(A) Board Matters
Principle 1 : Board's Conduct of its Affairs
Our Board is responsible for guiding our overall strategic direction, corporate governance, and providing oversight
in the proper conduct of our businesses.
The Board meets regularly to review our key activities and business strategies. Regular Board Meetings are held
quarterly to deliberate on strategic matters and policies including significant acquisitions and disposals, the annual
budget, review the performance of the business and approve the release of the quarterly and year-end reports.
Where necessary, we convene additional Board sessions to address significant transactions or developments.
Unless delegated, all transactions of the Company are approved by the Board.
Our Constitution provides for Directors to participate in meetings by teleconference or videoconference.
The Board has also established an Executive Committee ("EC") to oversee major business and operational matters.
The EC comprises Bertie Cheng, Ronald Seah Lim Siang, Stephen Geoffrey Miller and Lim Chai Hock Clive.
Management regularly consults and updates the EC on all major business and operational issues.
The Board is also supported by other Board committees which are delegated with specific responsibilities, as
described under "Principle 4: Board Membership" of this Report.
The Board, upon the recommendation of the Audit Committee ("AC"), has adopted a comprehensive set of internal
controls, which sets out the authority and approval limits for capital and operating expenditure, investments
and divestments, bank borrowings and cheque signatories arrangements at Board level. Authority and approval
sub-limits are also provided at Management levels to facilitate operational efficiency.
Management monitors changes to regulations and accounting standards closely. Updates and briefings on
regulatory requirements are conducted either during Board sessions or by circulation of papers. Directors are also
encouraged to attend seminars and training that may be relevant to their responsibilities and duties as directors,
at the Company's cost.
The Company's practice is to issue a letter of appointment setting out the duties and obligations of new Directors
upon their appointment. New Directors are given briefings by Management on the business activities of the Group
and its strategic directions. New Directors are also given manuals containing, among others, relevant information
on the Group and information about their statutory and other responsibilities as Directors.
To help ensure compliance with the applicable securities and insider trading laws, including the best practices
set out in the SGX-ST Listing Manual (the "Listing Manual"), we have adopted and implemented our Guidelines
on Dealing in Securities of TeleChoice (the "Guidelines"). We send regular compliance notices to all Directors
and employees. In accordance with Rule 1207(19) of the Listing Manual, all our Directors and employees are
prohibited from dealing in our securities during the period of, two weeks before the respective announcement of
our first quarter, second quarter and third quarter financial results, and one month before the announcement of
our full year financial results. Restrictions are lifted from the date of the announcement of the respective results.
Similar dealing restrictions also apply in the Company's acquisition of its securities pursuant to its share purchase
mandate. All our Directors and employees, and those of our subsidiaries and associates, are advised not to deal
in our securities on short term considerations and are also advised to comply with the Guidelines and observe
applicable insider trading laws at all times.
Principle 2: Board Composition and Guidance
To be effective, we believe our Board should comprise a majority of Non-Executive Directors independent of
Management, with the right core competencies and a balance and diversity of skills and experience to enable
them to contribute effectively.
Our Board currently comprises seven (7) Directors, all of whom are Non-Executive Directors and independent of
Management. Our Board comprises a majority of Independent Directors, namely Bertie Cheng, Yap Boh Pin, Tang
Yew Kay Jackson and Ronald Seah Lim Siang, which helps ensure a strong element of independence in all our
The composition of our Board enables Management to benefit from an outside diverse and objective perspective
of issues that are brought before our Board. It also enables our Board to interact and work with Management
through a robust exchange of ideas and views to help shape the strategic directions. This, coupled with a clear
separation of the role of our Chairman and our President, provides a healthy professional relationship between
our Board and Management, with clarity of roles and robust oversight.
Profiles of each Director are found on pages 8 to 11 of the 2018 Annual Report.
Principle 3: Chairman and President
We believe there should be a clear separation of the roles and responsibilities between our Chairman and President.
Our Chairman and the President are separate persons in order to maintain an effective balance of power and
Our Chairman is Bertie Cheng, an Independent Non-Executive Director. Our Chairman leads the Board and ensures
that our Board members work together with Management, with the capability and moral authority to engage and
contribute effectively and constructively on various matters, including strategic issues and business planning
Our President, Lim Shuh Moh Vincent, is charged with full executive responsibility for the running of our businesses,
making operational decisions and implementing business directions, strategies and policies. Our President is
supported on major business and operational issues by the oversight of our EC.
