The Board of Directors (“the Board”) of Sasbadi Holdings Berhad (“Sasbadi Holdings” or “the Company”) is committed to implementing and maintaining principles and practices of good corporate governance within Sasbadi Holdings and our subsidiaries (“the Group”) in order to safeguard stakeholders’ investments and the Group’s assets. This statement provides an overview of the corporate governance practices by the Group during the financial year ended (“FYE”) 31 August 2023. This overview takes guidance from the key principles laid out in the Malaysian Code on Corporate Governance (“MCCG”) and is to be read together with the Corporate Governance Report which is available on the Company’s website at www.sasbadiholdings.com. PRINCIPLE A : BOARD LEADERSHIP AND EFFECTIVENESS I. BOARD RESPONSIBILITIES The Board is responsible for the overall strategic direction and leadership of the Group, the adequacy and effectiveness of the Group’s risk management and internal control system, compliance with the relevant laws and regulations and maintaining an oversight over Management. The Board is guided by the Company’s Board Charter which outlines the roles and responsibilities, operation and processes of the Board. The roles and responsibilities of the Board include, among others, the following: • Review, challenge and approve the strategic plan prepared by the Management for the Group and to monitor the implementation of the plan; • Oversee the conduct of the Group’s business to ensure the objectives are met, the business is sustainable and the relevant regulations are complied with; • Identify, assess and manage the principal risks affecting the Group through the implementation of an adequate and effective system; • Ensure that there are plans in place for orderly succession of senior management; • Review the adequacy and effectiveness of the Group’s risk management and internal control system; and • Oversee the implementation of investor relations policy to enable effective communication between the Group and the shareholders and other stakeholders. In order to ensure the effective discharge of the Board’s functions and responsibilities, the Board delegates specific roles and responsibilities to three (3) Board Committees, i.e. Audit Committee, Nomination Committee and Remuneration Committee. (a) Separation of the Positions of Chairman and Managing Director The Board practices the separation of the positions of Chairman and Managing Director and the division in their responsibilities. There is a balance of power and authority such that no one individual has unrestricted powers over decision-making. Dato’ Salleh Bin Mohd Husein, who is an Independent Non-Executive Director, is the Chairman of the Group and he leads the Board in the oversight of Management while Mr Law King Hui, who is the Managing Director of the Group, focuses on the running of the business and day-to-day management of the Group. (b) Support of Qualified and Competent Company Secretaries The Board is supported by two (2) qualified, competent and experienced Company Secretaries, who are Associate members of the Malaysian Institute of Chartered Secretaries and Administrators (“MAICSA”) and are qualified pursuant to the requirements of the Companies Act 2016, pertaining to corporate secretarial matters which include, among others, convening of Board, Board Committee and general meetings, preparation of circular resolutions and minutes of meetings, maintenance of statutory registers and records, prepare and release of announcements to Bursa Malaysia Securities Berhad (“Bursa Securities”), and advising the Board on compliance with the relevant laws and regulations and adoption of corporate governance best practices. Corporate Governance Overview Statement ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 53
(c) Access to Information and Advice The Directors have full and unrestricted access to all information of the Group on a timely and accurate manner to enable them to discharge their roles and responsibilities effectively. In addition, the Directors have full and unrestricted access to the Company Secretaries, the external auditors and the outsourced internal auditors for advice and services. If required, the Directors, collectively and individually, are also entitled to seek external independent professional advice at the Company’s expense. This is provided for in the Company’s Board Charter. At the invitation of the Board or Board Committees, key management, external auditors and outsourced internal auditors will attend the meetings to present reports or information pertaining to their respective areas to the Board or Board Committees. (d) Board Meetings The Board shall meet at least four (4) times in a financial year and additional meetings may be convened as and when necessary. All Directors shall comply with the attendance requirement as set out in the Main Market Listing Requirements (“MMLR”) of Bursa Securities. Agenda for the meetings, Board papers and any other relevant documents shall be distributed in advance to enable the Board members to have sufficient time to prepare for the meeting and to arrive at informed decisions. The Board may also invite members of the Management to attend the Board meeting to provide further information or explanation to the Board members. Any Director who has interests or is conflicted with regard to the business transaction being deliberated at the meeting, shall abstain from participating in the discussion or decision process pertaining to the matter. The Company Secretaries shall keep minutes of the Board meetings. For the FYE 31 August 2023, there were five (5) Board meetings held and the attendance records of the Directors are as follows: Member Attendance Dato’ Salleh Bin Mohd Husein Law King Hui Lee Swee Hang Law Yi Chian Dato’ Noor Rezan Binti Bapoo Hashim Tang Yuen Kin Datu Dr Rashidah Binti Bolhassan (appointed on 18 April 2023) Law En Ruey (appointed on 30 October 2023) 5 out of 5 5 out of 5 5 out of 5 5 out of 5 5 out of 5 5 out of 5 1 out of 1 Not applicable All the Directors complied with the minimum 50% attendance in respect of Board Meetings held during the FYE 31 August 2023 as stipulated under Paragraph 15.05 of the MMLR of Bursa Securities. (e) Code of Conduct, Whistle-Blowing Policy and Anti Bribery and Corruption Policy The Board