STATEMENT ON CORPORATE GOVERNANCE
PELANGI PUBLISHING GROUP BERHAD’S POLICY ON CORPORATE GOVERNANCE
The Board of Directors (“the Board”) of Pelangi Publishing Group Berhad (“PPG”) remains committed to ensure that the highest standards of corporate governance are practiced throughout PPG and its group of companies. It continues to be fully accountable to the shareholders and stakeholders, and will be bound to continually enhance the level of corporate governance in the management of PPG’s business, its financial performance for the achievement of business profitability, preservation of long term shareholder value and the protection of shareholders’ interests, without failing to take into account the interests of other stakeholders.
Notwithstanding PPG’s structure, policies, procedures and practices that are set, they are still open to be reviewed for enhancement and improvement. The ultimate aim of the Board is to secure all principles and objectives are transparent to parties with interests in PPG.
PPG also maintains a strong leadership in the organization to ensure efficiency, integrity, honesty and responsibility for the ethical management of the Group and the maintenance of good corporate values.
PRINCIPLE STATEMENT
The Board is pleased to report to the shareholders that throughout the 2008 financial year, PPG and its Group have applied the Principles of Corporate Governance and Best Practices contained in the Malaysian Code on Corporate Governance. The manner and extend of compliance are stated as follows:
SECTION 1: THE BOARD OF DIRECTORS
Composition of The Board
As at the date of this Annual Report, the Board consists of six (6) members comprising one (1) Executive Chairman, two (2) Executive Directors, two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director.
PPG is in compliance with the Listing Requirements of Bursa Malaysia which require that at least two (2) directors or one — third (1/3) of the total number of Directors, whichever is higher, to be Independent Directors.
The Company recognizes the contribution of Non-Executive Directors as equal Board members to the development of the Group’s strategy as well as their role in representing the interests of public shareholders and providing a balanced and independent view to the Board. No individual or group of individuals dominates the Board’s decision making and number of directors reflects fairly the investment of the shareholders. The profiles of the Board members are set out on pages 10 to 12 of the Annual Report.
Board Balance and Board Effectiveness
All Board members are individuals of caliber and credibility. The composition of the Board reflects the commitment to maintain and appropriate balance to ensure a sufficiently wide and relevant mix of background, skill and experience to provide strong and effective leadership and control of the Group.
The Directors and professionals from diverse disciplines ie accounting, education and legal. Together, they create the synergy and effectiveness necessary to steer the Group toward strengthening its professional competence for achieving PPG’s full objectives.
The directorships held by Directors are confirmed by each Director at the beginning of every financial year and is updated as and when informed by the respective Directors of any changes to the directorships status.
The Board through the Nominating Committee is constantly reviewing the required mix of skill, experience and the contribution including their core competencies in order to enhance the quality of the Directors’ participation in the Board to suit the ever changing standards of corporate governance.
Supply of Information
Directors are provided with an agenda and a compilation of Board papers prior to the agreed date for each Board Meeting in order to give Directors sufficient time to review and properly briefed on each issues before to be deliberated at the Board Meeting.
At every Board Meeting and at any time at all, members of the senior management make themselves available to brief and provide information to assist the Board in its deliberation on any specific matter essential to assist the Directors in undertaking their duties for the Group.
All Directors have full and unrestricted access to all information within the Group, and to the advice and services of the Group Company Secretary who is responsible for ensuring that Board Meeting procedures are adhered to and that applicable rules and regulations are complied with. The Board assumes full responsibility in ensuring that the appointed Company Secretary is capable in discharging its duties.
The Board has the liberty to seek external independent professional advice if so required.
Board meetings
The Board met six (6) times during the 2008 financial year during which it reviewed and approved various issues including the quarterly financial results of the Group for announcement to Bursa Securities, corporate announcements of the Group, business plan and strategy and also the performance of the Group. The Board also reviewed the adequacy of the Group’s internal control system.
Note that additional Board Meetings are held as and when required. When it is not possible to hold any meeting, a circular resolution will be passed by the Board. As at todate, aof each Director at the Board Meetings held during the financial below:
| Directors |
Date Appointed |
Attendance |
| Sum Kown Cheek |
19.12.2003 |
6/6 |
| Lee Kheng Hon |
19.12.2003 |
6/6 |
| Mak Tack Meng* |
19.12.2003 |
6/6 |
| Syahriza Binti Senan |
19.12.2003 |
6/6 |
| Chung Shan Kwang |
01.10.2007 |
4/6 |
| Sam Yuen @ Sam Chin Yan** |
14.01.2008 |
4/4 |
| Winston Paul Wong Chi-Huang# |
10.02.2009 |
– |
| Vincent Wong Soon Choy## |
10.02.2009 |
– |
Remark:
* Mr Mak Tack Meng deceased on 8 January 2009.
