CAHYA MATA SARAWAK ANNUAL REPORT 2016

A N N U A L R E P O R T 2 0 1 6 Section 06 Governance 53 Cahya Mata Sarawak Berhad STATEMENT ON CORPORATE GOVERNANCE OVERVIEW The Board of Directors of Cahya Mata Sarawak Berhad (“the Board”) is committed to the highest standards of corporate governance which are important to business integrity, sustainability and performance and to safeguard the interests of shareholders and other stakeholders. The Board continues to evaluate the Group’s corporate governance framework and practices in response to the evolving best practices, as well as changing requirements. The Board is pleased to present the Corporate Governance Statement for the financial year 2016 outlining the application of the principles and recommendations as set out in the following guides: • Companies Act 2016 (“the Act”); • Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”); • Malaysian Code of Corporate Governance 2012 (“the Code”); and • Second Edition of Corporate Governance Guide issued by Bursa Malaysia Berhad (“CG Guide”). BOARD OF DIRECTORS The Board The Board is responsible for the overall governance of the Group and is accountable to shareholders for the performance of CMS. The Board is committed to act in the best interests of the Company and its shareholders by exercising due diligence and care in discharging its duties and responsibilities. Board Charter The Board Charter, adopted in 2014, sets out the roles and responsibilities of the Board and Board Committees and serves as a guide and reference for Directors in relation to their role, powers, duties and functions. The Board Charter also outlines processes and procedures for the Board and Board Committees for convening of their meetings. The Board Charter, which is reviewed annually, is available on the Company’s website at www.cmsb.com.my . Roles and Responsibilities of the Board The Board discharges its responsibilities in the best interests of the Company. During the year, the Board continued to observe its duties and responsibilities guided by the following six (6) core responsibilities: • Review, approve and monitor the Group’s strategic plan and direction The Board plays an active role in the development of the Group’s strategic plan and direction. In September of each financial year, the Board holds a dedicated session to carry out its long term strategic planning exercise with the Senior Management of the Group from the Head Office and Divisions. This annual Board retreat provides an opportunity for theBoard to interact andengage in robust discussions with members of the Senior Management in a more informal setting. The Board deliberates, challenges and approves the broad strategic proposals upon which the Senior Management proceed to develop the Group Management Plan (“GMP”) for the ensuing three (3) years. This GMP is then developed by the Senior Management on a divisional/departmental basis, to include budgets for the upcoming year, forecasts for the ensuing two (2) years, detailed business and operational strategies and plans by individual business unit including both justifications and a risk assessment. Each one is then presented to the Group Managing Director (“Group MD”) and the Group Chief Financial Officer (“Group CFO”) for deliberation and finalisation during a series of Challenge Sessions in October each year. The final consolidated GMP is then tabled to the Board in the November session for approval. For 2016, the Board Strategic Retreat was held in Kuching in September together with an official visit to the newly commissioned integrated cement plant in Mambong. This was immediately followed by the Senior Management Retreat which was also held in Kuching. The Board subsequently approved the Group Management Plan 2017–2019 in November. Progress of the plans are reported to the Board at every Board meeting throughout the year and half- year reviews are also conducted to monitor Senior Management’s implementation of the approved strategic plans. • Oversee and evaluate the Company’s business conduct The Group’s operations and performance are measured and tracked against approved targets set in the Key Performance Indicators (“KPI”) of Senior Management which are cascaded to all the executive staff across the Group. The Group MD presents a Business Overview at every Board meeting which includes an overview of each division’s performance, key operational issues and industry updates. • Identify and manage principal risks The Board, via the Group Risk Committee (“GRC”), regularly monitors the review and management of principal risks. This supplements the existing quarterly risk reports from each Division and Head Office department which are managed through an online system called Q-Radar, to ensure the risks faced by the Group are systematically identified, rated, mitigated and monitored with the top risks being reviewed by GRC.