Stamford Tyres Corporation Limited (the "Company") is committed to maintaining high corporate governance standards and sound corporate practices within the Company and its subsidiaries (the "Group") to ensure that effective self-regulation practices are in place to enhance corporate performance and accountability. This report outlines the Company's main corporate governance practices with reference to the principles and provisions of the Code of Corporate Governance 2018 (the "Code").

The Board of Directors (the "Board") is pleased to confirm that for the financial year ended 30 April 2023, the Company has adhered to the principles and provisions as set out in the Code and where the Company's practices vary from any of the provisions of the Code, explanations for the deviation and how the Group's practices are consistent with the intent of the relevant principle, are provided in the sections below.

Board Matters

BOARD'S CONDUCT OF AFFAIRS

Principle 1: The company is headed by an effective Board which is collectively responsible and works with Management for the long-term success of the company.

The Board comprises six directors, of whom four are independent directors. The Board members are:

Details of the directors' qualifications, background and working experience are set out under the "Board of Directors" section of this Annual Report.

The Board oversees the business affairs of the Group, sets overall corporate strategy and directions, approves budgets, and reviews the Group's performance. The Board is collectively responsible for the long-term success of the Group. Each Director exercises his independent judgement to act in good faith and in the best interest of the Group for the creation of longterm value for shareholders. The Board works with Management to achieve this objective and Management remains accountable to the Board and plays an important role in providing Board members with complete, adequate, and timely information to assist the Directors in the fulfilment of their responsibilities.

The Board sets appropriate tone-from-the-top to uphold ethics and integrity within the Group and ensures that directors are not placed in situations where there is a conflict between their duties to the Company and their own personal interests.

Each Director is required to promptly disclose any conflict or potential conflict of interest, whether direct or indirect, in relation to a transaction or proposed transaction with the Company, as soon as practicable after the relevant facts have come to his knowledge. Where a director has a conflict or potential conflict of interest in relation to any matter, he is required to immediately declare his interest, recuse himself and refrain from participating in discussions regarding a transaction or proposed transaction in which he has an interest or is conflicted, unless the Board is of the opinion that his presence and participation is necessary to enhance the efficacy of such discussion. Nonetheless, he should abstain from voting in relation to the conflict-related matters.

Board Orientation, Training and Updates

Incoming new Directors are given proper guidance and orientation (including on-site visits to the Group's operational facilities) upon their appointment, to familiarise them with the Group's business, operations, financial performance and key management personnel of the Group as well as corporate governance practices to facilitate the effective discharge of their duties.

Newly-appointed Directors will be given a formal letter explaining his duties and obligations as a director. They will also be briefed by Management on the Group's business, its strategic directions as well as its corporate governance policies. Orientation programmes and familiarisation visits are organised, if necessary, to facilitate a better understanding of the Group’s operations.

If a newly appointed director has no prior experience as a director of a company listed on Singapore Exchange Securities Trading Limited ("SGX-ST"), he is required to attend courses and training organised by institutions such as Singapore Institute of Directors ("SID"), the Accounting and Corporate Regulatory Authority ("ACRA") and the SGX-ST at the Company's expense. He will also be encouraged to attend at the Company's expense, courses relating to the Singapore regulatory environment and audit essentials.

As part of the board renewal process and recognising the importance of building a diverse Board while balancing the need to avoid losing institutional memory to achieve long term sustainable development, Ms Caroline Wee joined the Board as Independent Non-Executive Director on 2 September 2022. The Company believes that Ms Caroline Wee, with her wealth of experience and qualifications, will be able to provide new perspectives to the Board as well as contribute to the core competencies of the Board. She is not related to any of the directors or controlling shareholders of the Company.

Ms Caroline Wee has attended and completed the Listed Entity Director Programme core modules comprising LED 1 to LED 4 and ESG conducted by SID.

Directors have the opportunity to visit the Group's operations here and overseas and meet Management to gain a better understanding of the Group's business operations globally. All directors are encouraged to continually keep abreast of developments in regulatory, legal and accounting frameworks that are relevant to the Group through the extension of opportunities for participation in relevant training courses, seminars and workshops where applicable, at the Company's expense. Appropriate external trainings will be arranged where necessary.