** For the period from 14 January 2008 to 30 September 2008.
# Mr Winston Paul Wong Chi-Huang was appointed as Director of the Company on 10 February 2009.
## Mr Vincent Wong Soon Choy was appointed as Alternate Director to Mr Winston Paul Wong Chi-Huang on 10 February 2009.
Appointments of the Board and Re-election
Nominating Committee
The Board has established a Nominating Committee which is responsible for recommending and nominating new Directors for appointment by the Board.
The Nominating Committee comprises two (2) Independent Non-Executive Directors. The members are as follows:
Members Of The Nominating Committee
Chairman
Mak Tack Meng* (Independent Non-Executive Director)
Winston Paul Wong Chi-Huang** (Independent Non-Executive Director)
Member
Syahrize Binti Senan (Independent Non-Executive Director)
Remark:
* Mr Mak Tack Meng deceased on 8 January 2009.
** Mr Winston Paul Wong Chi-Huang was appointed as Chairman of Nominating Committee on 10 February 2009.
The Nominating Committee was formed on 18 August 2004 to assist the Board in the executive of its duties and it should meet not less than once a year. During the financial year 2008, the Committee had met once.
The primary objectives of the Nominating Committee are to ensure that the Directors bring characteristics to the Board, which provide a required mix of responsibilities, skills and experience. The Nominating Committee will also assist the Board in reviewing on an annual basis the appropriate balance and size of Non-Executive participation. The Nominating Committee will also establish procedures and processes for the annual assessment of the effectiveness of the Board as a whole, the Committee of the Board and contribution of each individual Director.
The Committee has full and unrestricted access to the Company’s records, properties and personnel. The Nominating Committee may use the services of professional recruitment firms to source for the right of candidate for the Directorship.
The PPG’s Article of Association require all Directors to retire from office at least once in three (3) years and the retiring Directors are eligible for re-election at the Annual General Meeting. Directors who are appointed by the Board during the year are subject to re-election at the next Annual General Meeting following their appointments.
To assist shareholders in their decision, details of the Directors seeking for re-election at the forthcoming Annual General Meeting are disclosed in the page 4 of this Annual Report and the Directors’ profile are disclosed separately on pages 10 to 12of this Annual Report.
Directors’ Training
All members of the Board have completed the Mandatory Accreditation Programme [MAP] as prescribed by Bursa Malaysia Securities Berhad.
Directors are required to attend trainings or seminars to keep abreast with developments in the market place ie or relevant new legislation, regulations and changing commercial risks.
As at the date of this Annual Report, the training courses attended by some of the Directors are as follows:
1. Core of Competitiveness
2. PCS Internal Audit Curriculum
Relationship of the Board to Management
Many of the responsibilities of the Board are delegated to management. Independence from the management of the Group is a key principle to the effective functioning of the Board. It facilitates the assessment of the Group’s Directors’ and management’s performance. The Chairman of the Board is responsible for all overall management of Board activities and ensuring that the Board discharges its previously defined responsibilities.
The roles of Chairman and Managing Director are currently held by Mr. Sum Kown Cheek. The Board considers this combined arrangement to be in the best interests of the Group in view of Mr Sum’s entrepreneurship, business acumen and vast experience in the publishing industry.
SECTION 2: DIRECTORS’ REMUNERATION
Remuneration Policy and Procedure
The Board has established a Remuneration Committee which is responsible to review and recommends to the Board on the remuneration of the Executive Directors in all its forms according to the level of performance of the Executive Directors itself.
The level of remuneration of Executive Director has been structured to link rewards to the individual and Group performance. The Board as whole determines the remuneration packages of Executive and Non-Executive Directors. The individuals themselves abstain from discussion of their own remuneration.
The Remuneration Committee comprises two (2) Independent Non-Executive Directors and One (1) Executive Chairman and Managing Director. The members are as follows:
Chairman
Mak Tack Meng* (Independent Non-Executive Director)
Winston Paul Wong Chi-Huang** (Independent Non-Executive Director)
Members
Syahrize Binti Senan (Independent Non-Executive Director)
Sum Kown Cheek (Executive Chairman and Managing Director)
Remark:
* Mr Mak Tack Meng deceased on 8 January 2009.
** Mr Winston Paul Wong Chi-Huang was appointed as Chairman of Remuneration Committee on 10 February 2009.
The Remuneration Committee was formed on 24 May 2004 and shall meet not less than once a year. There was no meeting held during the financial year. However, the Committee held a meeting on 9 January, 2009 which was attended by all members, upon availability of relevant information for deliberation.
The Committee has full and unrestricted access the Company’s records, properties and personnel. The Committee may obtain professional advice of external consultants on the appropriate of remuneration package.
Directors’ Remuneration
The details of the total remuneration of each Directors of the Company during the 2008 financial year are as disclosed in Note 8 to the financial statements.
SECTION 3: SHAREHOLDERS
Annual General Meeting
The Annual General Meeting is the principal forum for dialogue with shareholders. The shareholders are encouraged to participate in the question and answer session. Notice of the Annual General Meeting and Annual Reports are sent out to shareholders at least 21 days before the date of the meeting.
