SPH is committed to achieving high standards of corporate governance, to promote corporate transparency and to enhance shareholder value. Towards this, SPH has put in place clear policies and processes to enhance corporate performance, accountability and sustainability, as well as to protect shareholders’ interests. SPH has adopted the Code of Corporate Governance 2018 (the “Code”) as the benchmark for its corporate governance policies and practices, even though it is only required to comply with this as from its financial year commencing 1 September 2019. SPH is pleased to confirm that it has adhered to the principles and provisions of the Code. In so far as any provision has not been complied with, the reason has been provided.
The Annual Report should be read in totality for SPH’s full compliance.
The Board is collectively responsible for providing overall strategy and direction to the Management and the Group. Directors act in the best interests of the Company and through the Board’s leadership, the Group’s businesses are able to achieve sustainable and successful performance. The Board has put in place ethics policies within the Group, which set out a code of conduct and ethical standards for Directors and staff to adhere to.
The principal functions of the Board are as follows:
Matters requiring the Board’s decision and approval include:
The Group has in place, financial authorisation limits for matters such as operating and capital expenditure, credit lines and acquisition and disposal of assets and investments, which require the approval of the Board.
All Directors are expected to objectively discharge their duties and responsibilities at all times as fiduciaries in the interests of the Company. The Board has a Code of Conduct and Ethics (including Conflicts of Interest) for Directors. This guides Directors in the discharge of their duties, requiring them to adhere to the highest standards of integrity and accountability. This code covers key areas such as conflicts of interest, duty of confidentiality, loans to directors, directors’ declaration of interest under the Companies Act, external appointments and dealings in shares.
In addition, SPH has in place a SPH Code of Ethics which sets out the framework and policies governing its employees’ conduct, including those relating to anti-bribery, anti-corruption, anti-money laundering, counterfinancing of terrorism, environmental protection, ethical procurement, fraud risk management, harassment and discrimination, conflict of interest and whistleblowing.
To assist the Board in their duties and to ensure that specific issues are subject to in-depth and timely review, certain functions have been delegated to various Board Committees, which would submit its recommendations or decisions to the Board. The Board Committees constituted by the Board are the Executive Committee (“EC”), Audit Committee (“AC”), Remuneration Committee (“RC”), Nominating Committee (“NC”) and Board Risk Committee (“BRC”). Each of these Board Committees has its own terms of reference.
The EC comprises Dr Lee Boon Yang (Chairman), Mr Bahren Shaari, Mr Quek See Tiat and Mr Ng Yat Chung.
The EC’s principal responsibilities are as follows:
Details of other Board Committees are as set out below:
The Board meets at least on a quarterly basis and as warranted by particular circumstances. The Board met eight times in the financial year ended 31 August 2019 (“FY2019”), of which four were the regular quarterly meetings and four were meetings to discuss other important and strategic matters. A Director who is unable to attend any meeting in person may participate via tele-conference. The attendance of the Directors at meetings of the Board and Board Committees, and the frequency of such meetings, is disclosed on page 116. A Director who fails to attend three Board meetings consecutively, without good reason, will not be nominated by the NC for re-appointment and will be deemed to have resigned.
Training for Directors
Upon the appointment of a Director, he is provided with a formal letter setting out his key duties and obligations, including disclosure requirements and best practices relating to dealings in securities under applicable laws and regulations. A comprehensive orientation and induction programme, including site visits to the Group’s operating centres, is organised for new Directors to familiarise them with the Group’s business, operations, organisation structure and corporate policies. They are also briefed on the Company’s corporate governance practices, the prevailing regulatory regime and their duties as Directors.
A new Director who has no prior experience as a director of an issuer listed on the SGX-ST must also undergo mandatory training in his roles and responsibilities as prescribed by the SGX-ST.
Directors are updated regularly on changes in relevant laws and regulations, industry developments, business initiatives and challenges, and analyst and media commentaries on matters related to the Company and its businesses. As part of the Directors’ ongoing training, Directors are informed and encouraged to attend, at the Company’s expense, relevant training programmes conducted by the Singapore Institute of Directors, Singapore Exchange, and other business and financial institutions and consultants.
For FY2019, Directors were provided with training in the areas of disruptive technologies, digital strategies and cybersecurity trends, bribery and anti-money laundering law, and ethics framework, in addition to updates on regulatory and reporting requirements such as the Singapore Exchange Securities Trading Limited (“SGX”) Listing Manual, Companies Act, Code of Corporate Governance and financial reporting standards.
They are also informed about matters such as the Code of Dealings in the Company’s shares as they are privy to price sensitive information.