Directors are regularly updated on the Group's business activities and regulatory and industry specific environments in which the Group operates during the Board meetings. Changes to regulations and accounting standards are monitored closely by Management. The Board as a whole, is updated regularly on risk management, corporate governance and key changes in the relevant regulatory requirements and accounting standards. New releases issued by the SGX-ST and ACRA which are relevant to the directors are circulated to the Board so that they are kept updated on pertinent matters relating to the relevant regulatory requirements and their key changes such as listing rules, corporate governance, risk management, financial reporting standards and the Companies Act 1967 (the "Act").

All Board members have completed the mandated sustainability training course organised by SID as prescribed by SGX-ST pursuant to Rule 720(7) of the SGX-ST Listing Rules.

Principal Duties of the Board

In addition to its statutory duties, the principal functions of the Board include:

1. supervising the overall management of the business and affairs of the Group and approve the Group's corporate and strategic policies and direction;
2. formulating and approving the Group's financial objectives and monitoring its performance such as reviewing and approving of results announcements and approving of annual financial statements;
3. reviewing and approving the Group's annual budgets, major funding proposals, investment/ divestment proposals and corporate or financial restructuring;
4. overseeing the processes for evaluating the adequacy of internal controls and risk management including the review and approval of interested person transactions;
5. ensuring that necessary financial and human capital resources are available for the Group to meet its objectives;
6. reviewing and endorsing the framework of remuneration for the Board and key management personnel as recommended by the RC;
7. approving the nominations to the Board of Directors and appointment of key management personnel, as recommended by the NC;
8. considering sustainability issues e.g. environmental and social factors, as part of its strategic formulation; and

assuming responsibility for corporate governance and compliance with the Act and the rules and requirements of relevant regulatory bodies.

Matters Requiring Board Approval

The Board has adopted a set of internal guidelines on matters requiring board approval. Matters that are specifically reserved for the approval of the Board include, among others, any material acquisitions and disposals of assets, corporate or financial restructuring, share issuances and proposing of dividends, annual budgets, significant legal and financial issues, announceable matters, interested person transactions, succession planning, appointment and replacement of directors and key management personnel, determination of their remuneration, and other matters as may be considered by the Board from time to time.

Delegation to Board Committees

The Board has delegated specific responsibilities to three committees namely, the AC, the NC and the RC to assist in the execution of its responsibilities. Each committee has its own written terms of reference which clearly sets out its objectives, duties, powers and responsibilities and which has been amended to be in line with the Code. All Board Committees are actively engaged and play an important role in ensuring good corporate governance in the Company and within the Group. Minutes of all Board Committees have been circulated to the Board so that Directors are aware of and are kept updated as to the proceedings and matters discussed during the Committees’ meetings.

While the Board Committees have the authority to examine particular issues and report back to the Board with their decisions and/or recommendations, the ultimate responsibility on all matters still lies with the entire Board.

Attendance at Board and Committee Meetings

The Board conducts regular scheduled meetings on a quarterly basis. The Board and the Board Committees meet regularly based on a meeting schedule planned in advance of each financial year so as to ensure maximum attendance by all participants. Ad-hoc meetings are convened as warranted by circumstances. If a Director is unable to attend meetings in person, telephonic or video conference participation at meetings is allowed under the Company's Constitution. Between board meetings, important matters concerning the Company are also put to the Board for its decision via circular resolutions for directors' approval together with supporting memoranda to enable the directors to make informed decisions.

The attendance of Directors at Board and Committee Meetings held since May 2022 while they were members as well as at the Annual General Meeting ("AGM") of the Company held in August 2022 are set out below:

In addition to the above, the Independent Directors had also met with the internal auditors and external auditors without the presence of the Executive Directors or Management at least once in FY2023.

During FY2023, the Independent Directors and Non-Executive Directors met amongst themselves with or without the presence of the Executive Directors and the management team on an ad-hoc basis to approve and/or discuss specific issues or matters relating to the Group. Such informal discussion and meetings are not included in the above table.

Multiple Board Representations

All directors are required to declare their board representations and ensure that sufficient time and attention are given to the affairs of the Group. The NC will review the multiple board representations held by the directors on an annual basis to ensure that sufficient time and attention is given to the affairs of the Group.