has put in place a Code of Conduct which sets out certain values, principles and standards of good conduct expected of the Directors and employees at work. A copy of the Code of Conduct can be viewed on the Company’s website, www.sasbadiholdings.com. The Code of Conduct will be reviewed from time to time for changes and new developments in the external and internal environment. All Directors and employees of the Group are required to observe the Code of Conduct which provides guidance as to the ethical conduct to be complied to uphold the principles of honesty and integrity, to ensure a high standard of ethical and professional conduct is upheld in the performance of their duties and responsibilities. Any Director or employee who knows of, or suspects, a violation of the Code of Conduct, is encouraged to whistle-blow or report the violation or suspected violation through the Whistle-Blowing Policy of the Company. A copy of the Whistle-Blowing Policy of the Company can be viewed on the Company’s website, www.sasbadiholdings.com. For the FYE 31 August 2023, there was no report of any violation of the Code of Conduct. ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 54 Corporate Governance Overview Statement (continued)
The Group also established and adopted the Anti-Bribery and Corruption Policy (“ABC Policy”), guided by the Guidelines on Adequate Procedures issued pursuant to Section 17A of the Malaysian Anti-Corruption Commission (“MACC”) Act 2009 (Amendment 2018). The ABC Policy sets out the parameters to prevent the occurrence of bribery and corrupt practices and to provide information and guidance to all employees, Directors and associated third parties on how to recognise and deal with bribery and corruption issues. The Group is committed to conducting business dealings in an honest and ethical manner. The ABC Policy can be viewed on the Company’s website, www.sasbadiholdings.com. (f) Directors’ Fit and Proper Policy The Board also adopted the Directors’ Fit and Proper Policy, that serves as a guide to the Nomination Committee and the Board in their review and assessment of candidates to be appointed to the Board as well as existing directors who are retiring and seeking re-election. The aforesaid policy serves to ensure that the person to be appointed or re-elected as a director possesses the necessary character and integrity, experience and competence as well as the ability to discharge and give appropriate commitment and participation and contribution to the Board and the Company. The Directors’ Fit and Proper Policy is published on the Company’s website at www.sasbadiholdings.com. (g) Sustainability The Board recognises the importance of sustainability, encompassing environmental, social and governance (“ESG”) considerations, along with its associated risks and opportunities for the Group. In alignment with this commitment, on 17 January 2023, the Board has approved and adopted the Sustainability Policy. The Board is the highest governing body and has the overall responsibility for the Sustainability matters within the Group. The Board delegates the responsibility for identifying sustainability risks relating to the Group to the Audit Committee. The Board and the Audit Committee undertake the process of identifying sustainability risk and devising appropriate strategies, plan and targets to address the risks on a yearly basis, with intervening reviews carried out as and when required. The Group Managing Director leads the members of the senior management team (collectively known as “Management”) in implementing the sustainability strategies and plans and the Management will be reporting to the Audit Committee and Board on a periodic basis. II. BOARD COMPOSITION During the FYE 31 August 2023, the Board is made up of three (3) Executive Directors (including the Group Managing Director) and four (4) Independent Non-Executive Directors (including the Chairman). Subsequent to the FYE 31 August 2023, Mr Law En Ruey, was appointed to the Board on 30 October 2023 as Executive Director. The Board composition provides a good mix of experience and diversity in skills and expertise while maintaining a good balance between Executive and Independent Directors. The Board has also complied with paragraph 15.02 of the MMLR of Bursa Securities, which requires at least two (2) Directors or one-third (1/3) of the Board of the Company, whichever is the higher, to be independent. This is also in line with Practice 5.2 of the MCCG which requires at least half of the Board to comprise independent Directors. The composition and size of the Board are assessed by the Board through the Nomination Committee appointed by the Board annually or as and when the need arises. The Board through the Nomination Committee assess the independence of the Independent Directors on an annual basis based on the criteria formulated by the Nomination Committee. This is to mitigate risks arising from conflict of interest or undue influences from interested parties. Based on the assessment in FYE 31 August 2023, the Board reviewed, assessed and was satisfied with the independence demonstrated by all of the Independent Directors and their ability to act in the best interest of the Company. MCCG recommends that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years and, upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to the Director’s re-designation as a Non-Independent Director. In the event the Board intends to retain an Independent Director beyond nine (9) years, they should provide justification and seek annual shareholders’ approval through a two-tier voting process. ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 55 Corporate Governance Overview Statement (continued)
