COUNTRY HEIGHTS HOLDING BERHAD



Corporate Governance



CORPORATE GOVERNANCE OVERVIEW STATEMENT

The Board of the Directors of Country Heights Holdings Berhad (CHHB or the Company) recognises the importance of practicing good corporate governance and is committed to ensuring that high standards of corporate governance are practiced throughout the Company and its subsidiaries (“the Group”), with integrity, transparency and professionalism which contribute towards the successful achievement of corporate goals and enhance stakeholders’ value.

The Malaysian Code of Corporate Governance 2017 (the Code) came into force on 26 April 2017 and superseded its earlier 2012 edition. The Board of Directors of CHHB (the Board) fully supports the recommendations set out in the Code. The Code is based on the following three (3) principles which are:

(i) Board leadership and effectiveness;
(ii) Effective audit and risk management; and
(iii) Integrity in corporate reporting and meaningful relationship with stakeholders.

This Statement sets out the commitment of the Board to ethical behavior and transparency in business strategy, operations and corporate culture in deriving the intended outcomes of the principles and practices of the Code and in applying the principles and practices of the Code to ensure long-term sustainability of the Group.


BOARD OF DIRECTORS

The Board

CHHB is led and controlled by an active and experienced Board with a mix of suitably qualified and experienced professionals in the fields of accountancy, banking and finance, property development and marketing, corporate finance and mergers and acquisitions.

Responsibilities and Duties

The Board is responsible for setting the strategic direction of CHHB and monitoring the implementation of that strategy by CHHB Management, including:-


  • oversight of the CHHB Group, including its control and accountability systems;
  • appointing and removing the Group CEO;
  • appointing and removing the Company Secretary;
  • Board and Executive Management development and succession planning;
  • input into and final approval of corporate strategy;
  • input into and final approval of the annual operating budget (including the capital management budget);
  • approving and monitoring the progress of major capital expenditure, capital management and acquisitions/divestment;
  • monitoring compliance with all relevant legal, tax and regulatory obligations;
  • reviewing and monitoring systems of risk management and internal compliance and controls, codes of conduct, continuous disclosure, legal compliance and other significant corporate policies;
  • at least annually, reviewing the effectiveness of CHHB’s implementation of its risk management system and internal control framework;
  • monitoring Executive Management’s performance and implementation of strategy and policies, including assessing whether appropriate resources are available;
  • approving and monitoring financial and other reporting to the market, shareholders, employees and other stakeholders; and
  • appointment, reappointment or replacement of the external auditor.

In discharging his/her duties, each Director must:-

  • exercise care and diligence;
  • act in good faith in the best interests of CHHB;
  • not improperly use his/her position or misuse information of CHHB; and
  • commit the time necessary to discharge effectively his/her role as a Director.


All Directors (including Executive Directors) are entitled to be heard at all Meetings and should bring an independent judgement to bear in decision-making.

Board Balance

The Board is of the opinion that its current composition fairly reflects a balance of executive and non-executive to ensure that the interest of not only the Company, but also that of the stakeholders and of the public in general are represented as each independent director brings invaluable judgment to bear on issues of strategy, performance, resource allocation, risk management and standard of conduct. The Board is also of the view that the minority shareholders are fairly represented by the presence of these highly competent and credible Independent Non-Executive Directors.

The composition and size of the Board are reviewed from time to time to ensure their appropriateness and effectiveness. The Board currently has nine (9) members, comprising four (4) Non-Executive Directors and five (5) Executive Directors. Of the four (4) Non- Executive Directors, three (3) are Independent, thus fulfilling the requirement that at least one-third of the Board comprise of Independent Directors. A brief profile of each Director is presented on pages 8 to 16 of this Annual Report.

The Board is led by a team of experienced members from different professional backgrounds, all of whom provide the Group with a wealth of professional expertise and experience which are conducive for efficient deliberations at Board meetings, giving rise to effective decision making and providing multi-faceted perspectives to the business operations of the Group.

The Board is supportive of gender diversity in the boardroom as recommended by the Code and has developed a Gender Diversity Policy to promote the representation of women in the composition of the Board. For the purpose of the Code, the Gender Diversity Policy will refer principally to gender diversity in the boardroom, but this approach however, in no means limits the Company’s recognition and respect for the value of diversity at all levels of the organisation. A diverse boardroom and workplace include the skills and perspective that people bring to the organisation through, but not limited to, experience, gender, age, culture and beliefs.

The Gender Diversity Policy sets out the approach to diversity on the Board of Directors of CHHB and the Company’s policy and the processes whereby the Company will address, to the extent practicable, the objectives set out in Practice 4.5 of the Code. Presently, there are two (2) female Directors, representing approximately 22% women participation on the Board.

All Board members participate fully in decisions on key issues involving the Group. The Executive Directors are responsible for implementing the policies and decisions of the Board and managing the Group’s day-to-day operations. Together with the Independent Non-Executive Directors, they ensure that strategies are fully discussed and examined after taking into account the long term interests of the various stakeholders including shareholders, employees, customers, suppliers and the various communities in which the Group conducts its business.

The Independent Non-Executive Directors provide independent judgment, experience and objectivity without being subordinated to operational considerations to the exclusion of other relevant factors. They help to ensure that the interests of all shareholders are indeed taken into account by the Board and that the relevant issues are subjected to objective and impartial consideration by the Board. They also ensure that the Board practices good governance in discharging its duties and responsibilities. The Board, as a whole, retains overall control of the Group. The Independent Directors fulfill the criteria of “Independence” as prescribed under Paragraph 1.01 of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).

The Board is made aware that they should notify the Chairman before accepting any new directorship. The notification should include an indication of time that will be spent on the new appointment.

Board Meetings

The Board is satisfied with the level of commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of CHHB. All the Directors have complied with the minimum requirements on attendance at Board Meetings as stipulated in the MMLR of Bursa Securities (minimum 50%).

During the financial year, the Board of Directors held six (6) meetings and details of Directors’ attendances are set out below. Besides the Board Meetings, urgent decisions were approved via Directors’ Circular Resolutions during the year.


Name of Director No. of Meetings Attended
Tan Sri Lee Kim Tiong @ Lee Kim Yew
(Executive Chairman)
3/6
Lee Cheng Wen
(Deputy Chairman, Non-Independent Non-Executive Director)
5/6
Nik Hassan Bin Nik Mohd Amin
(Independent Non-Executive Director)
6/6
Chew Chong Eu
(Independent Non-Executive Director)
5/6
Ong Tee Chin
(Independent Non-Executive Director)
Appointed on 20 September 2017
1/1
Lee Thai Young Matahari
(Executive Director)
5/6
Lee Sow Lin
(Executive Director)
6/6
Yip Chun Mun
(Executive Director)
6/6
Har Soon Thim 5/5
(Executive Director)
6/6
Chua Hee Boon
(Independent Non-Executive Director)
Retired on 21 June 2017
4/4


At Board meetings, the Chairman encourages constructive, healthy debate, and the Directors are free to express their views. Any Director who has a direct and/or deemed interest in the subject matter to be deliberated shall abstain from deliberation and voting on the same during the meeting.

Executive Chairman and Executive Directors

The Founder of CHHB, Tan Sri Lee Kim Tiong @ Lee Kim Yew (“Tan Sri Lee”), is the Executive Chairman of the Company. He was previously the Non-Independent Non-Executive Deputy Chairman and was appointed as Non-Independent Non-Executive Chairman on 2 June 2016. On 1 October 2016, Tan Sri Lee was re-designated as the Executive Chairman of the Company.

As Executive Chairman and given his capability, leadership and entrepreneurship skills, business acumen and his vast experience in the industry, Tan Sri Lee undertakes to personally and passionately spearhead the CHHB Group to better performance in the near future together with the 4 Executive Directors, each having separate and clearly defined scope of responsibility and authority. The division of roles and responsibilities ensures that there is no excessive concentration of power in these positions.