The NC has assessed that each Director in the Company is able to and has been adequately carrying out his duties as a director of the Company, taking into consideration the Director's number of listed company board representations and other principal commitments. The Committee also took into consideration the Company's existing practice of directors being assessed by each other as an additional check and balance on the performance of individual Directors and that a Director should have self-responsibility to determine whether he is able to discharge his duties properly and effectively as a director when taking on additional listed company board seats. The NC, with concurrence from the Board, has adopted a guide that a director should not have in aggregate more than five (5) listed company board representations to be able to devote sufficient time and attention to the affairs of the Company. None of the directors have exceeded this limit.

Access to Information

Directors are given full access to the management team and the Company Secretary, all Board and Board Committee minutes and all approval and information papers.

Board members are provided with quarterly management reports and from time to time, they are furnished with all relevant information on material events and transactions to enable them to be fully cognisant of the decisions and actions of the Company's Executive Management. Detailed board papers are prepared for each Board meeting. The board papers include sufficient information from Management on financial, business and corporate issues and are normally circulated in advance of each meeting to enable the Directors to obtain further explanations, where necessary, in order to be briefed properly before the meeting.

The Directors are also regularly updated on the business activities of the Group and when there are significant developments or events relating to the Group's business operations.

Management has access to the Directors for guidance or exchange of views outside of the formal environment of the Board meetings.

The Company provides for the Directors, individually or as a group, to have separate and independent access to the Company Secretary at all times and they have been provided with the phone numbers and e-mail particulars of the Company Secretary. Each director has the right to seek independent legal and other professional advice where necessary, at the Company's expense, concerning any aspect of the Group's operations or undertakings in order to fulfil her/his duties and responsibilities as a Director and after consultation with the Chairman of the Board.

The Company Secretary attends all Board and Committee meetings and ensures Board procedures are followed. The role of the Company Secretary has been clearly defined which includes, inter alia, advising the Board on all matters regarding the proper functioning of the Board, compliance with the Company's Constitution, the Act, relevant provisions of the Securities and Futures Act and the Listing Manual of the SGX-ST. The Company Secretary assists the Board in implementing and strengthening corporate governance policies and procedures.

Under the direction of the Chairman, the Company Secretary ensures good information flow to and within the Board and the Board Committees and between Management and the Non- Executive Directors. During FY2023, the Company Secretary attended meetings of the Board and its Committees and the minutes of such meetings were circulated to all members of the Board and Board Committees. The appointment and removal of the Company Secretary is subject to the approval of the Board as a whole.

BOARD COMPOSITION & GUIDANCE

Principle 2: The Board has an appropriate level of independence and diversity of thought and background in its composition to enable it to make decisions in the best interests of the company.

There is an appropriate level of independence and diversity of thought and background in the Board's composition to enable it to make decisions in the best interest of the Company. As of 30 April 2023, the Board comprises six board members, of whom four are Independent and Non- Executive Directors.

The composition of the Board and independence of each Director is assessed and reviewed annually by the NC to ensure that the Board has the appropriate mix of expertise and experience to govern and manage the Group's affairs.

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 can interfere, or be reasonably perceived to interfere with the exercise of the director's independent business judgment to the best interests of the Company.

The NC conducted its annual review of the directors' independence and is satisfied that the Company complies with Guideline 2.1 of the Code and Rule 210(5)(c) of the Listing Manual of SGX-ST which requires independent directors to consist of at least one-third of the Board.

Rule 210(5)(d) of the Listing Manual of the SGX-ST also sets out circumstances under which a director will not be independent. The NC and the Board took into account the existence of relationships or circumstances, including those identified by the SGX-ST Listing Rule 210(5) (d) and the Code's Practice Guidance ("Practice Guidance"), that are relevant in determining a director's independence and considered whether a director has business relationships with the Group, its substantial shareholders or its officers and if so, whether such relationships could interfere or be reasonably perceived to interfere, with the exercise of the director's independent business judgement in the interest of the Group. A director will not be considered independent if he/she is employed by the Company or any of its related corporations for the current or any of the past three (3) financial years or if he/she has any immediate family members who is employed by the Company or any of its related corporations for the past three (3) financial years and whose remuneration is determined by the RC or if he has been a director of the Company for an aggregate period of more than nine years. Such director may continue to be independent until the conclusion of the Company's next annual general meeting in 2024.