Principle 4: Board Membership
We believe that Board renewal must be an ongoing process, to ensure good governance, and maintain relevance
to the changing needs of the Company and business. As required by our Constitution, our Directors are subject
to retirement and re-election by shareholders as part of the Board renewal process. Nominations and election of
Board members are the prerogatives and rights of all our shareholders.
In carrying out its functions, our Board is supported by key Board committees, namely the AC, the Remuneration
Committee ("RC"), the Nominating Committee ("NC") and the EC. Each of our Board committees has been
established with clear charters setting out their respective areas of authority, terms of reference and committee
procedures. Other Board committees can be formed from time to time to look into specific areas as and when
the need arises. Membership in the different committees is carefully managed to ensure that there is equitable
distribution of responsibilities amongst Board members, to maximise the effectiveness of the Board and foster
active participation and contribution from Board members. Diversity of experiences and appropriate skills are
also considered, along with the need to ensure appropriate checks and balances between the different Board
Details of frequency and participation at our Board, AC, RC, NC and EC meetings for FY18 are set out in Table 1.
Table 1: FY18 – Directors' Attendance at Board and Board Committees Meetings
|No. of Meetings Held
||No. of Meetings Attended (% Attendance)
||No. of Meetings Held
||No. of Meetings Attended (% Attendance)
||No. of Meetings Held
||No. of Meetings Attended (% Attendance)
||No. of Meetings Held
||No. of Meetings Attended (% Attendance)
|Yap Boh Pin
|Tang Yew Kay Jackson
|Ronald Seah Lim Siang
|Stephen Geoffrey Miller
|Ho Koon Lian Irene
|Lim Chai Hock Clive
Our NC is chaired by an Independent Non-Executive Director, Bertie Cheng and also comprises Yap Boh Pin
(Independent Non-Executive Director) and Stephen Geoffrey Miller (Non-Executive Director). The members of our
NC (including the Chairman) are all Non-Executive Directors independent of Management.
Our NC's responsibilities include:–
- recommendations to the Board on the selection, appointment and re-appointment of the Company's
- determining the independence of a Director on an annual basis;
- deciding how the Board's performance and the performance of the Chairman, Board committees and each
individual Directors are to be evaluated;
- recommendations to the Board on the review of board succession plans for Directors and the President;
- recommendations to the Board on training and professional development programs for the Board.
Our Constitution requires one-third of our Directors to retire and subject themselves to re-election by shareholders
at every annual general meeting ("AGM") ("one-third rotation rule"). In other words, no Director stays in office
for more than three years without being re-elected by our shareholders.
In addition, a newly-appointed Director is required to submit himself/herself for retirement and re-election at the
AGM immediately following his/her appointment. Thereafter, he/she is subject to the one-third rotation rule.
Principle 5: Board Performance
We believe that Board performance is ultimately reflected in our business performance. Our Board should ensure
compliance with applicable laws and all Board members should act in good faith, with due diligence and care, in
our best interests and the best interests of our shareholders.
Our Board, through the delegation of its authority to the NC, has used its best efforts to ensure that our Directors
are equipped with the necessary background, experience and expertise in technology, business, finance and
management skills to make valuable contributions and that each Director brings to our Board an independent and
objective perspective to enable balanced and well-considered decisions to be made.
Our NC has implemented a framework for assessing Board performance, and undertakes regular reviews of
the performance of our Board, our Chairman, our committees and each individual Director, with inputs from our
other Board members. The results of the Board appraisal exercise, which is conducted at least once annually,
are circulated to all Directors for information and feedback. The information gleaned from the completed Board
appraisal exercise(s) are taken into consideration by the NC, in determining whether there are any changes needed
to the appraisal system, prior to the commencement of the next Board appraisal cycle. In addition, our NC also
reviews the performance of Directors who hold multiple board representations and has established a guideline
that (a) a Director holding a full time position should not be a Director of more than four listed companies; and
(b) a "professional" Director should not be a Director of more than six listed companies. However, the NC has the
discretion to deviate from this guideline on a case-by-case assessment.
As at 31 December 2018, three of our four Independent Directors, namely Bertie Cheng, Yap Boh Pin and Tang
Yew Kay Jackson, had served on our Board for more than nine years. Our NC conducts rigorous review of the
independence of our non-executive directors particularly for those directors who have served on our Board for more
than nine years. Our Board takes the view that the key consideration in ascertaining the effectiveness of a Director's
independence is the ability to exercise independent judgement with a view to the best interests of the Company.