Access to complete, adequate and timely information
The Board and Management are given opportunities to engage in open and constructive debate for the furtherance of strategic objectives. All Board members are supplied with relevant, complete, adequate and timely information prior to Board meetings and on an on-going basis to enable them to make informed decisions. Directors may challenge Management’s assumptions and also extend guidance to Management, in the best interests of the Company.
Directors may, at any time, request for further explanation, briefings or informal discussions on any aspect of the Group’s operations or business issues from Management.
The Board is provided with quarterly financial accounts, other financial statements and progress reports of the Group’s business operations, as well as analysts’ reports on the Company. The quarterly financial results and annual budget are presented to the Board for approval. The monthly internal financial statements are made available to members of the Board. The financial results are also compared against the budgets, together with explanations given for significant variances for the reporting period. The Board also receives regular updates on the industry and technological developments. Such reports enable Directors to keep abreast of key issues and developments in the industry, as well as challenges and opportunities for the Group.
Management provides the Board with management accounts and such explanation and information on a regular basis and as the Board may require from time to time, to enable the Board to make a balanced and informed assessment of the Company’s performance, position and prospects. Management also provides the Board with monthly reports on its financial performance.
As a general rule, board papers are sent to Directors one week in advance in order for Directors to be adequately prepared for the meeting. Senior Management attends Board meetings to answer any query from Directors. Directors also have unrestricted access to the Company Secretary and Management at all times. Directors are entitled to request from Management and provided with such additional information as needed to make informed and timely decisions.
The Board announces quarterly and full-year financial results which present a balanced and informed assessment of the Company’s performance, position and prospects, via public announcements and through the SGXNET.
The Board takes adequate steps through the establishment of appropriate internal policies to ensure compliance with legislative and regulatory requirements, including requirements under the SGX-ST Listing Manual.
The Company Secretary works closely with the Chairman in setting the agenda for Board meetings. She attends all Board meetings and ensures that board procedures are followed and that applicable rules and regulations are complied with. Under the direction of the Chairman, the Company Secretary’s responsibilities include ensuring good information flow within the Board and its Board Committees, and between Management and non-executive Directors. The Company Secretary also organises orientation and training for new Directors, as well as provides updates and advises Directors on all governance matters. The Constitution provides that the appointment and removal of the Company Secretary is subject to the approval of the Board.
Should Directors, whether as a group or individually, need independent professional advice relating to the Company’s affairs, the Company Secretary will appoint a professional advisor to render the relevant advice. The cost of such professional advice will be borne by the Company.
As at the date of this report, the Board comprises ten Directors, all of whom, except for the CEO, are nonexecutive and independent directors. Each Director has been appointed on the strength of his/her calibre and experience.
SPH is committed to building an open, inclusive and collaborative culture, and recognises the benefits of having a Board with diverse backgrounds and experience. It has adopted a Board Diversity Policy which recognizes that a diverse Board will enhance the decision-making process by utilising the variety in skills, industry and business experiences, gender and other distinguishing qualities of the members of the Board. Diversity will be considered in determining the optimum composition of the Board so that, as a whole, it reflects a range of different perspectives, complementary skills and experiences, which is likely to result in better decision-making. Such diversity will provide a wider range of perspectives, skills and experience, which will allow Board members to better identify possible risks, raise challenging questions, and contribute to problem-solving. In accordance with this policy, NC will review the relevant objectives for promoting and achieving diversity on the Board, the progress made, and make recommendations for approval by the Board. NC will review this policy from time to time as appropriate and the progress made.
The NC will, in reviewing and assessing the composition of the Board and recommending the appointment of new directors to the Board, consider candidates on merit against the objective criteria set and with due regards for the benefits of diversity on the Board.
The Board and NC are of the view that the current composition of the Board encompasses an appropriate balance and diversity of skills, experience, gender, knowledge and competencies such as accounting, finance, legal, information and digital technology, business or management experience, industry knowledge and strategic planning experience.
The Directors have, with the concurrence of the NC, decided that the optimum size of a Board for effective deliberation and decision making should not exceed 12, taking into account the nature and scope of the operations of the Company, the requirements of the Company’s businesses and the need to avoid undue disruptions from changes to the composition of the Board and Board Committees.
Review of Directors’ independence
The NC reviews annually whether a Director or potential candidate for the Board is considered an independent director bearing in mind the Code’s definition of an “independent director” and guidance as to the relationships, the existence of which would deem a Director not to be independent (Principle 2). Under the Code, an independent director is one who is independent in conduct, character and judgment, and has no relationship with the Company, its related corporations, its substantial shareholders or its officers, that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgement in the best interests of the Company. Under the SGX-ST Listing Manual a Director will not be deemed independent if he is employed by SPH or its related corporations for the current or any of the past three financial years, or if he has an immediate family member who is employed or has been employed by SPH or its related corporations for the past three financial years, and whose remuneration is determined by the SPH Remuneration Committee. The Company has no known substantial shareholder.