The Company's process of determining whether a director is independent includes the use of a declaration form on independence which each independent director is required to complete and submit to the NC for its annual review. The results of the self-assessment are then collated by the Company Secretary and reported to the Board.

For FY2023, the NC has assessed the independence of Mr Sam Chong Keen, Mr Leslie Mah Kim Loong, Mr Kazumichi Mandai and Ms Caroline Wee and was satisfied that there were no relationship or other factors such as financial assistance, past association, business dealings, being a representative of a shareholder, financial dependence, relationship with the Group or the Group's management, which would impair or compromise their independent judgement or which would deem them not to be independent. The NC is of the view that the Board has sufficient independent element and its composition is appropriate to facilitate effective decision-making.

Each Independent Director had recused himself or herself in the determination of his or her own independence.

Proportion of Non-Executive Independent Directors

The Chairman is a Non-Executive Independent Director.

The NC and the Board are of the opinion that there is an appropriate level of independence as the Board is able to exercise objective judgment independently from Management as all key issues and strategies are thoroughly reviewed and discussed by all Board members and constructively challenged by the Independent Directors. The NC and the Board are of the view that the independence of independent directors must be based on the substance of their professionalism, integrity and objectivity and not merely based on form such as the number of independent directors that must make up a majority of the Board.

No individual or small group of individuals dominate the decisions of the Board.

As more than one third of the Board comprised independent and non-executive directors in FY2023 and the Chairman is a non-executive independent director, the NC is of the view that the Board has sufficient independent element and composition is appropriate to facilitate effective decision-making and aid the development of the Group's strategic processes, to review the performance of the Management in meeting agreed goals and objectives, and monitor the reporting of performance and operations, as an appropriate check and balance.

The Non-Executive Independent Directors, have constructively challenged and helped Management develop proposals on business strategies for the Company and the Group, taking into consideration the long-term interests of the Group and its stakeholders. The Non-Executive Independent Directors also reviewed the performance of Management in achieving agreed goals and objectives for the Company and the Group, and monitored the reporting of performance. Their views and opinions also provide different perspectives to the Group's business. The Company is in compliance with Rule 210(5)(c) of the Listing Manual of the SGX-ST, which requires the Board to have at least two non-executive directors who are independent and free of any material business or financial connection with the Company.

To discharge its oversight responsibilities, the Board must be an effective board which can lead and control the business of the Group. There is a process of refreshing the Board progressively over time so that the experience of longer serving directors can be drawn upon while tapping into the new external perspectives and insights which more recent appointees bring to the Board's deliberation.

Independence of Directors Who Have Served on the Board beyond Nine (9) Years

Particular attention is given to reviewing and assessing the independence of any director who has served on the Board beyond nine years from the date of his/her appointment.

As at 30 April 2023, three independent directors, Mr Sam Chong Keen, Mr Leslie Mah Kim Loong and Mr Mandai Kazumichi, have served on the Board for more than 9 years from the date of their respective first appointment.

On 11 January 2023, Singapore Exchange Regulation ("SGX RegCo") announced listing rule changes to limit to nine years the tenure of independent directors serving on the boards of listed companies and to remove the two-tier vote mechanism for listed companies to retain long-serving independent directors who have served for more than nine years. Pursuant to Rule 210(5)(d)(iv) of the Listing Manual of the SGX-ST, which is applicable for an issuer's annual general meeting for the financial year ending on or after 31 December 2023, a director will not be independent if he has been a director of the issuer for an aggregate period of more than nine years (whether before or after listing) and such director may continue to be considered independent until the conclusion of the next annual general meeting of the issuer.

To provide issuers sufficient time for board appointments, SGX RegCo has established transitional arrangements and will implement the nine-year limit at issuers' AGMs for the financial year ending on or after 31 December 2023. The transitional arrangements apply between 11 January 2023 and the date of issuer’s AGM for the financial year ending on or after 31 December 2023 ("Transitional Period"). During the Transitional Period, independent directors whose tenure exceeds the nine-year limit may continue to be independent until the conclusion of the next AGM of the issuer for the financial year ending on or after 31 December 2023.