Board Appointment Process

All nominees to the Board are first considered by the Nomination & Remuneration Committee, based on objective criteria, merit and with due regard for diversity in skills, experience, age, cultural background and gender before they are recommended to the Board. The Nomination & Remuneration Committee may also consider the use of external consultants in the identification of potential directors.

While the Board is responsible for the appointment of new Directors, the Nomination & Remuneration Committee is delegated the role of screening and conducting an initial selection before making a recommendation to the Board.

The annual assessment criteria of the Board and Board Committees have been updated to be aligned with the recommendations of the Code.

During 2017, there was an appointment of a new Director in place of the retirement of Mr. Chua Hee Boon, an Independent Non- Executive Director. The Nomination & Remuneration Committee had reviewed his background, knowledge, integrity, competency, experience, commitment (including time commitment), potential contributions to the CHHB Group and the independency of the proposed Director. The Board members, with the recommendation of the Nomination & Remuneration Committee, appointed a new Board member, namely Mr. Ong Tee Chin.

Board Effectiveness Evaluation

Performance indicators on which the Board’s effectiveness is evaluated include the Board’s composition, administration and process, conduct, responsibilities, accountability, interaction and communication with the Management and stakeholders. Performance indicators for individual Directors include their interactive contributions, understanding of their roles and quality of input.

The Board undertakes a process to assess the effectiveness of the Board as a whole and its Board Committees and the contribution of each Director for the financial year 2017. The evaluation involves the completion of questionnaires on the effectiveness of the Board of Directors as a whole, as well as that of the Board Committees. The structure, processes, accountability and responsibilities of the Committees are evaluated in assessing the effectiveness of the respective Committees.

The Board has analysed the gaps and put in place appropriate measures to ensure overall effectiveness of the Board and the CHHB Group.

Re-election/Re-appointment of Directors

The Constitution (Articles of Association) of the Company require a director appointed during a financial year to retire at the following annual general meeting. All directors are bound to retire at least once in every three years and re-election of directors takes place at each Annual General Meeting (“AGM”). All retiring directors shall be eligible for re-election/re-appointment.

The re-election/re-appointment of directors at the AGM are subject to prior assessment by the Nomination & Remuneration Committee and the recommendations thereafter are submitted to the Board and then for shareholders’ approval.

The re-election/re-appointment of directors ensured that shareholders have a regular opportunity to reassess the composition of the Board.

Tenure of Independent Non-Executive Directors

Encik Nik Hassan Bin Nik Mohd Amin and Mr Chew Chong Eu were both appointed to the Board as Independent Non-Executive Directors of the Company on 29 April 2008 and have, therefore served for more than 9 years.

Notwithstanding their long tenure in office, the Board, based on the review and recommendations made by the Nomination & Remuneration Committee, is unanimous in its opinion that the independency of Encik Nik Hassan Bin Nik Mohd Amin and Mr Chew Chong Eu have not been compromised or impaired based on the following justifications:

  • They continue to fulfill the criteria and definition of an Independent Director as set out under Paragraph 1.01 of the MMLR;
  • They have been with the Company for more than nine (9) years and therefore, understand the Company’s business operations which enable them to participate actively and contribute positively during deliberations or discussions at meetings of the Nomination & Remuneration Committee, the Audit & Risk Management Committee, and the Board; and
  • They have contributed sufficient time and efforts at the meetings of the Nomination & Remuneration Committee, the Audit & Risk Management Committee, and the Board for informed and balanced decision making.


The Board therefore believes that Encik Nik Hassan Bin Nik Mohd Amin and Mr Chew Chong Eu should be retained as Independent Non-Executive Directors and accordingly, recommends them to be retained as Independent Non-Executive Directors. Ordinary resolutions for the aforesaid purpose will be tabled at the forthcoming AGM for shareholders’ approval.

Directors’ Remuneration

The policy and framework for the overall remuneration of the Executive and Non-Executive Directors are reviewed regularly against market practices by the Nomination & Remuneration Committee, following which recommendations are submitted to the Board for approval.

The Board as a whole determines the remuneration of the Non-Executive Directors and each individual Director abstains from the Board decision on his own remuneration. The remuneration of Non-Executive Directors is based on a standard fixed fee. In addition, allowances are also paid in accordance with the number of meetings attended during the year.

The Executive Directors are not entitled to the above Directors’ fee nor are they entitled to receive any meeting allowance for Board or Board Committee meetings that he/she attends. Their remuneration is based on their Key Performance Indicators (“KPIs”) which are appraised annually.

Disclosure of each Director’s remuneration is set out under Practice 7.1 in the Corporate Governance Report.

The proposed Directors’ fees for the financial year 2017 will be tabled at the forthcoming 34th AGM for shareholders’ approval.

The aggregate remuneration of the Directors (including Mr Chua Hee Boon prior to his retirement) for the financial year ended 31 December 2017, categorised into the appropriate components, is as follows:

Description Executive Directors Non-Executive Directors Total
RM’000 RM’000
RM’000
Salaries & Other emoluments 1,099 41 1,140
Benefit-in-kinds 32 - 32
EPF Contribution 145 - 145
Fees - 41 41
Total
1,276 82 1,358


The number of Directors (including Mr Chua Hee Boon prior to his retirement) whose total remuneration falls into the respective bands is as follows:-

Range of Remuneration (RM) Number of Directors
Executive Non-Executive
Up to RM100,000 2 5
RM100,001 to RM200,000 1 -
RM200,001 to RM300,000 - -
RM301,000 to RM400,000 - -
RM400,001 to RM500,000 - -
RM500,001 to RM600,000 2 -


The Company has opted not to disclose each Director’s remuneration as the Board considers the information to be sensitive and proprietary.

BOARD COMMITTEES

The Board has delegated specific responsibilities to two (2) board committees, being the Audit & Risk Management Committee and Nomination & Remuneration Committee. The delegation of certain responsibilities of the Board to its Committees is made in accordance with Article 88 of the Constitution (Articles of Association) of the Company. This is necessary as there is now greater reliance on the Board Committees in response to the complex challenges of the business.

These Committees have the authority to examine particular issues within their terms of reference and report back to the Board with their recommendations. The ultimate responsibility for the final decision on most matters remains with the entire Board.

All Board Committees have written terms of reference, operating procedures and authority delegated and approved by the Board, which are reviewed from time to time to ensure they are relevant and up-to-date.

The Chairpersons of the various Board Committees report the outcome of their meetings to the Board and relevant decisions are incorporated into the minutes of the meetings of the Board of Directors.

Audit & Risk Management Committee (“ARMC”)

The report of the ARMC is set out on pages 74 to 78 of this Annual Report.

Nomination & Remuneration Committee (“NRC”)

The NRC comprises wholly of Non-Executive Directors, majority of whom are independent.

Membership:
  • Ong Tee Chin (Chairman of NRC);
  • Nik Hassan Bin Nik Mohd Amin;
  • Chew Chong Eu; and
  • Lee Cheng Wen.


Objectives

The objectives of the NRC with regard to the nomination role are as follows:
  • to identify and recommend new nominees to the Board as well as the Board Committees, however all decision as to who shall be appointed shall be the responsibility of the Board after considering the recommendations of the NRC;
  • to assist the Board in reviewing the Board’s required mix of skills, experience and other qualities, including core competencies which both Executive and Non-Executive Directors should bring to the Board;
  • to implement the process formulated by the Board designed to assess the effectiveness of the Board and the Board Committee as a whole;
  • to develop policies, practice and recommend proposals appropriate to facilitate the recruitment, retention and removal of Executive Director as well as the length of service; and
  • to review the Executive Directors’ objectives, goals and the assessment of performance.


The objectives of the NRC with regard to the remuneration role are as follows:
  • to determine the level and make-up of Executive Directors’ remuneration so as to ensure that CHHB attracts and retains the Directors of the appropriate calibre, experience and quality needed to run the CHHB Group successfully. The level and makeup of the remuneration should be structured so as to link rewards with corporate and individual performance; and
  • to determine the remuneration packages of Non-Executive Directors which shall be a decision of the Board as a whole.