The Directors complete an annual declaration of independence, whereby they are required to assess their independence taking into account the above requirements, which is then put to the NC for review. The Directors are mindful, however, that the relationships identified in the annual confirmation of independence are only indicators of possible situations where independent judgment may be impaired, but are not in themselves conclusive, and they are also required to disclose any relationship with SPH, its related corporations or its officers which may interfere with, the exercise of their independent business judgment in the best interests of the Company, or would otherwise deem them to be not independent.
There is a strong independence element in the Board. The Board and the NC have ascertained that for the period under review, nine out of its ten Directors are independent. For transparency, the NC has set out its determination of the independence of Mr Andrew Lim and Ms Janet Ang.
The NC (save for Mr Andrew Lim who abstained from deliberation in this matter) noted that Mr Andrew Lim is a partner of Allen & Gledhill LLP, which is one of the law firms providing legal services to the Group in FY2019. Mr Lim had declared to the NC that he did not have a 5% or more stake in Allen & Gledhill LLP, that he did not involve himself in the selection and appointment of legal advisers for the Group, and that he supported the selection of legal advisers based on assessment of quality, and for their remuneration to be based on market rate. The NC also took into account Mr Lim’s actual performance and valuable contributions on the Board and Board Committees and the outcome of the recent assessment of individual Directors’ performance. It agreed that Mr Lim has at all times discharged his duties with professionalism and objectivity, and exercised strong independent judgment in the best interests of the Company, and should therefore continue to be deemed an independent Director.
The NC noted that Ms Janet Ang was, until her retirement from IBM from 1 March 2019, the Vice-President, IBM Asia Pacific, which has business dealings with the Group. Ms Ang had declared to the NC that she did not have a 5% or more stake in IBM and as an employee of IBM, did not participate in the negotiation of contracts or business dealings between SPH and IBM, which had transactions with the Group in FY2019. The NC also took into account Ms Ang’s actual performance and valuable contributions on the Board and Board Committees, and the outcome of the recent assessment of individual Directors’ performance. It agreed that Ms Ang has at all times discharged her duties with professionalism and objectivity, and exercised strong independent judgment in the best interests of the Company, and should therefore continue to be deemed an independent Director.
For the above reasons, the NC has determined Mr Lim and Ms Ang to be independent Directors.
Key information regarding the Directors, including directorship and chairmanship both present and those held over the preceding five years in other listed companies, and other principal commitments, are set out in the Board of Directors’ section and on pages 27 to 31 which provide further information on them.
To facilitate open discussions and the review of the performance and effectiveness of Management, the independent and non-executive Directors regularly meet without the presence of Management or the executive Director for informal discussions. This includes a continual review of the performance and effectiveness of Management in meeting agreed goals and objectives, and succession planning and leadership development.
The Chairman and CEO of the Company are separate persons. The Chairman is a non-executive and independent Director and also chairs the EC and the RC. He sets the agenda for Board meetings, ensures that adequate time is available for discussion of all agenda items, in particular, strategic issues, and that complete, adequate and timely information is made available to the Board. He encourages constructive relations within the Board and between the Board and Management, facilitates the effective contribution of non-executive Directors, and ensures effective communications with shareholders. He takes a lead role in promoting high standards of corporate governance, with the full support of the Directors, the Company Secretary and Management.
The Chairman and the CEO are not related. The CEO bears executive responsibility for the Group’s business and implements the Board’s decisions. The roles of the Chairman and the CEO are kept separate to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision-making.
The Company does not have any lead Independent Director given the majority independence of the Board and that the Chairman is independent. Further, matters affecting the Chairman such as succession and remuneration are deliberated by the RC and NC, where all the members (including the Chairman) were independent Directors, and where the Chairman was conflicted, he would recuse himself and abstain from voting.
The Board reviews the composition of the Board and Board Committees periodically, taking into account the need for progressive renewal of the Board and each Director’s competencies, commitment, contribution and performance.
To ensure that the governance and business needs of the Group are adequately addressed, the NC regularly reviews the capabilities of the Directors collectively by taking into account their skills, experience, diversity, and company and industry knowledge.
The composition of the Board, including the selection of candidates for new appointments to the Board as part of the Board’s renewal process, is determined using the following principles:
The NC comprises Mr Bahren Shaari (Chairman), Dr Lee Boon Yang, Ms Chong Siak Ching, Mr Andrew Lim and Mr Lim Ming Yan, all of whom are non-executive and independent Directors.
The functions of the NC include the following:
The NC reviews the size of the Board and recommends that the optimum board size should not exceed 12. The NC regularly reviews the balance and mix of expertise, skills and attributes of the Directors in order to meet the business and governance needs of the Group.