In view of the Transitional Period, Mr Sam Chong Keen, Mr Leslie Mah Kim Loong and Mr Kazumichi Mandai continue to be considered independent until the conclusion of the Company's AGM to be held in 2024.

The NC and Board have determined that Mr Sam Chong Keen, Mr Leslie Mah Kim Loong and Mr Kazumichi Mandai continue to remain objective and independent-minded in Board deliberations. As Chairman of the Board, Mr Sam Chong Keen provides stability to the Board and the Group has benefited from the counsel and wealth of experience of Mr Sam Chong Keen, Mr Leslie Mah Kim Loong and Mr Kazumichi Mandai. Each of them has, over time, not only gained valuable insight into the Group, its business, markets and industry but has also brought the breadth and depth of their respective business experience to the Company. They have provided the Board and the various Board Committees on which they serve, pertinent counsel and guidance to facilitate sound decision-making. They have each not hesitated to express his own viewpoint as well as seek clarifications from Management on issues they deem necessary and each of them is able to exercise objective judgement on corporate matters independently, particularly from Management. Their length of service has not in any way interfered with their exercise of independent judgment nor hindered their ability to act in the best interests of the Company.

Taking into account the above, after due consideration and careful assessment, and also having weighed the need for Board refreshment against tenure for relative benefit, the NC and the Board are of the view that each of Mr Sam Chong Keen, Mr Leslie Mah Kim Loong and Mr Kazumichi Mandai is able to discharge his duties independently with integrity and competence.

Mr Sam Chong Keen, Mr Leslie Mah Kim Loong and Mr Kazumichi Mandai has each abstained from all NC and Board deliberations and decisions relating to his continued independence.

The Board also recognises that independent directors may over time develop significant insights in the Group's business and operations and can continue to provide noteworthy and valuable contribution objectively to the Board as a whole. They are of the view that the independence of the independent directors must be based on their substance of their professionalism, integrity and objectivity and not merely based on form such as the number of years which they have served on the Board. The NC, with the concurrence of the Board also weighed the need for Board refreshment against tenure for relative benefit. As it is in the interest of the Company to refresh the Board progressively, the NC is taking active steps to ensure that board renewal is conducted in an orderly manner, to avoid losing institutional memory.

As part of the board renewal process, Mr Leslie Mah Kim Loong, who is due to retire by rotation pursuant to Regulation 111 of the Constitution, will not be seeking re-election and will retire from the Board of Directors at the conclusion of the forthcoming AGM on 31 August 2023. Mr Leslie Mah Kim Loong has been a director of the Company since 2012. The Board and Management would like to express their heartfelt gratitude to Mr Leslie Mah Kim Loong for his invaluable contributions to the Group over the years. Meanwhile, the NC will continue to take the necessary actions to renew the Board progressively.

Board Size and Board Diversity

The NC is of the view that the size of the Board and its board committees is appropriate, taking into account the nature and scope of the Group’s operations, the core competency, qualifications, skills and broad range of industry knowledge and business experience of the directors to govern and contribute to the effectiveness and success of the Group. The NC reviews the size of the Board as well as opportunities to refresh the Board from time to time.

The Company's Board Diversity Policy sets out its approach to achieve diversity on the Board. The Company recognises and embraces the benefits of diversity of experience, age, skill sets, gender and ethnics on the Board and views board diversity as an essential element to support the attainment of its strategic objectives and sustainable development. This is achieved by enhancing the decision-making process of the Board through the perspectives derived from the various skills, business experience, industry discipline, gender, age, ethnicity and culture, geographical background and nationalities, tenure of service and other distinguishing qualities of the directors to avoid groupthink and foster constructive debate.

In reviewing and assessing the composition of the Board and making recommendations to the Board for the appointment of directors, the NC will consider all aspects of diversity including diversity of background, experience, gender, age, and other relevant factors such as distinguishing qualities of the members of the Board. These differences will be considered in determining the optimum composition of the Board and when possible, should be balanced appropriately.

Every year, the NC conducts its review of the composition of the Board, which comprises members of both genders from different backgrounds and ethnicity and whose core competencies, qualifications, skills, and experiences, meet the requirements of the Group at the point in time. The NC will continue to review the Board Diversity Policy, as appropriate, to ensure its effectiveness, and will recommend appropriate revisions to the Board for consideration and approval. It will also continue its identification and evaluation of suitable candidates to ensure there is diversity on the Board when progressively renewing the Board.