Authority

The NRC is authorised by the Board:
  • to seek assistance from the Company Secretary on matters related to the responsibilities of the NRC under the rules and regulations to which it is subject to and how those responsibilities should be discharged;
  • to have full and unrestricted access to the Company’s records, properties and personnel; and
  • to seek independent professional advice and expertise deemed necessary for the performance of its duties.


Responsibilities

The responsibilities in relation to nomination matters are as follows:
  • to formulate the nomination, selection and succession policies for the Board and Board Committees as may be determined by the NRC from time to time;
  • to make recommendations to the Board on new candidates for election/appointment, and re-election/re-appointment of the Directors to the Board;
  • to make recommendations to the Board for appointment to fill casual vacancies;
  • to conduct a review in determining whether a director can continue to be independent in character and judgement, and also to take into account the need for progressive refreshing of the Board; and
  • to review the required mix skills, experience and other qualities of the Board annually.


The responsibilities in relation to remuneration matters are as follows:
  • to formulate and/or review the remuneration policies and packages for the members of the Board and Board Committees and recommend to the Board for approval; and
  • to approve the utilisation of the provision for annual salary increment, performance bonus and long term incentives (if any) in respect of each financial year.


The NRC shall consider any other matters referred by the Board to the NRC and, in discharging its duties, the NRC shall at all times be mindful of the provisions of all applicable laws, regulations and guidelines.

Meeting Attendance of the NRC:

The NRC met once during the financial year.

Main Activities of the NRC in 2017:

During the year, the NRC has fulfilled a number of key activities, as listed below:
  • Evaluated and assessed the performance of the Independent Non-Executive Directors (self-assessment) for the year 2016.
  • Evaluated and assessed the performance and effectiveness of the Board of Directors and Board Committees for the year 2016.
  • Reviewed and recommended the re-election of Directors due for retirement pursuant to Articles 102 and 106 of the Constitution (Articles of Association) of the Company, at the 33rd Annual General Meeting.
  • Reviewed and recommended the appointment of additional Director.
  • Reviewed the fees and allowances of the Non-Executive Directors for the year 2017 and subsequently recommended to the Board for approval.


The NRC noted that the Board and its Committees had met the board structure criteria, as to its size, independence, desired skills and qualities of the Board members, as required by the regulations.

Directors’ Training

All the Directors have attended the Mandatory Accreditation Program prescribed by Bursa Securities. Induction briefings will be organised for newly appointed Directors, if any.

The Directors are also encouraged to attend seminars/courses from time to time to equip themselves with the necessary knowledge to discharge their duties and responsibilities more effectively.

During the financial year, the Directors have attended, individually and/or collectively, various programmes and briefings, amongst others, as follows:


Name of Directors Training Programmes
Tan Sri Lee Kim Tiong @ Lee Kim Yew • World Chinese Economic Summit 2017
Lee Cheng Wen • Audit Committee Institute Breakfast Roundtable 2017
Nik Hassan Bin Nik Mohd Amin • Effective Internal Audit Function for Audit Committee (AC) Workshop
• Audit Committee Institute Breakfast Roundtable 2017
Chew Chong Eu • Debriefing on Cold Review Finding 2016
• Companies Act 2016
• Technical Analysis Series : Practical and Effective Trend Trading for Profitability
• Mergers & Acquisitions : The Process and Marking Mergers Succeed
Ong Tee Chin • Mandatory Accreditation Program
Lee Thai Young Matahari • World Chinese Economic Summit 2017
Lee Sow Lin • Advocacy Session on Corporate Disclosure for Directors and Principal Officers
Yip Chun Mun • SSM National Interest Schemes Conference 2017
Har Soon Thim • Leading Change @ The Brain
• Integrating An Innovation Mindset with Effective Governance


The Company will continuously arrange further training for the Directors as part of their obligations to update and enhance their skills and knowledge which are important for carrying out an effective role as Directors. From time to time, the Board also receives updates and briefings, particularly on regulatory and legal developments relevant to the Company’s business.

EFFECTIVE BOARD OPERATIONS AND INTERACTION

Board Meetings Schedule and Predetermined Agendas

The calendar for the ensuing financial year for Board and Board Committee meetings and draft agendas are established before the end of the current financial year and synchronised with the Management’s business planning cycle and quarterly financial results. This is to enable the Directors to plan ahead and allocate time in their respective schedules for the ensuing year’s Board and Board Committee meetings.

The Board meeting agenda is structured to address priority strategic issues aligned with the Company’s vision and mission which are consistent with the Board’s key roles. The agenda for each board meeting is prepared by the Company Secretary together with the Chairman. Other Directors and key members of Management may also be consulted.

Company Secretary

The Board is supported by a suitably qualified and competent Company Secretary to provide sound governance advice, ensure adherence to rules and procedures and advocate adoption of corporate governance best practices. The Company Secretary is an Associate member of the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA).

The Company Secretary is responsible for ensuring that Board procedures are followed, and the applicable rules and regulations for the conduct of the affairs of the Board are complied with. The Company Secretary is also responsible for all matters associated with the maintenance of the Board or otherwise required for its efficient operation. The Company Secretary attends and ensures that all meetings of the Board, Board Committees and Shareholders are properly convened, and that accurate and proper records of the proceedings and resolutions passed are taken and maintained in the statutory registers of the Company. The Board is regularly updated and apprised by the Company Secretary on new regulations issued by the regulatory authorities. The Company Secretary also serves notice to the Directors and Principal Officers to notify them of closed periods for trading in the Company’s shares.

Supply of Information

The Directors have full and unrestricted access to complete information on a timely basis pertaining to the Group’s business and affairs to enable them to discharge their duties. Board Meetings which are scheduled to be held are also presented with relevant reports to facilitate its decision-making process. The Board and its Committees are given the notice and agenda of meetings at least seven (7) days in advance and the meeting papers are delivered at least three (3) days prior to each meeting.

The Chairman of the ARMC will report to the Directors at the Board Meetings on any salient audit findings deliberated at the ARMC Meetings which require the Board’s notice or direction that may be required to be taken by the Management.

The Directors have access to the advice and services of the Company Secretary. The Directors may seek advice from the Management on matters relating to their areas of responsibility. The Directors may also interact directly with, or request further explanation, information or updates on any aspects of the Company’s operations or business concerns from the Management. The Directors may seek independent professional advice, at the Company’s expenses, if required, in furtherance of their duties.

Prompt Communication of Board Decisions

All Board decisions are clearly recorded in the minutes, including the rationale for each decision, along with clear actions to be taken and the individuals responsible for their implementation. Relevant urgent Board decisions are communicated to the Management within one working day of the Board meeting and the minutes of Board Meetings are completed for comments by the Board members within seven (7) working days of the meeting dates. Relevant extracts of the minutes are distributed to the Management for action once the board minutes are completed, depending on the urgency of the matters.

Board and Management Interaction

The Board has direct access to the Management and has full and immediate access to information relating to the Group’s business and affairs in the discharge of their duties. Towards building and maintaining trust in order to deliver significant and positive performance and shareholder value, both the Board and Management acknowledge the importance of positive interaction, dynamics and open communication between them.

Management members are invited to attend Board meetings to report to the Board on matters relating to their areas of responsibility, and also to brief and provide details to the Directors on recommendations submitted for the Board’s consideration.

BOARD PROFESSIONALISM

Board Charter

Whilst Directors and Management of the Company are aware of their respective roles and responsibilities, including the limits of authority accorded, the Board recognises the need to formalise such demarcation of duties to provide clarity and guidance to Directors and Management.

Accordingly, the roles of the Board, Board Committees, Executive and Non-Executive Directors are specified in the Company’s Board Charter. The Board Charter, which has been adopted by the Board, serves as a referencing point for Board’s activities to enable Directors to carry out their stewardship role and discharge their fiduciary duties towards the Company. The Board Charter also includes a formal schedule of matters reserved to the Board for deliberation and decision so that the control and direction of the Company are in the Board’s hands.