Process for selection of new directors
The NC shortlists candidates with the appropriate profile for nomination or re-nomination and recommends them to the Board for approval. It looks out for suitable candidates to ensure continuity of Board talent. Some of the selection criteria used are integrity, independent-mindedness, diversity, ability to commit time and effort to the Board, track record of good decision-making, experience in high-performing companies and financial literacy. The Committee may seek advice from external search consultants where necessary.
The appointment of Directors is also in accordance with Section 10 of the Newspaper and Printing Presses Act (Cap 206).
Directors’ time commitment
The NC has adopted internal guidelines addressing competing time commitments that arise when Directors serve on multiple boards and have other principal commitments. As a guide, a Director should not have more than six listed company board representations and other principal commitments.
The NC monitors and assesses annually whether Directors who have multiple board representations and other principal commitments, are able to give sufficient time and attention to the affairs of the Company and diligently discharge his duties as a Director of the Company. The NC takes into account the results of the assessment of the effectiveness of the individual Director, his actual conduct on the Board and Board Committees, and his attendance record at meetings, in making this determination.
The NC is satisfied that in FY2019, despite their other listed company board representations and other principal commitments, each of the Directors was able to give sufficient time and attention to the affairs of the Company, and was able to adequately carry out his duties as a Director of the Company.
Re-nomination of Directors
As a matter of corporate governance, all Directors are required to submit themselves for re-nomination and re-election at regular intervals, and at least once every three years. Article 116 of the Company’s Constitution requires one-third of the Directors for the time being, or if their number is not a multiple of three, the number nearest to but not less than one-third, to retire by rotation at every annual general meeting (“AGM”). These Directors may offer themselves for re-election, if eligible.Succession Planning
The NC regards succession planning as an important part of corporate governance and has an internal process of succession planning for the Chairman, Directors, the CEO and senior Management, to ensure the progressive and orderly renewal of the Board and key executives.
The NC reviews the performance of the Board, Board Committees and individual Directors on an annual basis, based on performance criteria as agreed by the Board, and decides how this may be evaluated.
The Board has a process for assessing the effectiveness of the Board as a whole and its Board Committees, and for assessing the contribution by the Chairman and individual Directors to the effectiveness of the Board.
Board Evaluation Process
The Board evaluation process involves having Directors complete a Questionnaire seeking their views on various aspects of the performance of the Board and Board Committees, such as Board composition, information, process and accountability. The Company Secretary compiles Directors’ responses to the Questionnaire into a consolidated report. The report is discussed at the NC meeting and also shared with the Board. The NC assessed the performance of the Board as a whole, based on performance criteria (determined by the NC and approved by the Board), such as the Board’s composition and size, the Board’s access to information, Board processes, Board accountability, standard of conduct and performance of the Board’s principal functions and fiduciary duties, and guidance to and communication with Management and stakeholders. The performance criteria do not change from year to year, unless the NC is of the view that it is necessary to change the performance criteria, for example, in order to align with any changes to the Code.
Individual Director Evaluation
The Company also conducted a peer and self evaluation to assess the performance of individual Directors. Performance criteria include factors such as the Director’s attendance, preparedness, candour, participation and contribution at Board meetings, industry and business knowledge, functional expertise, and commitment and dedication. The results of the peer and self evaluation are compiled by the Company Secretary and given to the Board Chairman, who assesses the performance of the individual Directors, and will discuss with each individual Director if necessary.
The RC comprises Dr Lee Boon Yang (Chairman), Ms Tan Yen Yen, Ms Chong Siak Ching, Mr Tan Chin Hwee and Mr Lim Ming Yan, all of whom are non-executive and independent directors.
The functions of the RC include the following:
The RC sets the remuneration guidelines of the Group for each annual period, including the structuring of long-term incentive plans, annual salary increases and variable and other bonuses for distribution to employees. It administers the SPH Performance Share Plan 2016 which was approved by shareholders at the Annual General Meeting on 1 December 2016 (“Share Plan”). The RC also reviews the remuneration framework (covering all aspects of remuneration including but not limited to Directors’ fees, salaries, allowances, bonuses, share-based incentives and awards, and benefits in kind) and specific remuneration packages of Directors including that of the CEO, and key Management and submits its recommendations to the Board for endorsement. The RC reviews any overly-generous obligation on the part of the Company in the event of termination, to ensure that such contracts contain fair and reasonable termination clauses. The RC also aims to be fair and avoid rewarding poor performance. The RC also undertakes benchmarking against comparable organisations, to ensure that all aspects of remuneration are fair and competitive.