After due and careful rigorous review, our Board is of the view that Bertie Cheng, Yap Boh Pin and Tang Yew Kay
Jackson remain independent in their exercise of Board duties as they have continued to demonstrate independent
mindedness and conduct, including expressing their own views on issues and challenging Management. Each
of these Independent Directors has declared their independence and has no relationship with Management that
could adversely impinge on their independence in the discharge of their duties as Directors on our Board.
One of our Independent Directors, Ronald Seah Lim Siang, has declared that he and his brother, Peter Seah
Lim Huat, are both directors in related corporations of the Company which have business transactions with the
Group. Ronald Seah Lim Siang continued to demonstrate strong independence in character and judgement in the
discharge of his responsibilities as a Director on our Board. He has continued to express his individual view points,
debated issues and objectively scrutinised and challenged Management. After taking into account the views of
the NC, our Board is of the view that Ronald Seah Lim Siang remains independent in his exercise of Board duties.
Principle 6: Access to Information
We believe that our Board should be provided with complete, adequate and timely information prior to Board
meetings and as and when the need arises.
Management provides complete, adequate and timely information to our Board, on our affairs and issues requiring
our Board's attention, as well as monthly reports providing updates on our key operational activities and financial
performance. The monthly flow of information and reports allows our Directors to make informed decisions and
also to keep abreast of key challenges and opportunities between our Board meetings.
Frequent dialogue takes place between Management and members of our Board, and our President encourages
all Directors to interact directly with all members of our Management team.
Where a physical Board meeting is not possible, timely communication with members of our Board is effected
through electronic means, which include electronic mail and teleconference. Alternatively, Management will arrange
to personally meet and brief each Director, before seeking our Board's approval.
Our Board has separate and independent access to our senior Management and the Company Secretary at all
times. Our Board also has access to independent professional advice, if necessary.
Likewise, our AC has separate and independent access to the external and internal auditors, without the presence
of our President and other senior Management members, in order to have free and unfettered access to information
that our AC may require.
(B) Remuneration Matters
Principle 7: Procedures for Developing Remuneration Policies
Principle 8: Level and Mix of Remuneration
Principle 9: Disclosure on Remuneration
We believe that a framework of remuneration for our senior Management and key staff should not be taken in
isolation. It should be linked to the development of our senior Management and key staff to ensure that there is a
continual development of talent and renewal of strong and sound leadership for our continued success. For this
reason, our RC oversees the compensation package for our senior Management and key staff.
Our RC is responsible for reviewing cash and long-term incentive compensation policies for our President,
senior Management and key staff. Our RC is chaired by an Independent Non-Executive Director, Bertie Cheng
and also comprises Ronald Seah Lim Siang (Independent Non-Executive Director) and Stephen Geoffrey Miller
(Non-Executive Director). The members of our RC (including the Chairman) are all Non-Executive Directors
independent of Management. From time to time, we may co-opt an outside member into our RC to provide additional
perspectives on talent management and remuneration practices.
Our RC has access to expert professional advice on human resource matters whenever there is a need to consult
externally. Aon Hewitt Singapore Pte. Ltd. ("Aon") was appointed to provide professional advice on certain
human resource matters. Aon only provides human resource consulting services to the Company and has no
other relationships with the Company. In its deliberations, our RC takes into consideration industry practices and
norms in compensation. Our President is not present during the discussions relating to his own compensation, and
terms and conditions of service, and the review of his performance. However, our President will be in attendance
when our RC discusses the policies and compensations of our senior Management and key staff, as well as major
compensation and incentive policies such as share options, stock purchase schemes, framework for bonus, staff
salary and other incentive schemes.
All decisions at any RC meeting are decided by a majority of votes of RC members present and voting (the decision
of the RC shall at all times exclude the vote, approval or recommendation of any member having a conflict of
interest in the subject matter under consideration).
The RC is guided by its Terms of Reference which are aligned with requirements under the Code 2012.