In line with Practice 2.1 of the Code, the Board Charter has been uploaded on the Company’s website at www.countryheights.com. The Board will review the Board Charter of the Company periodically and will update the Board Charter where appropriate, from time to time.

Code of Ethics for Directors

The Code of Ethics for Directors which was adopted by the Board supports the Company’s vision and core values by instilling, internalising and upholding the value of uncompromising integrity in the behaviour and conduct of the Directors.

The code is reviewed and updated regularly by the Board. The code has been uploaded on the Company’s website at www.countryheights.com.

The Code of Ethics for Directors covers the following areas:


  • Responsibilities of the Directors
  • Dealings with shareholders, employees, creditors, business partners and stakeholder communities at large
  • Dealings with respective governments
  • Dealings with competitors
  • Dealings in respect of Company assets
  • Trading on insider information
  • Conflict of interest
  • Social responsibilities and the environment


Whistle Blower Programme

The Board recognises the importance of whistle blowing in light of the requirements stipulated in the Capital Markets and Services Act 2007, the Corporate Governance Guide and the Companies Act, 2016.

An internal whistle blowing programme has been introduced for the employees to channel concerns about illegal, unethical or improper business conduct affecting the Company and about business improvement opportunities.

If an employee has concerns about illegal or unethical conduct in the workplace, the concern may be reported to the designated email: grouphr@countryheights.com.my or to the Chairman of the ARMC.

The Board and the Management gave their assurance that employees will not be at risk to any form of victimisation, retribution or retaliation from their superiors or any member of the Management provided they act in good faith in their reporting.

Gender Diversity Policy

The Gender Diversity Policy is to enable the Board to set measurable objectives to achieve gender diversity and to report the progress of these measureable objectives. Diversity is fundamentally an issue about building the most effective and forward-looking Board possible, and delivering quality governance in the broadest understanding of that term.

CHHB is committed to workplace diversity, with a particular focus on supporting the representation of women in the composition of the Board, in senior management and across the whole organisation.

The Board, assisted by Management, is responsible for developing strategies to meet the objectives of this Policy and to ensure its optimal implementation through the monitoring, evaluation and reporting mechanisms as listed in the Gender Diversity Policy.

To ensure the optimal implementation of the Gender Diversity Policy, the following measures will be followed:


  • equal employment opportunities based on relative ability and potential for the best business performance outcomes;
  • transparent selection processes and reviews;
  • engage employment consultants, if appropriate, to identify and assess the best candidates available for positions;
  • attract and retain a skilled and diverse workforce;
  • succession planning and training opportunities; and
  • linking achievement of measurable objectives to Board Key Performance Indicators, where appropriate.


Environmental & Sustainability Policy

The Board recognises the need to operate its business in a responsible and sustainable manner complying with all relevant legislative and regulatory requirements, to maintain its reputation, and to generate future business. CHHB combines its values of nature, love, quality, style and excellence, together with its vision of ‘Ever Searching for Better Living’ and set its commitment to sustainable good practice in the context of environment, economic and social consideration.

The Company’s commitment to environment sustainability is considered central to its business culture and as such is intended to form part of, and to support, all CHHB’s activities. The Company believes that seeking to continuously improve its environmental performance is fundamental to its business success and that sustainability principles should be incorporated into CHHB’s activities and decision making at all levels.

The Environmental & Sustainability Policy of the Company and the Group focuses on corporate sustainability in five main areas, being environment, health and safety, employees, business partners and local communities. The Company’s and the Group’s effort on environmental and social responsibility during the financial year are set out in the Sustainability Statement of this Annual Report.

Conflict of Interest and Related Party Transactions (“RPT”)

The Directors are responsible at all times for determining whether they have a potential or actual conflict of interest in relation to any matter which comes before the Board.

The Directors recognise that they must declare any interest they may have in transactions with the Company and Group and abstain from deliberation and voting on the relevant resolutions at the Board or general meetings convened to consider the matter.

Trading on Insider Information

The Directors and employees of CHHB are not permitted to trade in securities or any other kind of property based on price sensitive information and knowledge which has not been publicly announced.

Notices on the closed period for trading in the Company’s shares are sent to the Directors and principal officers on a quarterly basis specifying the timeframe during which the Directors and principal officers are prohibited from dealing in the Company’s shares. The Directors are also prompted not to deal in the Company’s shares at any point when price sensitive information is shared with them.

Directors’ and Officers’ Liability Insurance

The Company has in place a liability insurance policy for the Directors and officers in respect of liabilities arising from holding office in the Company. The insurance does not, however, provide coverage in the event that a Director or a member of the Management is proven to have acted negligently, fraudulently or dishonestly.

RELATIONSHIP AND COMMUNICATION WITH SHAREHOLDERS AND INVESTORS

Dialogue between the Company, Shareholders and Investors

The Board values the support of its shareholders and investors. It also recognises the importance of effective communication with the shareholders and the investment community of material corporate and business matters of the Group.

Care is taken to ensure reporting to the shareholders is balanced and sufficiently comprehensive and objective to allow performance to be measured.

In complying with Paragraph 9.21(3) of the MMLR to improve investor relations between the Company and its stakeholders, CHHB ensures that its website contains the email address(es) of the designated person(s) and contact numbers to enable the public to forward queries to the Company. CHHB also post announcements made to Bursa Securities on its website immediately after such announcements are released on Bursa Securities’ website.

Annual Report and Annual General Meeting (“AGM”)

In addition to quarterly financial reports, the Company communicates with the shareholders and investors through its Annual Report.

The Annual Report is an important medium of information for the shareholders and investors whereas the AGM provides a vital platform for both private and institutional shareholders to share their views and acquire information on issues relevant to the Group.

In an effort to save costs and encourage shareholders to benefit from Information and Communication Technology, CHHB continues to dispatch annual reports to the shareholders in electronic format (CD-ROM). However, shareholders are given the option to request for hard copies of the Annual Report.

Notice of AGM is sent out to the shareholders in the month of April with more than the required twenty eight (28) days’ notice before the date of the AGM, which is usually held in June. This would enable the shareholders ample time to make the necessary arrangement to attend and participate in person or by corporate representatives, proxies or attorneys.

Shareholders and members of the public can access the website of the Company www.countryheights.com for the latest information on the Group.

At the AGM, the Chairman presents a comprehensive review of the Group’s financial performance and value created for the shareholders as well as current developments of the Group. The AGM is the principal forum for dialogue with the shareholders. It provides shareholders and investors with an opportunity to seek clarification on the Group’s business strategy, performance and major developments. All Directors of CHHB, including the Chairman of the ARMC and NRC, attend the AGM to provide meaningful response to questions addressed.

Poll Voting

In line with Paragraph 8.29A of the MMLR that any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting, is voted by poll, the Board shall table all the resolutions at the forthcoming AGM for voting by poll.

ACCOUNTABILITY AND AUDIT

Financial Reporting and Disclosure

In presenting the annual financial statements and quarterly announcements of unaudited consolidated results to shareholders, the Directors have taken reasonable steps to ensure a balanced and understandable assessment of the Group’s financial position and prospects. The Board is assisted by the ARMC in overseeing the Group’s financial reporting processes and the quality of its financial reporting.

Risk Management and Internal Controls

The Board recognises and affirms its overall responsibility for the Group’s system of internal controls, which includes the establishment of an appropriate control environment and control framework as well as for reviewing its effectiveness, adequacy and integrity. The Board acknowledges that this system is designed to manage, rather than eliminate the risk of non-achievement of the Group’s objectives.

The Board has overall responsibility for maintaining sound internal control systems that cover financial controls, operational and compliance controls and risk management to ensure shareholders’ investments, customers’ interest and the Group’s assets are safeguarded.

The Statement on Risk Management and Internal Control as set out on pages 79 to 81 of this Annual Report provides an overview of the state of internal controls within the Group.