In terms of the Board's composition, the Company seeks to have a Board that comprises directors who, as a group, not only provide an appropriate balance and have diversity of professional experience, skills and knowledge but also of other aspects such as gender, age, ethnicity and culture, geographical background and nationalities.

However, the NC and Board does not intend pursuant to the Board Diversity Policy to appoint persons as directors by reason of their gender, age, ethnicity etc as token representatives on the Board or simply to meet quotas. In the Board's view, the fundamental principle is that the candidate must be of the right fit, taking into account the needs and future plans of the Group's businesses, and must meet the relevant needs and vision of the Board and the Company at the material time.

The current Board composition reflects the Company's commitment to board diversity. The Board comprise directors who as a group provide an appropriate balance and diversity of skills and experience including financial, industrial and business management and collectively possess the necessary core competences, qualifications, skills and experience to lead and govern the Group effectively. Each director provides a valuable network of industry contacts which are considered essential to the Group and was appointed on the strength of his/her calibre, experience, skill and stature.

During FY2023, the Directors are between the ages of 52 to 79 and half the Board members are female directors. In terms of independence, there is a strong element of oversight on the Board, as there are four non-executive independent directors representing over 66% of the total board membership. Whilst the majority of the Board members are Singapore citizens, there is a Japanese director on the Board. In addition, the Board comprises members with varying lengths of tenure, demonstrating a good balance between long-serving directors and recent appointees, merging indepth experience with contemporary talent.

The Board concurred with the NC's view that the size of the Board and the Board Committees is appropriate for the needs and demands of the Company's and the Group's operations. In terms of diversity, the Board members with their combined business, management, financial, and professional experience, knowledge and expertise, provide the core competencies to allow for diverse and objective perspectives on the Group's business and direction.

The Board's composition enables Management to benefit from a diverse and objective external perspective on issues raised before the Board, and the directors as a group provide the appropriate balance and mix of skills, knowledge, experience, and other aspects of diversity.

The NC and the Board have assessed the current level of diversity on the Board to be satisfactory and given the current size of the Board and the nature of the Group's business at present, the Board does not propose to set specific diversity targets or concrete timelines for achieving board diversity targets. Instead, the Company takes the approach that maintaining a satisfactory level of diversity is an ongoing process which may need to be updated as the business of the Group develops. This will be disclosed in future corporate governance reports as appropriate.

The NC and the Board will continue to review the Board Diversity Policy, as appropriate, to ensure its effectiveness, and will recommend appropriate revisions to the Board for consideration and approval. It will also continue its identification and evaluation of suitable candidates to ensure there is diversity on the Board.

Details of the directors' qualifications, background and working experience are set out under the "Board of Directors" section of this annual report.

Where appropriate and necessary, the Independent Directors have discussions and meet without the Management's presence, to discuss matters such as the Group's financial performance, corporate governance initiatives, board processes, succession planning and the remuneration of the Executive Directors and key management personnel.

The Board has no dissenting view on the Chairman's Letter to Shareholders for the financial year in review.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER ("CEO")

Principle 3: There is a clear division of responsibilities between the leadership of the Board and Management, and no one individual has unfettered powers of decision-making.

The Chairman and CEO are separate persons to ensure an appropriate balance of power, increased accountability, and greater capacity of the Board for independent decision making.

The Chairman is a non-executive appointment and is separate from the office of the CEO. There is a clear segregation of the roles and responsibilities between the Chairman and the CEO to ensure an appropriate balance of power, increased accountability, and greater capacity of the Board for independent decision making. As the Chairman and CEO are not related, no Lead Independent Director was appointed.

The Chairman leads the Board and is responsible for the strategic direction of the Group, the workings of the Board and communicating the performance of the Company and the Group to the Board and shareholders. The Chairman encourages active and effective engagement, participation and contribution from all Directors and facilitates constructive relations among and between them and management.

At general meetings of shareholders, the Chairman plays a pivotal role in fostering constructive dialogue between shareholders, the Board and management.