Dato’ Salleh Bin Mohd Husein and Dato’ Noor Rezan Binti Bapoo Hashim were appointed as the Independent Non-Executive Chairman and Senior Independent Non-Executive Director respectively on 7 May 2013 and both have exceeded a cumulative term of nine (9) years as prescribed under the MCCG. The Board through the Nomination Committee has undertaken relevant assessment and recommended that both Dato’ Salleh Bin Mohd Husein and Dato’ Noor Rezan Binti Bapoo Hashim be retained as Independent Non-Executive Directors based on the following justifications: • Confirmation and declaration that they met the criteria of Independent Director prescribed under Paragraph 1.01 of the Listing Requirements of Bursa Securities; • Confirmation and declaration that they have no conflict of interests with the Company and have not been entering/are not expected to enter into contract(s) especially material contract(s) with the Company and/or its subsidiary companies; and • Their length of service on the Board do not in any way interfere with their exercise of balance and objective views to Board deliberations. Their experiences and knowledge in the Group’s business and operations enable them to contribute effectively to Board deliberations and decision making. The Board acknowledges that gender diversity is one of the key attributes to an effective and balanced board. In this regard, it is committed to having female representation on the Board though no specific target percentage is set. The Board has adopted the Gender Diversity Policy and the Group ensures equal opportunity is given to an individual whether for appointment as a Director or employment within the Group, based on merits and not on any gender, age or racial bias. Currently, the Board has three (3) female members out of a total of eight (8) Board members, representing a percentage of approximately 38%. (a) Establishment of Nomination Committee The Nomination Committee comprises the following members: Chairman : Dato’ Noor Rezan Binti Bapoo Hashim (Senior Independent Non-Executive Director) Members : Tang Yuen Kin (Independent Non-Executive Director) Datu Dr Rashidah Binti Bolhassan (Independent Non-Executive Director) (appointed on 18 April 2023) Dato’ Salleh Bin Mohd Husein (Independent Non-Executive Chairman) (resigned on 18 April 2023) All the members are Independent Non-Executive Directors and the Chairman, Dato’ Noor Rezan Binti Bapoo Hashim is our Senior Independent Non-Executive Director. The full Terms of Reference setting out the Nomination Committee’s composition, meeting proceedings, functions and reporting procedures, can be viewed on the Company’s website, www.sasbadiholdings.com. The functions of the Nomination Committee under its Terms of Reference include, among others, assessing and recommending candidates for directorships to the Board and undertaking annual assessment of the effectiveness of the Directors individually and as a whole. A summary of activities carried out by the Nomination Committee during the FYE 31 August 2023 is as follows: • Reviewed the Board’s and Board Committees’ structure, size, composition and diversity, and was satisfied with the review given the size of the Group and its business operations; • Reviewed the assessment of performance of the individual Directors, the Board as a whole and the Board Committees, and the independence of the Independent Directors, and was satisfied with the experiences, contributions, competencies and mix of skills of the Directors to enable the Board and the Board Committees to discharge their respective duties and responsibilities effectively, as well as with the independence of the Independent Directors. It was also concurred from the assessment that the Board could work as a team and arrive at consensual decisions; • Reviewed and assessed the Directors who are subject to retirement by rotation and casual vacancy, before recommending to the Board the tabling for shareholders’ approval of the re-election of the said Directors at the previous Annual General Meeting (“AGM”) held on 16 February 2023; ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 56 Corporate Governance Overview Statement (continued)
• Reviewed the need for continuous training and development by the Directors; • Reviewed the term of office and performance of the Audit Committee and each of its members and was satisfied that the Audit Committee had carried out its duties in accordance with its Terms of Reference; • Reviewed the list of key senior management (including their profiles) and their potential successors; and • Reviewed and recommended to the Board on the appointment on Datu Dr Rashidah Binti Bolhassan as Independent Non-Executive Director. The Nomination Committee also recommended Datu Dr Rashidah Bin Bolhassan to be appointed as member of the Audit Committee, Remuneration Committee and Nomination Committee in place of Dato’ Salleh Bin Mohd Hussien, to be in line with the Practice 1.4 of the MCCG i.e. the Chairman of the Board should not be a member of the Audit Committee, Remuneration Committee or Nomination Committee. The Board is satisfied with the level of time committed by the Directors in discharging their respective duties and roles as Directors of the Company. All the Directors of the Company have complied with paragraph 15.06 of the MMLR of Bursa Securities on the restriction on the number of directorships held in public listed companies. (b) Board and Board Committee Evaluation The Board has also put in place a formal process for the assessment of performance of the individual Directors, the Board as a whole and the Board Committees, as well as the independence of the Independent Directors, and the assessment is done on an annual basis. The Directors are given a set of questionnaires covering assessments of the Board, Board Committees, individual Director and independence assessments for Independent Directors to collect their feedback, views, commentary and suggestions for improvements. (c) Directors’ Training The Directors are encouraged to attend continuing education programmes to upgrade their knowledge and enhance their skills. Details of some of the training programmes/forums/seminars/conferences attended/participated by the Directors for the FYE 31 August 2023: Director Title of Training Programme/Forum/Seminar/Conference Date Dato’ Salleh Bin Mohd Husein • KPMG Asia Pacific Board Leadership Centre Webinar: 2023 Board and Audit Committee Priorities • Tertiary Infotech Sdn Bhd: Finance for Non-Finance Managers • Securities Commission’s Audit Oversight Board Conversation with Audit Committees 6 July 2023 1 March 2023 17 November 2022 Law King Hui • International Publishers Association: Artificial Intelligence & Publishing • Xiamen University Malaysia: Intellectual Properties and Innovation under the RCEP Framework – Opportunities for Cooperation Conference • Department of Educational Psychology and Counseling Faculty of Education University Malaya: Reimagine Inclusive Education • Malaysian Institute of Management: Building Towards a Corrupt-Free Nation – Fighting Corruption and Embracing a Culture of Compliance for Good Governance • MIRA: What Investors/Analysts Want in Terms of Disclosures From PLCS 26 April 2023 24 March 2023 28 February 2023 15 December 2022 1 November 2022 ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 57 Corporate Governance Overview Statement (continued)