Relationship with Auditors

The Board, by the establishment of the ARMC, maintains a formal and transparent relationship with the Group’s auditors. The external auditors are invited to participate and brief the ARMC on specific issues at ARMC meetings. The roles of both the external and internal auditors are further described in the Audit & Risk Management Committee Report.

The Group has established an in-house Group Internal Audit Department, in addition to utilising the services of the external auditors, which reports significant findings directly to the ARMC with recommended corrective actions. The Management is responsible to ensure that corrective actions on reported weaknesses are undertaken within an appropriate timeframe.

The ARMC and the Board maintain great emphasis on the objectivity and independence of the Auditors, namely Messrs. Kreston John & Gan, in providing relevant and transparent reports to the shareholders. As a measure of ensuring full disclosure of matters, the Auditors are invited to attend the ARMC meetings for discussion with the ARMC without the presence of the Management, as well as the AGM.

COMPLIANCE STATEMENT

The Board is supportive of all the recommendations of the Code and has ensured that these recommendations as set out in the Code have been substantially implemented accordingly by the Group. The Board will take reasonable steps to review existing policies and procedures from time to time to ensure full compliance thereof.

ADDITIONAL COMPLIANCE INFORMATION

Material Contracts

Material contracts of the Company and its subsidiaries involving Directors and substantial shareholders either subsisting at the end of the financial year or entered into since the end of the previous financial year are disclosed in Note 44 to the Financial Statements.

Contracts Relating To Loan

There were no contracts relating to any loan by the Company in respect of the above said item.

Recurrent Related Party Transactions

The existing shareholders’ mandate for the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature which are necessary for its day-to-day operations shall expire at the conclusion of the forthcoming AGM and is subject to renewal by the shareholders at the said AGM.

Significant related party transactions of the Group are disclosed in Note 47 to the Financial Statements.

Audit And Non-Audit Fees

The amount of audit and non-audit fees incurred by the Company and the Group for the financial year ended 31 December 2017 is set out on Note 33 of this Annual Report.

Share Buy-Back

The existing authority for the Company to purchase up to 10% of its total number of issued shares capital shall expire at the conclusion of the forthcoming AGM and is subject to renewal by the shareholders at the said AGM.

There was no share buy-back during the financial year ended 31 December 2017.


Month No. of shares purchased and retained as treasury shares Lowest price paid per share (RM) Highest price paid per share (RM) Avarage price paid per share (RM) Total consideration (RM)
June 2014 100,000 1.44 1.50 1.47 147,430.08
June 2015 2,050,000 1.32 1.35 1.35 2,777,170.98


* Inclusive of transaction cost

All the shares purchased by the Company were retained as treasury shares as at 31 December 2017. There was no resale of any treasury share during the financial year.

Utilisation of Proceeds

The Company did not raise any proceeds from corporate proposals during the financial year ended 31 December 2017.

This Statement is made in accordance with the resolution of the Board of Directors duly passed on 19 April 2018.

AUDIT & RISK MANAGEMENT COMMITTEE REPORT

The Audit & Risk Management Committee (“ARMC”) of Country Heights Holdings Berhad was established with the objective of assisting the Board of Directors in the areas of corporate governance, system of internal controls, risk management and financial reporting of the Group. Members of the ARMC are mindful of their dual roles which are clearly reflected and demarcated in the agendas of each meeting.



COMPOSITION

The Committee comprises four (4) members all of whom are Non-Executive Directors, with a majority of them being independent Directors. This meets the requirement of Paragraph 15.09(1)(2) of the Bursa Malaysia Listing Requirements (Listing Requirements). The Committee consists of the following members:


Name of Director Designation Directorship
Nik Hassan Bin Nik Mohd Amin Chairman Independent Non-Executive Director
Chew Chong Eu Member Independent Non-Executive Director
Ong Tee Chin ** Member Independent Non-Executive Director
Chua Hee Boon * Member Independent Non-Executive Director
Lee Cheng Wen Member Non-Independent Non-Executive Director


** Ong Tee Chin was appointed as a member of the Committee with effect from 20 September 2017.

* Chua Hee Boon has retired as an Independent Non-Executive Director of the Company at the conclusion of the Company’s last Annual General Meeting held on 21 June 2017.

ATTENDANCE OF MEETING

During the financial year 2017, the Committee held a total of five (5) meetings. The details of attendance of the Committee members are as follows:


Name Attendance %
Nik Hassan Bin Nik Mohd Amin 5/5 100%
Chew Chong Eu 4/5 80%
Chua Hee Boon 3/3 100%
Lee Cheng Wen 4/5 80%
Ong Tee Chin 1/1 100%


The Executive Chairman, Executive Directors, Chief Financial Officer Group Finance, other Senior Management members and the external auditors attended these meetings upon invitation to brief the ARMC on specific issues.

Prior to some ARMC meetings, private sessions were held between the Chairman ARMC and external auditors without the Management’s presence.

Minutes of meetings of the ARMC were circulated to all members and significant matters reserved for the Board’s approval were tabled at the Board meetings. The Chairman of the ARMC provides a report on the decisions and recommendations of the ARMC to CHHB Board.

TERMS OF REFERENCE

The ARMC has reviewed and endorsed its Terms of Reference to be in line with the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and best practices propagated by Bursa Securities Corporate Governance Guide; towards Boardroom Excellence.

Composition

The ARMC shall be appointed by the Board from amongst the Directors of the Company and shall consist of not less than 3 members of whom the majority shall be independent directors. All members of the ARMC shall be non-executive directors.

All members of the ARMC shall be financially literate and at least one member of the ARMC:-


  1. must be a member of the Malaysian Institute of Accountants; or
  2. if he is not a member of the Malaysian Institute of Accountants, he must have at least three years working experience and;
    1. he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967;
    2. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or
    3. Fulfils such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad.


No alternate Director shall be appointed as a member of the ARMC. The members of the ARMC shall elect a Chairman from among their members who shall be an independent non-executive director. In the absence of the Chairman and/or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting.

Appointments to the ARMC shall be for a period of up to three (3) years, which may be extended further periods of up to three (3) years, provided the director still meets the criteria for membership of the ARMC.

In the event of any vacancy in the ARMC resulting in the non-compliance with sub-paragraph 15.09(1) of the MMLR, the Company must fill the vacancy within three (3) months.

Quorum

The quorum shall not be less than 2, the majority of whom shall be independent directors.

Attendance & Frequency of Meetings

The ARMC shall meet as the Chairman deems necessary but not less than 4 times a year. The Chairman shall be entitled where deemed appropriate to invite any person(s) to meetings of the ARMC.

The ARMC shall meet with the external auditors, internal auditors or both, without executive board members and employees present at least twice a year.


Authority

The ARMC is authorized by the Board to:-
  1. Seek any information relevant to its activities from employees of the Company.
  2. source for necessary resources required to carry out its duties.
  3. obtain independent professional advice it considers necessary.
  4. have full and unlimited access to any information and documents pertaining to the Company.
  5. investigate any matters within its terms of reference, with explicit authority.