There are no termination, retirement and post-employment benefits granted to Directors, the CEO or the top five key management personnel in FY2019.
The RC may seek expert advice inside and/or outside of the Company on remuneration of Directors and staff. It ensures that in the event of such advice being sought, existing relationships, if any, between the Company and its appointed remuneration consultants will not affect the independence and objectivity of the remuneration consultants. WillisTowersWatson Consulting (Singapore) Pte Ltd, the consultants engaged to advise on staff remuneration matters in FY2019, do not have such relationship with the Company.
The RC and the Board in determining the level and structure of remuneration of the Board and senior management will ensure that they are appropriate and proportionate to the sustained performance and value creation of the Group, taking into account its strategic objectives, its long term interests and risk policies. The RC has structured remuneration packages for key management personnel on measured performance indicators, taking into account financial and non-financial factors. The Company adopts a remuneration system that is responsive to the market elements and performance of the Company and business divisions respectively. It is structured to link a significant and appropriate proportion of rewards to the Company and individual performance.
The remuneration framework for Directors, CEO and key management personnel is aligned with the interest of shareholders and relevant stakeholders and appropriate to attract, retain and motivate them for the long term success of the Group.
Disclosure on Directors’ Remuneration
For the period under review, the CEO’s remuneration package includes a variable bonus element and performance share grant, which are based on the Company’s and individual performance and have been designed to align his interests with those of shareholders. As an executive Director, the CEO does not receive Directors’ fees.
Non-executive Directors, including the Chairman, are paid Directors’ fees, subject to the approval of shareholders at the AGM. Directors’ fees comprise a basic retainer fee, fees in respect of service on Board Committees, attendance fees, and, where appropriate, fees for participation in special projects, adhoc committees and subsidiary boards. The Directors’ fees are appropriate to the level of contribution, taking into account factors such as effort and time spent, and the responsibilities of the Directors, such that the independence of the non-executive Directors is not compromised by their compensation.
The Directors’ fee structure for service on the Board and Board Committees remains unchanged from that of FY2018, with the scale of fees payable to the non-executive Directors held flat since 2007, and is as follows:
The attendance fees payable to Directors for attendance at each Board and Board Committee meeting are as follows:
Each of the non-executive Directors (including the Chairman) will receive 75% of his total Directors’ fees in cash (“Cash Component”) and 25% in the form of SPH shares (“Remuneration Shares”) (both amounts subject to adjustment as described below). The actual number of Remuneration Shares, to be purchased from the market for delivery to the respective non-executive Directors, will be based on the market price of the Company’s shares on the SGX on the date of the purchase. The actual number of Remuneration Shares will be rounded down to the nearest thousand and any residual balance will be paid in cash. Such incorporation of an equity component in the total remuneration of the non-executive Directors is intended to achieve the objective of aligning the interests of the non-executive Directors with those of the shareholders’ and the long-term interests of the Company. The aggregate Directors’ fees for non-executive Directors is subject to shareholders’approval at the Annual General Meeting. The Chairman and the non-executive Directors will abstain from voting in respect of this resolution.
A breakdown showing the level and mix of each Director’s remuneration payable for FY2019 is as follows:
Performance shares granted, vested and lapsed for Mr Ng as at 31 August 2019 are as follows:
Disclosure of Remuneration of Key Management Personnel
The Board is of the view that, given the confidential and commercial sensitivities associated with remuneration matters and the highly competitive human resource environment in which the Company operates and the importance of ensuring stability and continuity of business operations with a competent and experienced management team in place, it is in the best interests of the Company to not disclose the names of the Company’s top five key management personnel (who are not Directors or the CEO). The remuneration of the CEO is set out above. The remuneration of the top five key management personnel (who are not Directors or CEO) of the Company for this financial year are set out below in remuneration bands of $250,000.
Remuneration of Key Management Personnel
The Company adopts a remuneration policy for staff comprising a fixed component, a variable component, and benefits in kind. The fixed component is in the form of a base salary. The variable component is in the form of a variable bonus that is linked to the Company’s and individual performance. The benefits in kind include club and car benefits. The RC approves the bonus for distribution to staff based on the Company’s and individual performance.
The annual aggregate remuneration paid to the top five key management personnel of the Company (excluding the CEO) for FY2019 is S$4,721,000.
No employee of the Group was an immediate family member of any Director or the CEO and whose remuneration exceeded S$100,000 per annum, during this financial year.
The Company has also, in respect of selected key executives, provided that any component of their remuneration may be revoked in the event of a breach of the terms of their employment, misstatement of financial results, or any misconduct which results in financial loss to the Company.
Long Term Incentive Plan
The above remuneration bands include performance shares granted to staff under the Share Plan. The Share Plan is administered by the RC.