Director Title of Training Programme/Forum/Seminar/Conference Date Lee Swee Hang • Bursa Malaysia: Advocacy Session on the Continuing Disclosure Requirements & Corporate Disclosure Policy of Listing Requirements • International Publishers Association: Artificial Intelligence & Publishing • MIRA: What Investors/Analysts Want in Terms of Disclosures From PLCS 22 August 2023 26 April 2023 1 November 2022 Law Yi Chian • Bursa Malaysia: Advocacy Session on the Continuing Disclosure Requirements & Corporate Disclosure Policy of Listing Requirements • Bursa PLCs Investor Relations Series: What Do Investors Look For in Your Company • KPMG Board Leadership Center Exclusive: Understanding the Requirements in Bursa’s Enhanced Sustainability Reporting Framework 22 August 2023 28 July 2023 2 November 2022 Dato’ Noor Rezan Binti Bapoo Hashim • Tertiary Infotech Sdn Bhd: Finance for Non-Finance Managers • KPMG Board Leadership Center Exclusive: Understanding the Requirements in Bursa’s Enhanced Sustainability Reporting Framework • KPMG Board Leadership Center Exclusive: Human Rights Risk Management for Malaysian Companies 24 May 2023 2 November 2022 27 September 2022 Tang Yuen Kin • Securities Commission’s Audit Oversight Board Conversation with Audit Committees • McCombs School of Business, University of Texas at Austin, United States of America: Post Graduate Program in Data Science and Business Analytics • University of Illinois at Urbana-Champaign, United States of America: Business Administration (Online) – iMBA Program 6 December 2022 22 August 2022 to 2 April 2023 Commenced on 17 March 2021, and on-going Datu Dr Rashidah Binti Bolhassan • Bursa Malaysia: Mandatory Accreditation Programme 1 • Panel Member for Universiti Malaysia Sarawak: Management of Cultural Heritage: Safeguarding Intangible Cultural Heritage – An Interactive Workshop • Speaker for Sarawak Women of Tomorrow: Enhancing Entrepreneurship Mindset For Sustainable Economic Growth • Panel Speaker for the Kuala Lumpur International Book Fair 2023: The One Talk – My Library, My Pride • Panel Speaker for Tabung Ekonomi Gagasan Anak Sarawak (TEGAS): Women in Innovation & Intellectual Property • Speaker for Universiti Malaysia Sarawak: Three-tiered Indigenous Knowledge – A Method for Safeguarding Intangible Cultural Heritage 28 – 30 August 2023 20 June 2023 9 June 2023 31 May 2023 27 May 2023 12 May 2023 ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 58 Corporate Governance Overview Statement (continued)
III. REMUNERATION (a) Establishment of Remuneration Committee The Remuneration Committee comprises the following members: Chairman : Tang Yuen Kin (Independent Non-Executive Director) Members : Dato’ Noor Rezan Binti Bapoo Hashim (Senior Independent Non-Executive Director) Datu Dr Rashidah Binti Bolhassan (Independent Non-Executive Director) (appointed on 18 April 2023) Dato’ Salleh Bin Mohd Husein (Independent Non-Executive Chairman) (resigned on 18 April 2023) All the members are Independent Non-Executive Directors. The full Terms of Reference setting out the Remuneration Committee’s composition, meeting proceedings, functions and reporting procedures can be viewed on the Company’s website, www.sasbadiholdings.com. A summary of activities carried out by the Remuneration Committee during the FYE 31 August 2023 is as follows: • Discussed and reviewed Directors’ fees for the FYE 31 August 2023 prior to recommending to the Board the tabling for shareholders’ approval of the said fees at the Tenth AGM held on 16 February 2023; • Discussed and reviewed the Executive Directors’ remuneration; • Reviewed the employees’ unutilised annual leave; and • Reviewed the performance of the principal officers/key senior management of the Group for the FYE 31 August 2022. (b) Directors’/Key Management Personnel’s Remuneration The Remuneration Committee has put in place a Remuneration Framework and Policy with the objectives of creating a fair and transparent system for determining the appropriate levels of remuneration for both Executive and Non-Executive Directors, and to ensure that the levels of remuneration are sufficient to attract and retain persons having the right skills, experience, competence and expertise to serve as Executive and Non-Executive Directors in the Company. None of the Executive Directors, Non-Executive Directors and senior management personnel participates in determining his/her individual remuneration packages, which are reviewed annually. Details of aggregate remuneration received by the Directors from the Company and the Group for the FYE 31 August 2023 are as follows: Director Fees RM’000 Salaries RM’000 Employees’ Provident Fund RM’000 Estimated Value of Benefits-in- kind RM’000 Total RM’000 Dato’ Salleh Bin Mohd Husein 60 – – – 60 Law King Hui 40 360 15 35 450 Lee Swee Hang 40 216 10 7 273 Law Yi Chian 40 216 27 17 300 Dato’ Noor Rezan Binti Bapoo Hashim 60 – – – 60 Tang Yuen Kin 60 – – – 60 Datu Dr Rashidah Binti Bolhassan 22 – – – 22 Total 322 792 52 59 1,225 ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 59 Corporate Governance Overview Statement (continued)