Mr Conson Tiu Sia, who was appointed as CEO-Designate on 1 February 2023, has successfully completed the 6-month assessment period as CEO-Designate and was subsequently appointed as CEO on 1 August 2023. He bears full executive responsibility for the Group's operations. He, together with the assistance of a team of key management personnel, is responsible for the dayto- day management of the Group and executing the Group’s strategies and policies. The CEO attends the quarterly AC and Board meetings at the invitation of the AC and Board and updates them on strategic and operational aspects of the Group’s business. The performance of the CEO is reviewed periodically by the RC.

Separately, Mr Wee Kok Wah, who was appointed as Founder and Senior Advisor on 1 November 2021, provides invaluable guidance and counsel to the members of the Board as well as the senior management team. Prior to this appointment, Mr Wee was the Managing Director of the Company.

Lead Independent Director

The Code encourages the appointment of a lead independent director to provide leadership in situations where the chairman is conflicted, and especially where the chairman is not independent.

As the Chairman of the Board, Mr Sam Chong Keen, is an Independent Director, the Board is of the view that the appointment of a lead independent director is not necessary.

BOARD MEMBERSHIP

Principle 4: The Board has a formal and transparent process for the appointment and reappointment of directors, taking into account the need for progressive renewal of the Board.

NC Composition and Role

The NC comprises three Directors, the majority of whom, including the Chairman, are Independent Directors. The NC Chairman is Mr Sam Chong Keen and the other members are Mr Leslie Mah Kim Loong and Dr Wee Li Ann.

The NC is guided by written terms of reference approved by the Board and its principal functions are to establish a formal and transparent process on matters relating to and including:

1. making recommendations to the Board on relevant matters relating to:
   1. the review of succession plans for Directors, in particular the appointment and/or replacement of the Chairman, the CEO and key management personnel;
   2. the process and criteria for evaluation of the performance of the Board, its Board Committees and Directors;
   3. the review of training and professional development programmes for the Board and its Directors;
   4. the appointment and re-appointment of Directors (including alternate directors, if any);
2. reviewing and determining annually, and as and when circumstances require, if a Director is independent, in accordance with the Code and any other salient factors; and
3. where a Director or proposed Director has multiple board representations, deciding whether the Director is able to and has been adequately carrying out his duties as a Director taking into consideration the Director’s number of listed company board representations and other principal commitments.

Nomination and selection of Directors

The NC is responsible for recommending identified candidates to the Board to fill vacancies arising from resignation, retirement or any other reasons or if there is a need to appoint additional directors with the required skill, knowledge or experience to the Board in order to fill any identified competency gap in the Board. Suitable candidates for Board membership are then identified through, inter alia, recommendations from current Board members, substantial shareholders, management or through third-party referrals.

Board renewal is a continuous process and is a crucial element of the Group's corporate governance process. In this regard, the NC reviews annually the composition of the Board and Committees, which includes size and mix, and recommends to the Board the selection and appointment of new directors with a view to identify any gaps in the Board's skills set taking into account the Group's strategy and business operations. The NC seeks to refresh the Board membership progressively and has taken active steps in this regard to ensure that this is done in an orderly manner, to avoid losing institutional memory.

The selection criterion includes integrity, diversity of competencies, expertise, industry experience and financial literacy. The NC and the Board will interview short-listed candidates before discussing and approving the final appointment. For existing directors who retire and stand for re-election, based on the evaluation of these directors, the NC will make recommendations for the renomination of such directors.

The Company has the following process for the selection and appointment of new directors:

1. the NC recommends to the Board a suitable size of the Board; and evaluates the balance of skills, knowledge and experience of Board members required to add value and facilitate effective decision-making, taking into consideration the scope and nature of the Group's operations;
2. the NC considers the channels for seeking suitable candidates and draw up a list of potential candidates. Sources may include internal promotion, recommendations from directors/substantial shareholders/management or external search consultants;
3. short-listed candidates will be required to furnish their curriculum vitae stating in detail their qualification, working experience, employment history, and to complete certain prescribed forms to enable the NC to assess the candidate's independence status;
4. the NC evaluates the candidates' capabilities by taking into consideration certain criteria such as diversity of skills, experience, background, gender, age, ethnicity and other relevant factors and how the candidates fit into the overall desired competency matrix of the Board; and
5. the NC makes recommendation to the Board for approval. The Board is to ensure that the selected candidate is aware of the expectations and the level of commitment required.