Our RC's responsibilities include:
- review and recommend to the Board the cash and long-term incentive compensation policies and framework
and fee schedule for Directors and Key Management Personnel of the Company;
- administer and review any proposed amendments to the TeleChoice Restricted Share Plan, the TeleChoice
Performance Share Plan and such other similar share schemes or plans that may be adopted by the
Company from time to time;
- review and recommend to the Board for approval, on an annual basis, the specific remuneration packages
of each Director and the Key Management Personnel of the Company. Where the RC deems appropriate, it
may, in consultation with the Chairman of the Board, make the relevant recommendations in respect of the
remuneration of Director or Key Management Personnel, to the entire Board for approval; and
- undertake such other reviews and projects as may be requested by the Board and report to the Board its
findings from time to time on matters which require the attention of the RC.
The term "Key Management Personnel" shall mean the President and other persons having authority and
responsibility for planning, directing and controlling the activities of the Company.
Executive Remuneration for the President and Key Management Personnel
Remuneration for Key Management Personnel comprises a fixed component, a variable cash component,
a share-based component and benefits-in-kind.
- A. Fixed Component:
The Fixed Component comprises the annual base salary, annual wage supplement and monthly allowances.
- B. Variable Cash Component:
The Variable Cash Component, including the Performance Bonus and the Discretionary Bonus, is a
remuneration component linked to the achievement of annual performance targets for each Key Management
Personnel as agreed with the Board at the beginning of each financial year. Performance objectives aligned
to the overall business metrics and strategic goals of the Company are cascaded down throughout the
organisation through the use of Performance Scorecards, thereby creating greater alignment between the
performance of the Company, business units and the individual employees. These performance objectives
could be in the form of both quantitative and qualitative measures which are aligned to the Company's
business strategy. In determining the final payout for each Key Management Personnel, the RC considers
the overall performance of the Company, funding affordability and individual performance.
- C. Share-Based Component:
The aggregate number of new shares to be issued, when aggregated with existing shares (including
treasury shares, if any, and cash equivalents) delivered and/or to be delivered pursuant to the TeleChoice
Restricted Share Plan (the "TeleChoice RSP") (as amended) and the TeleChoice Performance Share
Plan (the "TeleChoice PSP") (as amended) (collectively referred to as the "Share Plans") then in force,
shall not exceed fifteen per cent (15%) of the total number of issued shares (excluding treasury shares
and subsidiary holdings, if any) from time to time. To align the interest of the Key Management Personnel
and that of shareholders, the Key Management Personnel are required to retain a certain percentage of
shares acquired through the share-based plans, up to the lower of: (1) a percentage of total number of
shares acquired under the Share Plans for FY07 and onwards based on position level; or (2) the number
of TeleChoice shares to be retained in order to meet the minimum value, which is set at a percentage of
annual base salary based on position level.
Please refer to the section on Equity Compensation Benefits in the Directors' Statement on pages 77 to 79
of the 2018 Annual Report for the details of the Share Plans as well as awards granted under the Share Plans.
Under the TeleChoice RSP (as amended), conditional awards vest over a three-year period, once the RC
is, at its sole discretion, satisfied that the performance and extended service conditions are attained. For
the 2016 RSP grants, the total number of shares to be awarded depends on the level of attainment of the
corporate performance targets. No shares will be delivered if the threshold performance targets are not
achieved, while up to 1.3 times the number of shares that are the subject of the award will be delivered if
the stretched performance targets are met or exceeded. For RSP grants for 2017 onwards, the total number
of shares to be awarded depends on the level of attainment of the individual performance targets.
Under the TeleChoice PSP (as amended), conditional awards of shares are granted. Awards represent the
right of a participant to receive fully paid shares upon the participant achieving certain pre-determined
performance targets which are set based on corporate objectives aimed at sustaining longer-term growth.
After the awards vest, the shares comprised in the awards are issued at the end of the performance
and/or service period once the RC is, at its sole discretion, satisfied that the prescribed performance
targets have been achieved. The actual number of shares given will depend on the level of achievement
of the prescribed performance targets over the performance period, currently prescribed to be a threeyear
period. No shares will be delivered if the threshold performance targets are not achieved, while up to
1.5 times the number of shares that are the subject of the award will be delivered if the stretched
performance targets are met or exceeded. The performance measures used in the TeleChoice PSP grants are
Total Shareholder Return against Cost of Equity Hurdles (i.e. measure of absolute performance) and Return
on Capital Employed (i.e. measure of capital efficiency). The Company has attained an achievement factor
which is reflective of not meeting the pre-determined target performance levels based on the performance
period from FY16 to FY18.
- D. Benefits-In-Kind:
Benefits provided are comparable with local market practices and include non-cash benefits such as leave,
medical benefits and handphones.