With the best interest of the Group in mind, and taking into consideration the sensitivity, privacy, security, issue of staff poaching, the Board has opted not to disclose on a named basis the top five senior management’s remuneration in the bands of RM50,000. Instead, the Company will disclose the top five senior management’s remuneration on an aggregate basis. The top five senior management’s remuneration on an aggregate for the FYE 31 August 2023, is as follows: RM’000 Salaries and bonus Other Emoluments 1,058 106 Total 1,164 Liability Insurance to indemnify the Directors and officers of the Group against liabilities incurred by them during the discharge of their duties while in office. PRINCIPLE B : EFFECTIVE AUDIT AND RISK MANAGEMENT I. AUDIT COMMITTEE The Audit Committee comprises the following members: Chairman : Tang Yuen Kin (Independent Non-Executive Director) Members : Dato’ Noor Rezan Binti Bapoo Hashim (Senior Independent Non-Executive Director) Datu Dr Rashidah Binti Bolhassan (Independent Non-Executive Director) (appointed on 18 April 2023) Dato’ Salleh Bin Mohd Husein (Independent Non-Executive Chairman) (resigned on 18 April 2023) Please refer to the Audit Committee Report contained in the Annual Report for more information. Relationship with the External Auditors The Audit Committee reviews and monitors the suitability and independence of the external auditors on an annual basis. In addition, the Audit Committee has obtained confirmation from the external auditors that they are and have been independent throughout the conduct of the audit engagement. For the FYE 31 August 2023, the fees incurred by the Group in relation to the non-audit services by the external auditors amounts to RM13,000. II. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK The Board recognises the importance of having effective governance, embedding risk management and internal control processes. The Board also acknowledges its overall responsibility for maintaining a sound risk management, internal control system and reviewing their adequacy and effectiveness in order to safeguard stakeholders’ investments and the Group’s assets. Details on the risk management and internal control system of the Group are set out in the Statement on Risk Management and Internal Control of this Annual Report. The Group has outsourced the internal audit function to a professional services firm, Sterling Business Alignment Consulting Sdn Bhd, which is independent of the activities and operations of the Group. The outsourced internal auditors report directly to the Audit Committee. Details on the internal audit function are set out in the Audit Committee Report and the Statement on Risk Management and Internal Control of this Annual Report. ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 60 Corporate Governance Overview Statement (continued)
PRINCIPLE C : INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS I. COMMUNICATION WITH STAKEHOLDERS The Board recognises the importance of maintaining effective communication between the Company and its potential investors or shareholders together with timeliness and equal dissemination of information. This will enhance their understanding of the Group’s performance and position and assist them into making informed decisions. The Board believes the AGM is a principal forum for dialogue and communication with shareholders. Stakeholders are also able to obtain latest information on the Group from the Company’s website and are encouraged to contact the Company should they require more information. In this regard, Management hold meetings and engagements with stakeholders regularly upon request and through roadshows, dialogues and forums. II. CONDUCT OF GENERAL MEETINGS Notice of the AGM together with a copy of Annual Report are sent out to the shareholders at least 28 days before the date of the meeting to provide the shareholders sufficient time to prepare for the meeting and to make informed decisions at the meeting. The Company will allocate sufficient time during the AGM and Extraordinary General Meeting(s) (“EGM”) for a Question-and-Answer session whereby the Chairman together with the other Board members will be present to answer any questions and possible concerns that the shareholders may have on the Group and its operations. Senior Management and the Group’s external auditors as well as the Company’s advisers are also available to respond to shareholders’ questions during the AGM/EGM as the case may be. The Company shall conduct poll voting for all resolutions set out in the notice of any general meeting in accordance with the MMLR of Bursa Securities. COMPLIANCE STATEMENT The Board is satisfied that throughout FYE 31 August 2023, the Company has applied the principles and recommendations of the corporate governance set out in the MCCG, where necessary and appropriate. This Corporate Governance Overview Statement was approved by the Board 7 December 2023. ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 61 Corporate Governance Overview Statement (continued)
The Audit Committee has been established to assist the Board of Directors (“the Board”) of Sasbadi Holdings Berhad (“Sasbadi Holdings” or “the Company”) in fulfilling its fiduciary responsibilities relating to corporate accounting, financial reporting practices, system of internal controls, audit processes and monitoring of compliance with laws and regulations (Note: Sasbadi Holdings and its subsidiaries are collectively referred to as “the Group” herein). MEMBERS OF THE AUDIT COMMITTEE The Audit Committee comprises the following members: Chairman : Tang Yuen Kin (Independent Non-Executive Director) Members : Dato’ Noor Rezan Binti Bapoo Hashim (Senior Independent Non-Executive Director) Datu Dr Rashidah Binti Bolhassan (Independent Non-Executive Director) (appointed on 18 April 2023) Dato’ Salleh Bin Mohd Husein (Independent Non-Executive Chairman) (resigned on 18 April 2023) The composition of the Audit Committee complies with paragraph 15.09 of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), as follows: • The Audit Committee comprises three (3) members; • All the members are Independent Non-Executive Directors; and • The Chairman, Tang Yuen Kin, is a member of the Malaysian Institute of Accountants. TERMS OF REFERENCE The full Terms of Reference setting out the Audit Committee’s composition, meeting proceedings, authority, functions and duties can be viewed on the Company’s website, www.sasbadiholdings.com. ATTENDANCE OF MEETINGS During the financial year ended (“FYE”) 31 August 2023, the Audit Committee held a total of five (5) meetings. The attendance of the members of the Audit Committee at the meetings is as follows: Member Attendance Tang Yuen Kin Dato’ Noor Rezan Binti Bapoo Hashim Datu Dr Rashidah Binti Bolhassan (appointed on 18 April 2023) Dato’ Salleh Bin Mohd Husein (resigned on 18 April 2023) 5 out of 5 5 out of 5 1 out of 1 4 out of 4 The agenda for the meetings, together with the relevant papers and reports and minutes of the previous meetings, were distributed to the members prior to the meetings. The Company Secretary attended all the meetings held during the financial year under review. In addition, the Group Managing Director and other Executive Directors, the Group Chief Financial Officer, key management personnel, external auditors and outsourced internal auditors also attended the meetings when invited by the Audit Committee to provide and present reports or information during the deliberation of matters pertaining to their respective areas, in the meetings. Audit Committee Report ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 62