Functions

  1. Financial Statements, External Audit and Other Information
    1. make appropriate recommendations to the Board on matters pertaining to the nomination, appointment and dismissal of external auditors and the fee thereof;
    2. review and discuss with the external auditors and internal auditors before the commencement of audit, the nature and scope of the audit;
    3. review the quarterly and year-end financial statements of the Group and Company prior to submission to the Board, focusing particularly on:-
      • public announcement of results and dividend payments;
      • any significant changes in accounting policies and practices;
      • significant adjustments and unusual events resulting from the audit;
      • the going concern assumption;
      • compliance with stock exchange, accounting standards and legal requirements.
    4. discuss problems and reservations arising from the interim and final audits, and any other matters the external auditors may wish to discuss (in the absence of management where necessary);
    5. review external auditors’ letter to management (if any) and management’s response;
    6. review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work;
    7. review the internal audit planning memorandum and results of the internal audit process and where necessary, ensure that appropriate action is taken on the recommendations of the internal audit function;
    8. review any appraisal or assessment of the performance of the Head of the internal audit function;
    9. approve any appointment or dismissal of the Head of the internal audit function;
    10. inform itself of resignation of the Head of internal audit and provide him/her an opportunity to submit reason(s) for resigning;
    11. consider any related party transactions and conflict of interest situation that may arise within the Company or Group that may raise questions over management’s integrity;
    12. consider the findings of internal audit investigations and management’s response;
  2. Risk Management, Internal Control and Information Systems

  3. The ARMC will review and obtain reasonable assurance that the risk management, internal control and information systems are operating effectively to produce accurate, appropriate and timely management and financial information. This includes the following:-
    1. advise the board on the Group’s overall risk appetite, tolerance and strategy, taking account of the current and prospective macroeconomic and financial environment drawing on financial stability assessments and other authoritative sources that may be relevant for the Group’s risk policies;
    2. champion and promote the Enterprise Risk Management and to ensure that the risk management process and culture are embedded throughout the Group;
    3. provide routine monthly and quarterly reporting and update the Board on key risk management issues and Potential Loss Event;
    4. review Risk Management Framework and Policy & Guide annually;
    5. oversee and advise the board on the current risk exposures of the Group and future risk strategy to ensure development and growth of the Group on a sustainable basis;
    6. in relation to risk assessment:-
      • keep under review the Group’s overall risk assessment processes that inform the board’s decision making, ensuring both qualitative and quantitative metrics are used;
      • review regularly and approve the parameters used in these measures and the methodology adopted;
      • set a standard for the accurate and timely monitoring of large exposures and certain risk types of critical importance, and
      • consider whether the Group has effective management systems in place to identify, assess, monitor and manage its key risk areas.
    7. review the Group’s capability to identify and manage new risk types;
    8. review reports on any material breaches of risk limits and the adequacy of proposed action;
    9. follow-up on management action plans based on the status of implementation compiled by the management;
    10. review the Business Risk Analysis & Evaluation and Mitigation Plans to be escalated to the Board on an annual basis and to report any major breach of Risk policies and tolerance limits and ensure Risk Mitigants are in place;
    11. give a view on proposal/feasibility studies prepared by project sponsor or project consultants which meet the requisite threshold before recommending to the Board for final decision;
    12. keep under review the effectiveness of the Group’s internal financial controls and internal controls and risk management systems and review and approve the statements to be included in the annual report concerning internal controls and risk management;
    13. review the Group’s procedures for preventing fraud; and
    14. consider and approve the remit of the risk management function and ensure it has adequate resources and appropriate access to information to enable it to perform its function effectively and in accordance with the relevant professional standards.


The ARMC shall also ensure the function has adequate independence and is free from management or other restrictions.

Minutes

The Secretary shall cause minutes to be duly entered in the books provided for the purpose of all resolutions and proceedings of all meetings of the ARMC. Such minutes shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting and if so signed, shall be conclusive evidence without any further proof of the facts thereon stated. Minutes of each meeting shall also be distributed to the members of the ARMC prior to each meeting.


Summary of Activities of the ARMC

During the financial year, the ARMC carried out its duties as set out in its Terms of Reference, including but not limited to:-


  1. review of audit plans prepared by both internal and external auditors;
  2. review of unaudited quarterly financial statements during the financial year prior to submission to the Board for consideration and approval;
  3. review and evaluate the policies for risk management and systems of internal control;
  4. review of internal audit reports presented by internal auditors and consider the major findings by the internal auditors and management’s responses thereto;
  5. review of the audited financial statements for the financial year ended 31 December 2017 and to discuss significant audit issues and findings with the external auditors;
  6. review the procedures for identification of related party transactions for compliance with the Listing Requirements of Bursa Securities and the appropriateness of such transaction, if any, before recommending to the Board for approval; and
  7. meet and discuss with the external auditors without the presence of the management staff.


External Audit

  1. The ARMC deliberated the External Auditors’ Final Report at its meeting on 27 February 2017 with regard to the relevant disclosures in the annual audited financial statements for the year ended 2016. The ARMC also considered suggestions to improve the accounting procedures and internal control measures.
  2. On 11 April 2017, the External Auditor tabled the Final Report and the Audit Financial Statements for the year ended 31 December 2016.
  3. On 17 April 2017, the Group Finance tabled the proposal on the appointment of the new External Auditors Messrs. Kreston John & Gan of CHHB and its Group of companies in place of the retiring Auditors, Messrs. Deloitte PLT and BTL & Co Chartered Accountants.
  4. On 24 August 2017 ARMC Chairman held a private session with the newly appointed External Auditors Messrs. Kreston John & Gan without the presence of the Management.
  5. On 23 November 2017, the ARMC reviewed the External Auditors’ Professional Services Planning Memorandum for the financial year ending 31 December 2017 outlining their scope of work and proposed fees of RM250,000 for the statutory audit and review of the Statement on Internal Control for 2017. The ARMC further resolved to recommend the proposed fees to the Board for approval.
  6. The new standard in the By-Laws (On Professional Ethics, Conduct and Practice) for Professional Accountants requires External Auditors to communicate in writing to the ARMC all breaches of independence requirements of the IEBSA Code of Ethics.


Summary of Activities of the Internal Audit Function

The ARMC is aware of the fact that an independent and adequately resourced internal audit function is essential to assist in obtaining the assurance it requires regarding the effectiveness of the system of internal controls.

The internal audit function is undertaken by an in-house internal audit department. The internal audit function reports independently to the ARMC and its role encompasses the examination and evaluation of the adequacy and effectiveness of the Group’s system of internal controls to provide reasonable assurance to the members of the ARMC. During the financial year under review the GIAD operated with the total manpower of 2 staff and both of them were also free from any relationship or conflicts of interest.

The internal audit function performs internal audits with strict adherence to the Professional Practices Framework of The Institute of Internal Auditors, USA (“IIA”) and conformance with the IIA’s International Standards for The Professional Practice of Internal Auditing (“Standards”) in meeting the responsibilities of internal auditors and the internal audit activity. The purpose of the Standards is to:


  1. Delineate basic principles that represent the practice of internal auditing.
  2. Provide a framework for performing and promoting a broad range of value-added internal auditing.
  3. Establish the basis for the evaluation of internal audit performance.
  4. Foster improved organisational processes and operations.


The Standards are principles-focused, mandatory requirements consisting of:
  • Statements of basic requirements for the professional practice of internal auditing and for evaluating the effectiveness of performance, which are internationally applicable at organisational and individual levels.
  • Interpretations, which clarify terms or concepts within the Statements.

The structure of the Standards is divided between Attribute and Performance Standards. Attribute Standards address the attributes of organisations and individuals performing internal auditing. The Performance Standards describe the nature of internal auditing and provide quality criteria against which the performance of these services can be measured. The Attribute and Performance Standards are also provided to apply to all internal audit services.

The internal audit activities carried out, under a risk-based approach, for the financial year include, inter alia, the following:-


  1. formulated annual risk-based audit plan and reviewed the resource requirements for audit executions;
  2. executed internal audit reviews in accordance with the approved annual audit plan;
  3. issued reports on the internal audit findings identifying weaknesses and highlighting recommendations for improvements on a periodic basis;
  4. followed-up on the implementation of corrective action plans or best practices agreed with management; and
  5. attended ARMC meetings to table and discuss the audit reports and followed up on matters raised.


The internal audit reviews conducted did not reveal weaknesses that have resulted in material losses, contingencies or uncertainties that would require separate disclosure in the annual report.

The total cost incurred for the internal audit function of the Group for the financial year ended 31 December 2017 was RM160,806.

This Statement is made in accordance with the Board’s resolution dated 19 April 2018.

Responsibility and Accountability

The Board of Country Heights Holdings Berhad affirms its overall responsibility for the Group’s system of internal controls to safeguard shareholders’ investments and the assets of the Group as well as reviewing the adequacy, integrity and effectiveness of the system. Internal control systems are primarily designed to cater for the business needs and manage the potential business risks of the Group.