In performing the duties as required under its Terms of Reference, the RC ensures that remuneration paid to
the President and Key Management Personnel is strongly linked to the achievement of business and individual
performance targets. The performance targets as determined by the RC are set at realistic yet stretched levels
each year to motivate a high degree of business performance with emphasis on both short-term and long-term
quantifiable objectives. The RC also considers the tight talent market for senior Management in setting total
compensation levels. The RC is satisfied that the level and mix of remuneration is appropriate and is aligned with
Under the Code 2012, the compensation system should take into account the risk policies of the Company, be
symmetric with risk outcomes and be sensitive to the time horizon of risks. The RC has reviewed the various
compensation risks that may arise and introduced mitigating policies to better manage risk exposures identified.
The RC will also undertake periodic reviews of the compensation related risks in future.
For FY18, there were no termination, retirement and post-employment benefits granted to the President and Key
There is no employee who is an immediate family member of a Director or the President, whose remuneration
exceeds S$50,000 a year.
Details of remuneration paid to our President and top four (4) Key Management Personnel for FY18 are set out in
Table 2 below. For competitive reasons, the Company is only disclosing the band of remuneration of our President
and each Key Management Personnel for FY18, within bands of S$250,000.
Table 2: FY18 – President and Top Four (4) Key Management Personnel's Remuneration
||Fixed Component %
|Lim Shuh Moh Vincent
|Lee Yoong Kin
|Pauline Wong Mae Sum
|Wong Loke Mei
|Goh Song Puay
- Remuneration Bands:
"A" refers to remuneration between S$250,001 and S$500,000.
"B" refers to remuneration between S$500,001 and S$750,000.
"C" refers to remuneration between S$750,001 and S$1,000,000.
For FY18, the aggregate total remuneration paid to the President and top four (4) Key Management Personnel
(who are not Directors) amounted to approximately S$3,173,492.
Remuneration for Directors
We remunerate our Directors with Directors' fees which take into account the nature of their responsibilities.
The remuneration structure is based on a scale of basic retainer fees as Director and additional fees for serving
on Board Committees as set out in Table 3 below. The Directors' remuneration for the financial year ended
31 December 2018 will be subject to shareholders' approval at the forthcoming AGM.
Table 3: FY18 – Scale of Fees
|Basic Retainer Fee
|Fee for appointment to the Audit Committee
|Fee for appointment to the Remuneration Committee
|Fee for appointment to the Nominating Committee and Executive Committee
- Board and Committee Chairman Fee includes Annual Basic Retainer as Board Member or Committee Member (as the case may be).
To align the interests of the Directors to that of the shareholders, Directors who served on the Board during FY18
(other than Lim Chai Hock Clive, in respect of whom please refer to the paragraph below) will be remunerated as
to approximately 70 percent (70%) of his total Directors' remuneration in cash and approximately 30 percent (30%)
of his total Directors' remuneration in the form of a restricted share award pursuant to the TeleChoice RSP (as
amended). The number of shares to be awarded will be based on the volume-weighted average price ("VWAP")
of a share listed on the SGX-ST over the 14 market days commencing on (and including) the first ex-dividend date
that immediately follows the date of this AGM (and in the event that no dividend is declared at such last concluded
AGM, the VWAP of a share listed on the SGX-ST over the 14 market days commencing after the date of such last
concluded AGM). The number of shares to be awarded will be rounded down to the nearest thousand shares,
and any residual balance settled in cash. The restricted share awards will consist of the grant of fully paid shares,
without any performance or vesting conditions attached. However, in order to encourage alignment of interests of
the Directors with the interests of shareholders, a Director is required to hold such number of shares equivalent to
at least (i) the prevailing annual basic Board retainer fee, based on the VWAP of a share listed on the SGX-ST over
the 14 days market days from (and including) the first ex-dividend date (if any) following the date of the Company's
last concluded AGM (and in the event that no dividend is declared at such last concluded AGM, the VWAP of a
share listed on the SGX-ST over the 14 market days commencing after the date of such last concluded AGM);
or (ii) the total number of shares awarded to that Director under the TeleChoice RSP (as amended) for FY13 and
onwards, whichever is lower. Notwithstanding the foregoing, a Director is permitted to dispose of all of his shares
after the first anniversary of the date of his cessation as a Director of the Company.