SUMMARY OF WORK OF THE AUDIT COMMITTEE DURING THE FYE 31 AUGUST 2023 During the FYE 31 August 2023, the Audit Committee had, in discharging its functions and duties, carried out, among others, the following work: Financial reporting / Annual reporting • Reviewed and recommended for the Board’s approval the unaudited financial results of the Group for announcement to Bursa Securities for the following financial quarters: • Fourth quarter ended 31 August 2022 • First quarter ended 30 November 2022 • Second quarter ended 28 February 2023 • Third quarter ended 31 May 2023 The review was to ensure that the unaudited quarterly financial results were prepared in accordance with the requirements of Malaysian Financial Reporting Standard 134, International Accounting Standard 34: Interim Financial Reporting, and paragraph 9.22 and Part A of Appendix 9B of the MMLR of Bursa Securities. The review also covered, among others, the accuracy and adequacy of disclosure of information, the Group’s performance and financial position for the respective quarters, segmental performance, seasonality of operations, prospects, etc; • Reviewed the audited financial statements for the FYE 31 August 2022 before recommending for the Board’s approval. The review was to ensure that the financial statements were prepared in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016; • Reviewed the assessment report/checklist relating to risk management and internal control prepared by Management for the purpose of the Statement on Risk Management and Internal Control (“SORMIC”) for inclusion in the Annual Report for the FYE 31 August 2022; • Reviewed and recommended for the Board’s approval the SORMIC and the Audit Committee Report (“AC Report”) for inclusion in the Annual Report for the FYE 31 August 2022. The review was to ensure that the SORMIC and the AC Report were prepared in accordance with the MMLR of Bursa Securities; • Reviewed the Group’s management budget for the FYE 31 August 2023 before recommending for the Board’s approval and adoption; and • Reviewed the revised Audit Committee Terms of Reference before recommending for the Board’s endorsement. External audit • Reviewed and discussed with the external auditors, i.e. BDO PLT, on the audit for the FYE 31 August 2022. At the meeting, BDO PLT reported that, during the course of the performance of the audit, they had not been made aware of any serious offence involving fraud or dishonesty being or which has been committed in the Group. The Management also represented, among others, the same (i.e. no knowledge of any serious offence involving fraud or dishonesty being or which has been committed in the Group) to BDO PLT; • Without the presence of Executive Directors and Management, discussed with BDO PLT on any issues, problems and reservations arising from the audit for the FYE 31 August 2022, and any other matters that they would want to bring to the attention of the Audit Committee; • Assessed the suitability of BDO PLT as the external auditors of the Group based on the criteria in relation to the re-appointment of external auditors as prescribed under the MMLR of Bursa Securities, such as the adequacy of BDO PLT’s experience and resources and the capability of the audit team assigned to the audit, as well as their independence, before recommending to the Board for the tabling to the shareholders for approval of the reappointment of BDO PLT as the external auditors of the Company, at the previous annual general meeting held on 16 February 2023; ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 63 Audit Committee Report (continued)
• Reviewed and discussed with the external auditors, BDO PLT, on their audit plan for the FYE 31 August 2023 covering the audit scope, audit methodology, timetable and milestones, audit materiality, audit focus areas and reported observations in prior year’s audit, before endorsing and recommending to the Board for adoption; and • Reviewed the audit and non-audit fees of the external auditors for the FYE 31 August 2023 before recommending for the Board’s approval. Internal audit • Reviewed, discussed and approved the outsourced internal auditors’ audit plan (covering the scope of work, subsidiaries being audited, estimated number of man-days, audit schedule and reporting timeline) and fees for the FYE 31 August 2023 before recommending for the Board’s endorsement; and • Reviewed and deliberated on the outsourced internal auditors’ reports as detailed in the Internal Audit Function section below, and follow up on the actions taken by the Management in addressing the issues and recommendations raised by the internal auditors. Risk management • Reviewed the updated Registry of Risks and Risk Matrix prepared by the Risk Management Team (“RMT”). While the risk ratings remained consistent, the total number of risk factors has increased after incorporating the additional risk in managing the environment, social and governance (“ESG”) strategies and challenges. The Audit Committee also take note of the changes in the suggested risk control action. INTERNAL AUDIT FUNCTION The internal audit function of the Group is outsourced to Sterling Business Alignment Consulting Sdn Bhd, an external professional firm which is independent of the activities and operations of the Group. They carried out review on the adequacy of the internal control system of the Group. The outsourced internal auditors report directly to the Audit Committee. A summary of the work carried out by the outsourced internal auditors during the FYE 31 August 2023 is as follows: • Prepared and presented an internal audit plan for the FYE 31 August 2023 to the Audit Committee. The focus of the internal audit plan for the FYE 31 August 2023, as approved by the Audit Committee was on major subsidiaries of the Company; • Undertook the internal control assessment in accordance with the internal audit plan for the FYE 31 August 2023, covering the following companies and functional areas/sections: i. Sasbadi Sdn Bhd, Sasbadi Online Sdn Bhd, Orbit Buku Sdn Bhd and Malaysian Book Promotions Sdn Bhd – Sales and Marketing ii. United Publishing House (M) Sdn Bhd – Finance and Accounts – Sales and Marketing • Undertook follow-up review on previously reported audit findings to ensure weaknesses identified have been or are being addressed; and • Presented the reports on internal control assessment setting out their findings and recommendations, and Management’s responses and actions, to the Audit Committee for deliberation. The fees incurred by the Group in relation to outsourced internal audit function for the FYE 31 August 2023 were RM30,000. ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 64 Audit Committee Report (continued)
INTRODUCTION The Board of Directors (“the Board”) of Sasbadi Holdings Berhad (“Sasbadi Holdings” or “the Company”) is pleased to present the following Statement on Risk Management and Internal Control of Sasbadi Holdings and its subsidiaries (“the Group”) for the financial year ended (“FYE”) 31 August 2023. This Statement has been prepared in accordance with paragraph 15.26(b) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, issued by the Taskforce on Internal Control with the support and endorsement of Bursa Securities (“the Guidelines”). BOARD RESPONSIBILITIES The Board recognises the importance of having effective governance, embedding risk management and internal control processes in order for the Group to achieve its objectives and sustain growth and success in its business operations. In this regard, the Board acknowledges its overall responsibility for maintaining a sound risk management and internal control system and for reviewing their adequacy and effectiveness in order to safeguard stakeholders’ investments and the Group’s assets. While maintaining overall responsibility, the Board has delegated its functions pertaining to risk management and internal controls to the Audit Committee. In addition, the Board and the Audit Committee are assisted by the Management in the implementation of the policies and procedures established by the Board on risk management and internal controls. The Board recognises that, due to the limitations inherent in any internal control system, the system is designed to manage, and not to eliminate, the risk of failure to achieve the Group’s business objectives, and it can only provide reasonable but not absolute assurance against material misstatement of financial information and records, or against financial losses or fraud. RISK MANAGEMENT The Group has put in place a risk management framework (“RM Framework”) to assist the Group in managing the various risks faced in its daily business operations. Under the RM Framework, a Risk Management Team (“RMT”), headed by the Group Chief Financial Officer and comprising the Heads of various functions and departments within the Group, has been established to actively manage the risks faced by the Group. The RMT reports to the Executive Management Team (“EMT”) comprising the Executive Directors, and the Audit Committee, who both in turn report to the Board. The RMT adopts a strategic approach towards risk management which involves risk identification, evaluation, treatment, monitoring and review. The RMT has been assessing, monitoring and managing the risks on a monthly basis via the use of a checklist of risks. In addition, the risks identified together with the steps taken/to be taken to mitigate the risks are deliberated during the periodic management meetings attended by the EMT and the RMT. INTERNAL CONTROL SYSTEM The key elements of the Group’s internal control system include, among others, the following: • Defined organisation structure with proper segregation of duties, responsibilities and authorities among the Directors, management and employees; • Board Committees (i.e. Audit Committee, Nomination Committee and Remuneration Committee) which undertake their duties and responsibilities according to their delegated functions as set out in their respective Terms of Reference; • Formalised Code of Conduct, Whistle-Blowing Policy, Anti-Bribery and Corruption Policy, Directors’ Fit and Proper Policy and Sustainability Policy. For the financial year under review, there were no concerns raised of any wrongdoing or improper conduct involving the Group or its Directors or employees; • Documentation of key business processes and authority matrix to ensure decisions are made by the relevant individuals/groups within the authority limits established; • Periodic Board, Board Committee and management meetings to discuss, among others, financial, operational, risk and compliance matters; • Annual budgeting process whereby the annual budget prepared by management is tabled for the Audit Committee’s review before being approved by the Board; • Outsourced internal audit function which reports to the Audit Committee; • Employment procedures and processes to facilitate the recruitment and evaluation of employees; and • Insurance coverage on the Group’s assets, where necessary. Statement On Risk Management And Internal Control ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 65
INTERNAL AUDIT FUNCTION The Group has outsourced the internal audit function to a professional service firm, which is independent of the activities and operations of the Group, to review the adequacy and effectiveness of the internal control system of the Group. The outsourced internal auditors, which report directly to the Audit Committee, conducted internal control assessment on the Group in order to identify areas for improvement, besides compliance with internal best practices, guidelines and objectives. During the financial year under review, the outsourced internal auditors have carried out an internal control assessment based on the internal audit plan for the FYE 31 August 2023 as approved by the Audit Committee, covering the following subsidiaries and functional areas/sections: i. Sasbadi Sdn Bhd, Sasbadi Online Sdn Bhd, Orbit Buku Sdn Bhd and Malaysian Book Promotions Sdn Bhd • Sales and Marketing, in respect of new market