Staff who participate in the Share Plan are a selected group of employees of such rank and service period as the RC may determine or as selected by the RC. Awards initially granted under the Share Plan are conditional and based on performance assessed over a multi-year performance period. The conditions for such awards were chosen as they reflect medium to longer-term corporate objectives.
The Share Plan contemplates the award of fully paid shares, their equivalent cash value or combinations thereof, free of charge, provided that certain prescribed performance conditions are met, and upon expiry of the prescribed vesting periods.
Senior executives are encouraged to hold a minimum number of shares under the share ownership guideline which requires them to maintain a beneficial ownership stake in the Company, thus further aligning their interests with shareholders.
Furthermore, the profit-driven performance bonus paid out for senior executives in 2019 was under the scheme where a notional variable bonus bank account was set up for each participant. The total performance bonus earned by each individual was credited into the bank account, with 1/3 paid out and the balance 2/3 carried forward to the next year. The bonus bank mechanism has ceased after the payout in 2019, and the bank balance will be paid out equally over the next two years. From 2020, a portion of the profit-driven performance bonus for senior executives will be paid in deferred shares, if the total amount is above a certain threshold. The deferred shares vest over two years.
Further details on the Share Plan and the incentives issued, can be found in the Directors’ Statement and Notes to the Financial Statements.
Under the Share Plan, the RC has the discretion to determine if an executive is involved in misconduct, resulting in the forfeiture or lapse of the incentive components of his remuneration or awards, to the extent that such incentive or award has not been released or disbursed.
The BRC oversees the risk governance in the Group to ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the Group’s assets.
The BRC monitors and assists the Board in determining the nature and extent of the significant risks which the Company is willing to take in achieving its strategic objectives and value creation.
The BRC comprises Mr Andrew Lim (Chairman), Ms Tan Yen Yen, Ms Janet Ang and Mr Ng Yat Chung, the majority of whom are independent and non-executive Directors. Mr Lim and Ms Ang are members of both the BRC and the AC. The BRC’s objectives include the following:
The Enterprise Risk Management framework strengthens the Group’s capability to identify new challenges and harness opportunities so as to enhance Management’s strategic decision-making, business planning, resource allocation and operational management. The BRC reviews the Group’s risk appetite and risk tolerance for enterprise risks regularly. Using qualitative and quantitative measures, enterprise risks are calibrated so that balanced control processes are matched against the strategic objectives of the various businesses.
The BRC also oversees the SPH Sustainability Reporting Framework that impacts the Company’s performance and the long term sustainability of its business.
The Risk Management Report is found on page 117. The Sustainability Report is found on page 45.
The CEO and Chief Financial Officer, as well as relevant key management personnel, at the financial year-end, have provided assurances that:
Based on the internal controls established and maintained by the Group, work performed by the internal and external auditors, and regular reviews performed by Management, the Board, the Audit Committee and the Board Risk Committee, the Board is of the opinion that the Group’s internal controls (including financial, operational, compliance and information technology controls) and risk management systems were adequate and effective as at 31 August 2019 to address financial, operational, compliance and information technology risks which the Group considers relevant and material to its operations. The AC concurs with the Board’s comments.
The Board notes that the system of internal controls provides reasonable, but not absolute, assurance that the Group will not be affected by any event that could be reasonably foreseen and mitigated against as it strives to achieve its business objectives. In this regard, the Board also notes that no system can provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, fraud or other irregularities.
The AC currently comprises Mr Quek See Tiat (Chairman), Mr Tan Chin Hwee, Ms Janet Ang and Mr Andrew Lim, all of whom are independent and non-executive Directors.
The NC is of the view that the members of the AC have sufficient financial management expertise and experience to discharge the AC’s functions given their experience as directors and/or senior management in accounting and financial fields. The AC performs the functions as set out in the Code including the following:
The AC has the authority to investigate any matter within its terms of reference, has full access to and cooperation by Management, and full discretion to invite any Director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its functions properly.
The AC meets with the external and internal auditors, in each case, without the presence of Management, at least once a year. The audit partner of the external auditors is rotated every five years, in accordance with the requirements of the SGX-ST Listing Manual.
Quarterly financial statements and the accompanying announcements are reviewed by the AC before presentation to the Board for approval, to ensure the integrity of information to be released.
During the financial year, the AC reviewed the quarterly financial statements prior to approving or recommending their release to the Board, as applicable; the auditors’ evaluation of the system of internal accounting controls; the adequacy and effectiveness of the Company’s internal controls; the annual audit plan of the external and internal auditors and the results of the audits performed by them; and potential interested person transactions. It also reviewed the scope, results and effectiveness of the internal audit and external audit functions; the independence and objectivity of the external auditors and the non-audit services rendered by them; and the re-appointment of the external auditors and their remuneration. Management’s assessment of fraud risks, adequacy of the whistleblowing arrangements and whistleblowing complaints are reviewed by the AC.