In relation to Lim Chai Hock Clive, it is proposed that the entire amount of his Director's remuneration for FY18
(including the amount of $12,600 which would otherwise have been paid in the form of share awards under the
TeleChoice RSP (as amended)) be paid to him in cash in full. Lim Chai Hock Clive is a controlling shareholder
of the Company, and approval of independent shareholders by way of a separate resolution for the grant of the
specific number of share awards to him is required under Listing Rule 853. However, as the number of share awards
to be granted to Lim Chai Hock Clive would have been computed only after the date of the AGM (as described
above), such number of awards would not be known until after the AGM, and it is therefore not possible to seek
approval for the grant of the specific number of share awards to him at the AGM. In view of the difficulties that the
Company would face in complying with the Listing Rule 853 for the grant of share awards to Lim Chai Hock Clive,
the Company is therefore proposing to pay him in cash in full instead.
The following Table 4 shows the total composition of Directors' remuneration for FY18.
Table 4: FY18 – Directors' Remuneration
||Total Directors' Remuneration(1)
|Yap Boh Pin
|Tang Yew Kay Jackson
|Ronald Seah Lim Siang
|Stephen Geoffrey Miller
|Ho Koon Lian Irene
|Lim Chai Hock Clive(3)
- The aggregate amount of these fees is subject to approval by shareholders at the upcoming AGM for FY18.
- These fees are payable to STT Communications Ltd.
- As explained above, Lim Chai Hock Clive will be paid his Director's remuneration of $42,000 in cash in full.
From FY14, the Company has implemented a contractual "Clawback" provision in the event that the executive
Director or Key Management Personnel of the Company engages in fraud or misconduct, which results in
restatement of the Company's financial results or a fraud/misconduct resulting in financial loss to the Company.
The Board may pursue to reclaim the unvested components of remuneration from the executive Director or Key
Management Personnel from all incentive plans for the relevant period, to the extent such incentive has been
earned but not yet released or disbursed. The Board, taking into account the RC's recommendation, can decide
whether and to what extent, such recoupment of the incentive is appropriate, based on the specific facts and
circumstances of the case.
(C) Accountability and Audit
Principle 10: Accountability
We have always believed that we should conduct ourselves in ways that deliver maximum sustainable value to
our shareholders. We promote best practices as a means to build an excellent business for our shareholders.
Our Board has overall accountability to our shareholders for our performance and in ensuring that we are well
managed. Management provides our Board members with monthly business and financial reports, comparing
actual performance with budget and highlighting key business indicators and major issues that are relevant to
our performance, position and prospects.
Principle 11: Risk Management and Internal Controls
The Company and its subsidiaries (the "Group") has in place an Enterprise Risk Management ("ERM") Framework,
which governs the process of identification, prioritisation, assessment, management and monitoring of key financial,
operational, compliance and IT risks to the Group. The key risks of the Group are deliberated by Management and
reported to the AC. Integral to the ERM is a Group-wide system of internal controls.
The Board, with the advice of the AC, determines the Group's level of risk tolerance and risk policies and the AC
oversees Management in the design, implementation and monitoring of the risk management and internal control
systems. The Board and the AC are supported by Management and various independent professional service
providers such as external and internal auditors to review the adequacy and effectiveness of the Group's risk
management and internal controls systems.
The Board, with the concurrence of the AC, is of the opinion that the Group's internal controls are adequate and
effective in addressing the financial, operational, compliance and IT risks of the Group. The Board acknowledges
that it is responsible for the Group's overall risk management and internal control system framework, but recognises
that there is no system that will preclude all errors and irregularities, as a system is designed to manage rather
than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute
assurance against material misstatement or loss.
The Board has received assurance from the President and the Chief Financial Officer ("CFO") that:
- the financial records have been properly maintained and the financial statements give a true and fair view
of the Group's operations and finances; and
- the Group's risk management and internal control systems are effective and adequate.
Principle 12: Audit Committee
Our AC consists of three (3) Non-Executive Directors, two of whom including the Chairman are Independent
Directors. The AC members are Yap Boh Pin as Chairman, Tang Yew Kay Jackson and Ho Koon Lian Irene. Our AC
members bring with them invaluable professional and managerial expertise in the accounting and financial sectors.