identification processes and procedures, distributors / agents appointment processes and procedures, new customer / sales leads generation and monitoring, pricing control processes and procedures, order processing, selling and distribution expenses allocation processes and procedures, credit and accounts receivables management, customer retention management, performance monitoring and reporting and implementation process of business development strategy. ii. United Publishing House (M) Sdn Bhd • Finance and Accounts, in respect of billing and revenue recognition processes and procedures, collection and receivables processes and procedures, payment processes and procedures, debit note and credit note, cash flow management, capital asset management, development costs capitalisation and amortisation and inter-company billing. • Sales and Marketing, in respect of new market identification processes and procedures, distributors / agents appointment processes and procedures, new customer / sales leads generation and monitoring, pricing control processes and procedures, order processing, selling and distribution expenses allocation processes and procedures, credit and accounts receivables management, customer retention management, performance monitoring and reporting and implementation process of business development strategy. iii. Follow-up review on previously reported audit findings to ensure weaknesses identified have been or are being addressed. Upon completion of the work, the outsourced internal auditors presented their reports to the Audit Committee during the quarterly meetings whereby the outsourced internal auditors’ findings and recommendations as well as the Management’s responses and action plans were deliberated. WEAKNESSES IN INTERNAL CONTROLS WHICH RESULTED IN MATERIAL LOSSES, IF ANY During FYE 31 August 2023 and up to the date of approval for issuance of this Statement, there were no material losses incurred by the Group arising from weaknesses in its internal control system. Statement On Risk Management And Internal Control (continued) ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 66
Statement On Risk Management And Internal Control (continued) MANAGEMENT RESPONSIBILITIES AND ASSURANCE In accordance to the Guidelines, the Management is responsible to the Board for identifying risks relevant to the business of the Company’s objectives and strategies, implementing and maintaining a sound system of risk management and internal control, and monitoring and reporting to the Board of significant control deficiencies and changes in risks that could significantly affect the Company’s achievement of its objectives and performance. In producing this Statement, the Board has received assurance from the Group Managing Director and the Group Chief Financial Officer that, to the best of their knowledge, the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the existing risk management and internal control system of the Group for FYE 31 August 2023. REVIEW OF THIS STATEMENT Pursuant to paragraph 15.23 of the MMLR of Bursa Securities, the Company’s external auditors have reviewed this Statement for inclusion in the 2023 Annual Report of the Company, and have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal control and risk management. CONCLUSION Based on the foregoing, the Board is of the view that the Group’s risk management and internal control system is adequate and effective. ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 67
Additional Compliance Information EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”) The Company has implemented an ESOS of up to ten percent (10%) of the Company’s total number of issued shares (excluding treasury shares, if any) for the eligible employees and Executive Directors of the Group (i.e. Sasbadi Holdings and its subsidiaries) effective from 1 September 2016 for a duration of five (5) years, expiring on 31 August 2021. On 17 February 2021, the Board of Directors has approved the extension of the ESOS for a further period of five (5) years to 31 August 2026. The details of the ESOS during the FYE 31 August 2023 are as follows: Description Number of Options Total number of options outstanding as at 1 September 2022 Total number of options granted to eligible employees Total number of options exercised Total number of options expired / forfeited Total number of options outstanding as at 31 August 2023 16,465,000 – (8,770,000) (4,365,000) 3,330,000 In accordance with the By-Laws of the ESOS, not more than 80% of the options available under the ESOS shall be allocated, in aggregate to the Executive Directors and senior management. The were no new ESOS options granted to the senior management during the FYE 31 August 2023. The total ESOS options granted to the senior management represents 29.22% of the total ESOS options granted since the commencement of the ESOS scheme. There were no options offered to any Director of the Company in respect of FYE 31 August 2023 and since commencement of the ESOS. AUDIT AND NON-AUDIT FEES The amount of audit and non-audit fees incurred by the Group and the Company for services rendered by the external auditors or a firm or corporation affiliated to the external auditors to the Group and the Company during the FYE 31 August 2023 are as follows: Group Company Audit services – BDO PLT Non-audit services RM’000 303 13 RM’000 65 8 The non-audit services provided by the external auditors were in relation to the review of the Statement on Risk Management and Internal Control and Agreed-Upon Procedures for Determination of the Effective Date of the Green Investment Tax Allowance Incentive. MATERIAL CONTRACTS INVOLVING DIRECTORS AND/OR MAJOR SHAREHOLDERS There were no material contracts entered into by the Company and/or our subsidiaries involving the interest of Directors and/or major shareholders, either subsisting at the end of the FYE 31 August 2023 or entered into since the end of the previous financial year. RECURRENT RELATED PARTY TRANSACTIONS There were no recurrent related party transactions entered into by the Group during the FYE 31 August 2023. UTILISATION OF PROCEEDS No proceeds were raised from any corporate proposals during the FYE 31 August 2023. ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 68
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