Besides the usual agenda for the Annual General Meeting, the Board presents the progress and performance of the business as contained in the annual report and provided opportunities for the shareholders to raise questions pertaining to the business activities of the Group. All Directors are available to provide response to questions from the shareholders during these meetings.
For re-election of Directors, the Board ensures that all relevant information regarding Directors who are retiring and who are willing to serve if re-elected are disclosed through the notice of meetings.
Items of special business included in the notice of the meeting will be accompanied by an explanatory statement to facilitate full understanding and evaluation of the issues involved.
SECTION 4: ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board is responsible to ensure that the financial statements are prepared in accordance with the Companies Act, 1965 and the applicable approved accounting standards in Malaysia.
In preparing the annual financial statements and quarterly announcements to shareholders, the Board has:
• Ensured that all applicable accounting standards and the Listing Requirements of Bursa Securities have been applied and followed consistently;
• Made reasonable and prudent judgments and estimates; and
• Prepared financial statements on the going concern basis that having made enquiries to the Group and Company have adequate resources to continue in operational existence for the foreseeable future.
The Board aims to present the highest standard of disclosure to warrant integrity and consistency of the financial reports produced, primarily in the Chairman’s statement in the Annual Report.
The Audit Committee assists the Board in scrutinizing information for disclosure to ensure accuracy, completeness and adequacy of information by reviewing and recommending to the Board for adoption.
The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 36 of this Annual Report.
Internal Control
The Board maintains a sound internal control framework to safeguard shareholders’ investment and the Group’s assets and businesses. The Statement on Internal Control furnished on page 27 of this Annual Report provides an overview of the state of internal control within the Group.
Employee Share Option Scheme (“ESOS”) Committee
The ESOS Committee was formed in May 2004 in accordance with provisions of the By-Laws to administer the Company’s ESOS. Mr. Lee Kheng Hon (Executive Director) sits as Chairman on the ESOS Committee.
RELATIONSHIP WITH AUDITORS
With the Internal Audit
The Group has outsourced the internal audit function to Messrs SQ Morison. The Group’s Internal Audit performs its functions with impartiality, proficiency and due professional care. It undertakes regular monitoring of the Group’s key controls and procedures, which is an integral part of the Group’s system of internal control.
Draft audit reports prepared by the Internal Audit are first circulated to the management ie the head of departments for deliberations on the audit findings, recommendations and agreed corrective actions to enable the management to carry out the necessary remedial measures thereof.
Subsequently, the audit reports are submitted to the Audit Committee for its review and deliberation. The Audit Committee will be briefed on the progress made in respect of each recommendation, and of each corrective action taken as recommended by the audit findings. The internal auditors reports to and has unrestricted access to the Audit Committee to ensure independency.
With the External Auditors
The Group through the Audit Committee has established transparent and a good working relationship with its External Auditors. The External Auditors, an independent member firm of Messrs Ernst & Young, have continued to highlight to the Group their key findings and matters that require the Board’s attention with respect to each year’s audit on the statutory financial statement. The role of the Audit Committee in relation to the external auditors is outlined in the Audit Committee Report on pages 22 to 26 of this Annual Report.
The External Auditors play a crucial role for the advantage of the shareholders, by enhancing the reliability of the Group’s financial statement and giving assurance of that reliability to users of the financial statements.
OTHER INFORMATION REQUIRED BY THE LISTING REQUIREMENTS
Utilisation of Proceed
No proceed were raised by the Company from any corporate exercise during the financial year.
Share Buybacks
During the financial year, the Company did not enter into any share buyback transactions.
Options or Warrants
No ESOS options have been exercised by the employees during the financial year ended 30 September 2008. Further information on the ESOS is set out on pages 33 and 34.
The Company did not issue any warrants or convertible securities during the financial year.
American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme
During the financial year, the Company did not sponsor any ADR or GDR programme.
Imposition of Sanctions and Penalties
There were no sanctions or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year.
Material Contracts
To the best of the Board’s knowledge, there are no material contracts involving the Group with any of the substantial shareholders nor Directors in office as at 30 September 2008 except those disclosed under Recurrent Related Party Transactions.
Material Contracts Relating to Loans
There were no material contracts relating to loans entered into by the Company and its subsidiaries involving Director’s and major shareholders’ interest
Non-Audit Fees
The amount of non-audit fees for services provided by the external auditors and internal audit fees for services provided by the internal auditors to the Group and the Company for the financial year amounted to RM25,000.00 and RM40,000.00 respectively.
Variance between Audited Results and Previously Announced Unaudited Results
There were no variances of 10% or more for the audited results of the Group from the unaudited results as announced on 25 November 2008.
Profit Guarantee
During the financial year, there were no profit guarantees given by the Company.
Revaluation Policy on Landed Properties
The Group does not have a revaluation policy for its landed properties.
This statement is made in accordance with the resolution of the Board dated 9 January 2009.
Sum Kown Cheek
Executive Chairman and Managing Director