The AC takes measures to keep abreast of the changes to accounting standards and issues which have a direct impact on financial statements, with training conducted by professionals or external consultants.
During the financial year, the following significant matters that impact the financial statements were reviewed by the AC in relation to their materiality and appropriate methodology/assessment. These matters were also discussed with Management and the external auditors.
The AC concluded that the Group’s accounting treatment and estimates in each of the significant matters were appropriate. All the key audit matters (“KAMs”) that were raised by the external auditors for the financial year ended 31 August 2019 have been addressed by the AC and covered in the above commentary. The KAMs in the auditors’ report for the financial year ended 31 August 2019 can be found on pages 130 to 132 of this Annual Report.
The AC has conducted an annual review of the performance of the external auditor taking into consideration the Audit Quality Indicators Disclosure Framework recommended by ACRA as reference. It has also reviewed the volume of non-audit services to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors, before confirming their re-nomination. Details of the aggregate amount of fees paid to the external auditors for FY2019, and a breakdown of the fees paid in total for audit and non-audit services respectively, can be found on page 199.
The Company confirms that the appointment of the external auditors is in accordance with Rules 712 and 715 of the SGX-ST Listing Manual.
None of the AC members is a former partner of the Group’s existing auditing firm.
Internal Audit Division (IAD)
IAD is staffed by seven audit executives, including the Head of Internal Audit. Most of the IAD staff have professional qualifications, and are members of the Institute of Singapore Chartered Accountants and/or Institute of Internal Auditors (“IIA”). Some are Certified Information Systems Auditor (CISA). All IAD staff have to adhere to a set of code of ethics adopted from the IIA.
The primary line of reporting of the Internal Audit function is to the AC. IAD is guided by the International Professional Practices Framework issued by IIA and ensures staff competency through the recruitment of suitably qualified and experienced staff, provision of formal and on-the-job training, and appropriate resource allocation in engagement planning.
The AC reviews IAD’s reports on a quarterly basis. The AC also reviews and approves the annual internal audit plans and manpower to ensure that IAD has the necessary resources to adequately perform its functions. The AC is satisfied that IAD is adequately resourced, effective and independent of the activities it audits.
The AC approves the hiring, removal, evaluation and compensation of the head of the internal audit function and he is provided with access to the AC.
The IAD has an annual audit plan, which focuses on material internal control systems including financial, operational, IT and compliance controls, and the risk management processes. IAD also provides advice on security and control in new systems development, recommends improvements to effectiveness and economy of operations, and contributes to risk management and corporate governance processes. Any material noncompliance or lapses in internal controls together with corrective measures are reported to the AC.
Based on the audit reports and management controls in place, the AC is satisfied that the internal control systems (including financial, operational, compliance and information technology controls) provide reasonable assurance that assets are safeguarded, that proper accounting records are maintained and financial statements are reliable. In the course of their statutory audit, the Company’s external auditors will highlight any material internal control weaknesses which have come to their attention in carrying out their normal audit, which is designed primarily to enable them to express their opinion on the financial statements. Such material internal control weaknesses noted during their audit, and recommendations, if any, by the external auditors are reported to the AC.
Code of Dealings in Securities
The Group has in place a Code of Dealings in SPH’s securities, which prohibits dealings in SPH securities by all Directors of the Company and its subsidiaries, and certain employees, within certain trading periods. The “black-out” periods are two weeks prior to the announcement of the Company’s financial statements for each of the first three quarters of its financial year and one month prior to the announcement of the Company’s full year financial statements. Directors and employees are also reminded to observe insider trading laws at all times, and not to deal in SPH securities when in possession of any unpublished price-sensitive information regarding the Group, or on short-term considerations. The Company issues quarterly reminders to its Directors, relevant officers and employees on the restrictions in dealings in listed securities of the Group as set out above, in compliance with Rule 1207(19) of the SGX-ST Listing Manual.
Codes of Conduct and Practices
In addition to the SPH Code of Ethics, codes of conduct and practices covering data protection and workplace health and safety are also posted on the Company’s intranet website.
The Group also has a Whistleblowing Policy & Procedure which is posted on the SPH Corporate website, to allow staff and external parties such as suppliers, customers, contractors and other stakeholders, to raise concerns or observations in confidence to the Company, about possible irregularities for independent investigation and appropriate follow up action to be taken. Such concerns include dishonesty, fraudulent acts, corruption, legal breaches and other serious improper conduct; unsafe work practices and any other conduct that may cause financial or non-financial loss to the Group or damage to the Group’s reputation. The Group adopts a zero-tolerance to corruption. The Whistleblowing Policy encourages staff and external parties to identify themselves whenever possible to facilitate investigations, but will also consider anonymous complaints, in certain circumstances. It makes available to staff and external parties the contact details of the Receiving Officer, who may also forward the concern to the respective Heads of Division, CEO, AC Chairman and/or Chairman.