Our AC's responsibilities include reviewing our annual audit plan, internal audit processes, the adequacy of internal
controls and Interested Party Transactions for which there is a shareholders' mandate renewable annually. In
addition, our AC is also responsible for overseeing the Group's risk management framework and policies, including
advising the Board on the Group's overall risk tolerance and policies; overseeing Management on the design,
implementation and monitoring of the risk management and internal control systems; and reviewing the adequacy
and effectiveness of the Group's risk management and internal control systems. Major identified risk categories
include strategic, operational, market and compliance risks. The risk management processes are tailored to
address these categories of risks.
The AC is supported by senior Management representatives who:–
- oversee and ensure that our risk management policies are adequate and remain effective;
- conduct regular reviews to ensure that our business units and key functions adequately prioritise and
address risk management issues; and
- prepare regular updates on risk management issues for the AC.
Our AC has full authority to commission and review findings of internal investigations into matters where there is any
suspected fraud or irregularity or failure of internal controls or violation of any law likely to have a material impact on
our operating results. Our AC is also authorised to investigate any matter within its charter with the full co-operation
of Management. Our AC reviews and approves the quarterly, half-yearly and annual financial statements and the
appointment and re-appointment of auditors before recommending them to the Board for approval.
In 2018, our AC held six meetings and meets with the external and internal auditors without the presence of
Management, at least once during the year, to discuss matters it believes should be raised privately.
Our AC reviews the nature and extent of non-audit services provided by the external auditors during the year to
assess the external auditors' independence. For details of fees payable to the auditors in respect of audit and nonaudit
services, please refer to Note 23 of the financial statements on page 151 of the 2018 Annual Report. Having been
satisfied that the independence of the external auditors is not impaired by their provision of non-audit services, and
that Rules 712 and 715 of the Listing Manual have been complied with, the AC has recommended to the Board
that KPMG LLP be nominated for re-appointment as the external auditors at the next AGM.
In line with our commitment to a high standard of internal controls and its zero tolerance approach to fraud, we
have put in place a whistle blower policy (the "Policy") providing employees a direct channel to the AC, for
reporting suspected fraud and possible impropriety in financial reporting, unethical conduct, dishonest practices
or other similar matters. This Policy aims at protecting employees against discrimination or retaliation as a result
of their reporting information regarding, or their participation in, inquiries, investigations or proceedings involving
TeleChoice or its agents. With such a policy in place, we are able to take swift action against any fraudulent
conduct and minimise any financial losses arising from such conduct. The Policy is available on our intranet and
is accessible by all employees.
To further emphasise the importance of corporate governance, we have introduced an Anti-Corruption Policy in
October 2018. All new employees are required to read, understand and be assessed on these policies as part of
the onboard process. There were no reported incidents of corruption during this period.
Management monitors changes to accounting standards and issues which have a direct impact on financial
statements closely. Updates and briefings on regulatory requirements are conducted either during AC sessions
or by circulation of papers.
The AC reviewed the draft financial statements and quarterly results before recommending their approval to
the Board. As part of this review, the AC considered significant accounting policies, estimates and significant
judgements. The AC also reviewed reports on findings from internal and external audits.
The key audit matters ("KAM") in relation to the financial statements considered by the AC and how these were
addressed are summarised as follows:–
|Impairment assessment of goodwill
The annual impairment of goodwill testing is considered
to be a key audit matter as significant judgement is
required to determine the assumptions to be used to
estimate the recoverable amount. The recoverable
amount of the cash generating units ("CGUs"), which
is based on the higher of the value in use or fair value
less costs to sell, has been derived from discounted
cash flow models. These models are based on several
key assumptions, including estimates of revenue
growth rates, operating profit margins and discount
|The AC considered the goodwill impairment analysis
provided by management and the views of the external
auditors on this issue.
The AC reviewed and challenged the key assumptions
used in management's calculations including revenue
growth rates, operating profit margins and the discount
rates. In its view, the AC also considered reports on
forecasts for 2019 to 2021 prepared by Management,
firm commitments secured from customers and
pipelines, as well as the level of headroom in the value
in use model prepared by Management.
The AC considered the sensitivity analysis undertaken
by Management and the external auditors and the
impact on the headroom.
On the basis of these reviews, the AC agreed with
Management that no impairment on goodwill was
necessary as at 31 December 2018.
|Valuation of inventories
The valuation of inventory and the inventory allowance
include subjective estimates and are influenced by
assumptions concerning future demand and sales
The AC reviewed and challenged the basis used by
Management in estimating the inventory allowance
required for slow moving inventory.