However, such systems are designed to manage, rather than to eliminate the risk of failure to achieve the Group’s corporate objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement, operational failures and fraudulent activities.

The Board is assisted by the Management to implement approved policies and procedures on risk and control. Management identifies and evaluates the risks faced by the Group and designs, implements and monitors an appropriate system of internal controls in line with policies approved by the Board.


KEY FEATURE OF THE GROUP’S INTERNAL CONTROL SYSTEM

Key elements of the Group’s internal control system that have been established to facilitate the proper conduct of the Group’s businesses are described below.


  1. Control Environment
    • Organisation Structure & Authorisation Procedures
      The Group maintains a formal organisation structure with well-defined delegation of responsibilities and accountability. It sets out the roles and responsibilities, appropriate authority limits, review and approval procedures in order to enhance the internal control system of the Company’s various operations.

      Key functions such as finance, tax, treasury, corporate, legal matters and contract awarding are controlled centrally.
    • Monitoring and Reporting Procedures
      The Executive Chairman / Executive Director meets on a regular basis with all divisional heads to consider the Group’s financial performance, business developments, management and corporate issues.

      The Divisional Heads and Business Unit Heads are responsible for the Standard Operating Procedures which include policies and procedures are continuously reviewed and update if required.

      The Divisional Heads and Business Unit Heads are responsible for the identification and evaluation of significant risks applicable to their areas of business together with the design and operation of suitable internal controls.
    • Human Resource Policy
      Comprehensive and rigorous guidelines on are in place, to ensure that the Company has a team of employees who are equipped with all the necessary knowledge, skills and abilities to carry out their responsibility effectively. Corporate values, which emphasize ethical behaviors, are set out in the Group’s HR Portal.
    • Annual Budget
      The Company has a comprehensive budgeting system established to meet the annual business plan. The annual business plan and budget are approved by the Board. Budgetary control is in place for every operations of the Company, where actual performance is closely monitored against budgets to identify and to address significant variances.
  2. Risk Management
    The Board acknowledges that all areas of the Group’s business activities involve some degree of risk. The Group is committed to ensuring that there is an effective risk management framework which allows management to manage risks within defined parameters and standards, and promotes profitability of the Group’s operations in order to enhance shareholder value.

    The Board with the assistance of the Audit & Risk Management Committee continuously review the on-going process of identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives throughout the financial year under review.

    The risk management process involves the senior management as well as the Executive Directors through direct participation in periodic management meetings. These meetings are held to assess and monitor the Group’s risk as well as deliberate and consider the Group’s financial performance, business development, management and corporate issue.

    A risk assessment is performed bi-annually to assess the risks faced by the Group’s business units. The results of these risk assessments are presented to the ARMC. Risk factors that can affect the Group include strategic, operational, compliance, reputational, financial and fraud risks.

    The Board determines the Company’s level of risk tolerance and actively identify, assess, and monitor key business risks to safeguard shareholders’ investments and company’s assets.

    The Company Officer responsible for managing internal controls and legal and regulatory compliance at the company is the Head of Group Finance.
  3. Internal Audit Function
    The Group has an in-house Group Internal Audit Department to carry out its internal audit function. The internal audit function has undertaken detailed assessments of the risks and reviews of the internal control systems of CHHB’s operating environment. The areas of assessments and reviews were set out in an internal audit plan which has been approved by the Audit & Risk Management Committee.

    The Group Internal Audit Department reports directly to the Audit & Risk Management Committee. Periodic testing of the effectiveness and efficiency of the internal control procedures and processes are conducted to ensure that the system is viable and robust. For 2017, all the internal audits were performed by the in-house Group Internal Audit Department. Arising from these assessments and reviews, the Group Internal Audit Department presented their reports to the Audit & Risk Management Committee on their findings, recommendations for improvements and the response from management for the Committee’s deliberation and consideration.

    The internal audit function performs internal audits with strict adherence to the Professional Practices Framework of The Institute of Internal Auditors, USA (“IIA”) and conformance with the IIA’s International Standards for The Professional Practice of Internal Auditing (“Standards”) in meeting the responsibilities of internal auditors and the internal audit activity.

    A summary of internal audit activities that were undertaken during the financial year ended 31 December 2017 is as follows:

    • Property Investment
      • Reviewed the accounts receivable, collections and debtors monitoring process and compliance to policies and procedures.
      • Reviewed of leasing and marketing activities to ensure continuous revenue assurance to the group.
    • Property Development
      • Reviewed on the warranty claim for the main access road and the maintenance schedule for the main access road and reports.
      • Reviewed on the unresolved insurance claims and unresolved issues at the project site.
      • Understanding on the project and a general overview of the procedures and practices
      • Reviewed the Progress Billings and to ensure that amount are promptly billed and collected.
      • Reviewed the agent commissions paid out and to ensure that properly recorded and being updated promptly.
      • Reviewed the rebates given out to the purchasers and to ensure that properly approved, recorded and being updated promptly.
      • To ensure that the company’s policies and procedures were complied with and the existing controls functioned as intended.
      • Reviewed on the overall sales achieved to date vs the total project cost.
    • Property Division - Risk Profile
      • This update covers risk and governance of various areas with the aim to provide an independent and objective assurance to improve and add value to CHHB's Property division activities.
  4. Information and Communication
  5. Information critical to the achievement of the Company’s business objectives are communicated through established reporting lines across the Company. This is to ensure that matters that require the Board and Senior Management’s attention are highlighted for review, deliberation and decision on a timely basis.

    A whistleblowing policy has been established together with the detailed processes of the policy. The policy is made known to all employees on the Group’s website, with a dedicated channel being formed where whistleblowers may direct their grouses and complaints directly to the - Chairman of the ARMC or Group Human Resources.
  6. Review & Monitoring Process
    Regular management meetings are held to discuss and monitor the Group’s operations and performance, including meetings to discuss deviation of results against performance targets, with significant variances explained for and corrective management action formulated, where necessary. In addition to the above, schedule and ad-hoc meetings are held at operational and management levels to identify, discuss and resolve business and operational issues as and when necessary.


CONCLUSION

The Group’s system of internal controls does not apply to associate companies, which the Group does not have full management control.

The Board is of the view that the system of internal controls was generally satisfactory. There were no material losses incurred during the financial year as a result of weaknesses in the system of internal controls that would require disclosure in the annual report.

Nevertheless, the Group will continue to take measures to strengthen the internal control environment.

This statement is made in accordance with the Board’s resolution dated 19 April 2018.


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

Responsibility and Accountability

The Board of Country Heights Holdings Berhad affirms its overall responsibility for the Group’s system of internal controls to safeguard shareholders’ investments and the assets of the Group as well as reviewing the adequacy, integrity and effectiveness of the system. Internal control systems are primarily designed to cater for the business needs and manage the potential business risks of the Group.

However, such systems are designed to manage, rather than to eliminate the risk of failure to achieve the Group’s corporate objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement, operational failures and fraudulent activities.

The Board is assisted by the Management to implement approved policies and procedures on risk and control. Management identifies and evaluates the risks faced by the Group and designs, implements and monitors an appropriate system of internal controls in line with policies approved by the Board.

KEY FEATURE OF THE GROUP’S INTERNAL CONTROL SYSTEM

Key elements of the Group’s internal control system that have been established to facilitate the proper conduct of the Group’s businesses are described below.

  1. Control Environment
    • Organisation Structure & Authorisation Procedures

      The Group maintains a formal organisation structure with well-defined delegation of responsibilities and accountability. It sets out the roles and responsibilities, appropriate authority limits, review and approval procedures in order to enhance the internal control system of the Company’s various operations.

      Key functions such as finance, tax, treasury, corporate, legal matters and contract awarding are controlled centrally.