The Group encourages shareholder participation, and ensures that shareholders have the opportunity to participate effectively at general meetings.
The general meeting procedures allow shareholders to raise questions relating to each resolution tabled for approval, and to participate, engage and openly communicate their views on matters relating to SPH.
The Company does not allow a shareholder to vote in absentia at general meetings, except through the appointment of a proxy, attorney or in the case of a corporation, a corporate representative, to cast their vote in their stead.
At general meetings, each distinct issue is proposed as a separate resolution. All resolutions are put to the vote by electronic poll voting. Independent scrutineers are appointed to conduct the voting process and verify votes after each resolution. The results of the electronic poll voting are announced instantaneously at the meeting.
The outcome of the general meeting is promptly announced on SGXNET after the general meeting.
The Company prepares minutes of general meetings which incorporate substantial and relevant comments or queries from shareholders, and responses from Board and Management, and publishes these on its corporate website.
All Directors, including the chairmen of the EC, AC, NC, RC and BRC, and senior Management, are in attendance at the AGMs and Extraordinary General Meetings to allow shareholders the opportunity to air their views and ask Directors or Management questions regarding the Company. The external auditors also attend the AGMs to assist the Directors in answering any queries relating to the conduct of the audit and the preparation and content of the auditors’ report. The AGM is held four months after the close of the financial year.
All SPH shareholders are treated fairly and equitably to facilitate the exercise of their ownership rights.
Any notice of a general meeting of shareholders is issued at least 14 days before the scheduled date of such meeting.
A shareholder who is not a “relevant intermediary” may appoint up to two proxies during his absence, to attend, speak and vote on his behalf at general meetings, provided that a shareholder holding management shares may appoint more than two proxies in respect of the management shares held by him. Shareholders who are “relevant intermediaries” such as banks, capital markets services licence holders which provide custodial services for securities and the Central Provident Fund Board, are allowed to appoint more than two proxies to attend, speak and vote at general meetings. This will enable indirect investors, including CPF investors, to be appointed as proxies to participate at shareholders’ meetings.
The Company has in place an investor relations policy which allows for an ongoing exchange of views so as to actively engage and promote regular, effective and fair communications with shareholders. The investor relations policy sets out the mechanism through which shareholders may contact the Company with questions and through which the Company may respond to such questions.
The Company holds analysts’ briefings of its quarterly results and a media briefing of its full year results. The quarterly financial results are published through the SGXNET, via media releases and on the Company’s corporate website, to ensure fair dissemination to shareholders. The date of release of the results is announced through SGXNET two weeks in advance. The Company also conducts analysts’ briefings and investor roadshows to maintain regular dialogue with shareholders as well as to solicit and understand the views of shareholders. Information disclosed is as descriptive, detailed and forthcoming as possible. Details are set out on page 42. The SPH investor relations team, together with senior Management, communicate with investors.
The Company does not practise selective disclosure. Price-sensitive information is first publicly released through SGXNET, either before the Company meets with any investors or analysts or simultaneously with such meetings. SPH also makes available speeches and presentations given by the Chairman, CEO and senior Management, and other information considered to be of interest to shareholders.
Following the amendments to the Listing Manual to allow listed companies to send documents to shareholders, including circulars and annual reports, using electronic communications, the Company also makes available a digital format of the Annual Report for FY2019 (“Annual Report”). The Annual Report, as well as the Company’s Letter to Shareholders, are published on the Company’s corporate website, www.sph.com.sg. All shareholders of the Company will receive the notice of AGM, proxy form and request form to request for hard copies of the Annual Report and/or Letter to Shareholders.
SPH has been declaring dividends at half-year and final year-end. Any payouts are clearly communicated to shareholders in public announcements and via announcements on SGXNET when the Company discloses its financial results.
The Board adopts a balanced approach towards the needs and interests of key stakeholders, taking into account the best interests of the Company.
To facilitate the exercise of shareholders’ rights, the Company ensures that all material information relating to the Company and its financial performance is disclosed in an accurate and timely manner via SGXNET. Shareholders are also informed of rules, including voting procedures that govern the general meeting. The Company maintains a current corporate website, www.sph.com.sg, to communicate and engage with stakeholders.
The annual report sets out the Group’s strategy and key areas of focus in managing stakeholder relationships.
Directors’ attendance at Board and Board Committee Meetings
(for the financial year ended 31 August 2019)