The AC considered the nature and extent of the work
performed by external auditors in ascertaining the
adequacy of inventory allowance.
The AC also reviewed reports from the Company's
internal auditors on inventory valuation.
On the basis of these reviews, the AC agreed with
Management that the Group's inventory allowance was
adequate for the financial year ended 31 December
Significant judgement is required in determining the
stage of completion used for long term projects and for
bundled contracts, appropriate allocation of contract
value to the different performance obligation is crucial
for proper revenue recognition.
|The AC reviewed the revenue recognition policies of
the Group's various revenue streams and considered
them to be appropriate.
The AC considered the nature and extent of the
work performed by external auditors in ascertaining
appropriateness of the Group's revenue recognition
The AC also reviewed reports from the Company's
internal auditors in relation to work performed on
On the basis of these reviews, the AC concluded that
the positions and judgements taken by Management
reasonably reflected the extent of the work done and
the revenue to be recognised.
All of the matters considered above were discussed with the President and the CFO and the external auditors.
The AC was satisfied that each of the matters set out above have been appropriately tested and reviewed by
the external auditors and the disclosures relating to each of these matters made in the financial statements were
Principle 13: Internal Audit
The Group has established an in-house internal audit function. The internal audit is an independent function within
the Group. The Head of Internal Audit reports functionally to the AC Chairman and administratively to the President
and the CFO. The AC approves the hiring, removal, evaluation and compensation of the Head of Internal Audit. The
scope of authority and responsibility of the internal audit function is defined in the Group Internal Audit Charter,
which has been approved by the AC.
The professional competence of the internal auditors is maintained or upgraded through training programmes,
conferences and seminars that provide updates on auditing techniques, regulations, financial products and
services. The internal audit function is staffed with suitably qualified experienced professionals who are at the
level of assistant manager and above. The AC is satisfied that the internal audit function has adequate resources
to perform its functions effectively. As a member of the Institute of Internal Auditors Singapore ("IIA"), the internal
audit function is guided by the International Professional Practices Framework issued by IIA.
The primary role of the internal audit function is to help to evaluate the adequacy and effectiveness of the
Group's controls and compliance processes. The Group's internal audit approach is aligned with the Group's
Risk Management Framework by focusing on key financial and compliance risks. The annual internal audit plan is
established in consultation with, but independent of Management. The annual internal audit plan is then reviewed
and approved by the AC. All internal audit findings, recommendations and status of remediation, are circulated
to the AC, the President and relevant senior Management every quarter.
The Head of Internal Audit presents the internal audit findings to the AC each quarter. The AC meets with the Head
of Internal Audit at least once a year, without the presence of Management. The internal auditors have unfettered
access to all the Group's documents, records, properties and personnel, including access to the AC.
(D) Communication with Shareholders
Principle 14 : Shareholder Rights
Principle 15 : Communication with Shareholders
Principle 16 : Conduct of Shareholder Meetings
We believe in having regular communication with shareholders and also timely disclosure of information to
shareholders through SGXNET.
Our Investor Relations team manages investor relations and has arranged a series of events during the year to
brief the media and investment analysts on our performance.
For the release of the respective quarterly and year-end results, the announcement is first released via SGXNET.
Thereafter, the media and investor analysts meet with Management for briefing(s) within the ambit of our SGXNET
announcements to ensure that there is fair and non-selective disclosure of information.
We support the Code 2012's principle to encourage greater shareholders' participation at general meetings of
shareholders. Separate resolutions are proposed on each separate issue at our general meetings. To enhance
transparency in the voting process, the Company has implemented poll voting for all resolutions tabled at its
general meetings. A registered shareholder who is not a relevant intermediary may appoint not more than two
proxies to attend and vote at our general meetings. A registered shareholder who is a relevant intermediary may
appoint more than two proxies to attend and vote at our general meetings, but each proxy must be appointed to
exercise the rights attached to a different share or shares held by such shareholder. Our external auditors are also
invited to be present at our AGMs to assist our Directors in answering questions from our shareholders relating to
the conduct of the audit and the preparation and content of the auditors' report.
Since FY04, the Board has set a benchmark to declare and pay annual dividends of at least 30% of our annual net
profit after tax, subject to the Group's earnings, cash flow and capital requirements. Our Company has consistently
managed to adhere to this benchmark.
Financial and other information (including news releases and SGXNET announcements) are made available on our
website at www.telechoice.com.sg which is updated on a regular basis.