    • Monitoring and Reporting Procedures

      The Executive Chairman / Executive Director meets on a regular basis with all divisional heads to consider the Group’s financial performance, business developments, management and corporate issues.

      The Divisional Heads and Business Unit Heads are responsible for the Standard Operating Procedures which include policies and procedures are continuously reviewed and update if required.

      The Divisional Heads and Business Unit Heads are responsible for the identification and evaluation of significant risks applicable to their areas of business together with the design and operation of suitable internal controls.

    • Human Resource Policy

      Comprehensive and rigorous guidelines on are in place, to ensure that the Company has a team of employees who are equipped with all the necessary knowledge, skills and abilities to carry out their responsibility effectively. Corporate values, which emphasize ethical behaviors, are set out in the Group’s HR Portal.

    • Annual Budget

      The Company has a comprehensive budgeting system established to meet the annual business plan. The annual business plan and budget are approved by the Board. Budgetary control is in place for every operations of the Company, where actual performance is closely monitored against budgets to identify and to address significant variances.

  2. Risk Management

    The Board acknowledges that all areas of the Group’s business activities involve some degree of risk. The Group is committed to ensuring that there is an effective risk management framework which allows management to manage risks within defined parameters and standards, and promotes profitability of the Group’s operations in order to enhance shareholder value.

    The Board with the assistance of the Audit & Risk Management Committee continuously review the on-going process of identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives throughout the financial year under review.

    The risk management process involves the senior management as well as the Executive Directors through direct participation in periodic management meetings. These meetings are held to assess and monitor the Group’s risk as well as deliberate and consider the Group’s financial performance, business development, management and corporate issue.

    A risk assessment is performed bi-annually to assess the risks faced by the Group’s business units. The results of these risk assessments are presented to the ARMC. Risk factors that can affect the Group include strategic, operational, compliance, reputational, financial and fraud risks.

    The Board determines the Company’s level of risk tolerance and actively identify, assess, and monitor key business risks to safeguard shareholders’ investments and company’s assets.

    The Company Officer responsible for managing internal controls and legal and regulatory compliance at the company is the Head of Group Finance.

  3. Internal Audit Function

    The Group has an in-house Group Internal Audit Department to carry out its internal audit function. The internal audit function has undertaken detailed assessments of the risks and reviews of the internal control systems of CHHB’s operating environment. The areas of assessments and reviews were set out in an internal audit plan which has been approved by the Audit & Risk Management Committee.

    The Group Internal Audit Department reports directly to the Audit & Risk Management Committee. Periodic testing of the effectiveness and efficiency of the internal control procedures and processes are conducted to ensure that the system is viable and robust. For 2017, all the internal audits were performed by the in-house Group Internal Audit Department. Arising from these assessments and reviews, the Group Internal Audit Department presented their reports to the Audit & Risk Management Committee on their findings, recommendations for improvements and the response from management for the Committee’s deliberation and consideration.

    The internal audit function performs internal audits with strict adherence to the Professional Practices Framework of The Institute of Internal Auditors, USA (“IIA”) and conformance with the IIA’s International Standards for The Professional Practice of Internal Auditing (“Standards”) in meeting the responsibilities of internal auditors and the internal audit activity.

    A summary of internal audit activities that were undertaken during the financial year ended 31 December 2017 is as follows:

    1. Property Investment
      • Reviewed the accounts receivable, collections and debtors monitoring process and compliance to policies and procedures.
      • Reviewed of leasing and marketing activities to ensure continuous revenue assurance to the group.

    2. Property Development
      • Reviewed on the warranty claim for the main access road and the maintenance schedule for the main access road and reports.
      • Reviewed on the unresolved insurance claims and unresolved issues at the project site.
      • Understanding on the project and a general overview of the procedures and practices
      • Reviewed the Progress Billings and to ensure that amount are promptly billed and collected.
      • Reviewed the agent commissions paid out and to ensure that properly recorded and being updated promptly.
      • Reviewed the rebates given out to the purchasers and to ensure that properly approved, recorded and being updated promptly.
      • To ensure that the company’s policies and procedures were complied with and the existing controls functioned as intended.
      • Reviewed on the overall sales achieved to date vs the total project cost.

    3. Property Division - Risk Profile

      This update covers risk and governance of various areas with the aim to provide an independent and objective assurance to improve and add value to CHHB's Property division activities.

  4. Information and Communication
    Information critical to the achievement of the Company’s business objectives are communicated through established reporting lines across the Company. This is to ensure that matters that require the Board and Senior Management’s attention are highlighted for review, deliberation and decision on a timely basis.

    A whistleblowing policy has been established together with the detailed processes of the policy. The policy is made known to all employees on the Group’s website, with a dedicated channel being formed where whistleblowers may direct their grouses and complaints directly to the - Chairman of the ARMC or Group Human Resources.

  5. Review & Monitoring Process
    Regular management meetings are held to discuss and monitor the Group’s operations and performance, including meetings to discuss deviation of results against performance targets, with significant variances explained for and corrective management action formulated, where necessary. In addition to the above, schedule and ad-hoc meetings are held at operational and management levels to identify, discuss and resolve business and operational issues as and when necessary.


CONCLUSION

The Group’s system of internal controls does not apply to associate companies, which the Group does not have full management control.

The Board is of the view that the system of internal controls was generally satisfactory. There were no material losses incurred during the financial year as a result of weaknesses in the system of internal controls that would require disclosure in the annual report.

Nevertheless, the Group will continue to take measures to strengthen the internal control environment.

This statement is made in accordance with the Board’s resolution dated 19 April 2018.

ENVIRONMENTAL & SUSTAINABILITY

Sustainable development, or sustainability, integrates economic progress, social responsibility and environmental concerns with the objective of improving the quality of life for everyone, now and for generations to come.

Country Heights Holdings Berhad (“CHHB”) recognises the need to operate its business in a responsible and sustainable manner complying with all relevant legislative and regulatory requirements, to maintain its reputation, and to generate future business. We combine our values of nature, love, quality, style and excellence, together with our vision of ever searching for better living and set our commitment to sustainable good practice in the context of environment, economic and social consideration.

CHHB’s commitment to environment sustainability is considered central to our business culture and as such is intended to form part of, and to support, all CHHB’s activities. We believe that seeking to continuously improve our environmental performance is fundamental to our business success and that sustainability principles should be incorporated into CHHB’s activities and decision making at all levels.

CHHB’s ENVIRONMENTAL & SUSTAINABILITY POLICY, which is applicable to CHHB and its Group of Companies, focuses on corporate sustainability in five main areas: environment, health and safety, employees, business partners and local communities.

The following principles underpin CHHB’s commitment towards sustainable development:-



Environment

  • To be committed to help safeguard the environment and strive for continual improvement in our environmental performance in ways that are sustainable, practical, commercial, meaningful, cost-effective and innovative.
  • To be an environmental steward and strive to conserve the natural resources and biodiversity under our influence and ensure that all potential adverse impacts our operations may have on the environment are identified an appropriately managed.



Health and Safety
  • To continually identify, access and manage the health and safety risks and impacts of our existing and planned operations.
  • To operate as far as is reasonably practicable in a manner which safeguards the health and safety of all our employees and stakeholders.



Employee
  • To strive to be an employer of choice by providing an environment in which all employees are treated fairly and with respect so that they can realise their full potential.
  • To provide the leadership and resources that will enable our employees to meet objectives and targets.



Business Partners
  • To ensure that our team of consultants, contractors and suppliers are aware of our Environmental & Sustainability Policy and its objectives and that they have the necessary skills to implement it.
  • To favour consultants, contractors and suppliers who promote sustainable development and encourage our customers to use our products and services responsibly.



Local Communities
  • To communicate regularly with the communities where we operate to develop and maintain a mutual understanding of goals and expectations.
  • To promote good relationship with the authorities and communities of which we are a part and enhance their capabilities while respecting their culture and heritage.

This policy applies to all directors and employees of CHHB and its Group of Companies, and will be subject to regular annual review to ensure its continued relevance for sustainable development.