All Directors must submit themselves for re-nomination and re-election at least once every three years. The Company's Constitution provides for one-third of the Directors to retire by rotation and be subject to re-election at every AGM. A newly appointed director must also subject himself/ herself to retirement and re-election at the AGM immediately following his/her appointment. Thereafter, he/she is subject to retirement by rotation at least once every three years.

Key information of each director is set out on pages 4 to 5 of this report and the dates of their initial appointment and last re-appointment/re-election are set out below:

Accordingly, at the coming AGM on 31 August 2023, Ms Caroline Wee will be retiring pursuant to Regulation 115 of the Company's Constitution. The directors due for re-nomination and reappointment at the forthcoming AGM under Regulation 111 of the Company's Constitution are Mr Sam Chong Keen and Mr Leslie Mah Kim Loong. Ms Caroline Wee and Mr Sam Chong Keen have offered themselves up for re-election. As part of the board renewal process, Mr Leslie Mah Kim Loong, who is due to retire by rotation pursuant to Regulation 111 of the Constitution, will not be seeking re-election and will retire from the Board of Directors upon the conclusion of the AGM on 31 August 2023. He will also relinquish his position as AC Chairman and member of the NC and RC.

Having assessed the contribution and performance of Mr Sam Chong Keen and Ms Caroline Wee, the NC has recommended the re-election of the two directors who are due to retire at the forthcoming AGM. The Board has accepted the recommendations of the NC. Each director had recused herself/himself relating to the recommendation on her/his re-election as director of the Company.

Subject to their re-election:

1. Mr Sam Chong Keen will continue to serve as the Non-Executive and Independent Chairman of the Board, a member of the AC and Chairman of the NC and the RC; and
2. Ms Caroline Wee will continue to serve as a Non-Executive and Independent Director and a member of the AC.

The requisite information pursuant Appendix 7.4.1 of the SGX-ST Listing Manual pertaining to the retiring directors can be found on pages 142 to 144 of this Annual Report.

Continuous review of Directors' independence

The NC is charged with determining annually, and as and when circumstances require, the independence of each independent director, having regard to the circumstances set forth in Provision 2.1 of the Code, its Practice Guidance and Rule 210(5)(d) of the Listing Manual of the SGX-ST.

Each independent director of the Company will confirm his independence (or otherwise) based on a checklist annually. The checklist is drawn up based on the guidelines provided under the Code. In FY2023, the NC had reviewed the independence of the independent directors, having regard to the circumstances set forth in Provision 2.1 of the Code, its Practice Guidance and the SGX-ST Listing Manual.

As described under the section on Board Independence, the Board, after taking into consideration the views of the NC, is of the view that Mr Sam Chong Keen, Mr Leslie Mah Kim Loong, Mr Kazumichi Mandai and Ms Caroline Wee are independent and that no individual or small group of individuals dominate the Board’s decision making.

Directors' time commitments

The NC ensures that new Directors are aware of their duties and obligations. The NC also decides if a Director is able to and has been adequately carrying out his or her duties as a director of the Company. As part of the assessment of the performance of each individual Director, there is consideration of whether sufficient time and attention has been given by the Director to the affairs of the Company. The NC is satisfied that all Directors were able to and have adequately carried out their duties as a director of the Company for FY2023.

The NC also believes that contributions from each director can be reflected in other ways other than the reporting of attendances of each Director at the Board and Board Committees meetings as well as the frequency of such meetings. A director would have been appointed on the strength of his experience and his potential to contribute to the proper guidance of the Group and its business. To focus on a director's attendance at formal meetings alone may lead to a narrow view of a director's contribution. It may also not do justice to his contributions, which can be in many forms, including Management's access to him for guidance or exchange of views outside the formal environment of the Board.

The listed company directorships and principal commitments of each director are disclosed on pages 4 to 5 of the Annual Report.

The NC does not encourage the appointment of alternate directors and none of the directors has an alternate director.

BOARD PERFORMANCE

Principle 5: The Board undertakes a formal annual assessment of its effectiveness as a whole, and that of each of its board committees and individual directors.

The NC, has with the approval of the Board, established performance criteria and evaluation procedures for evaluation and assessment of the effectiveness and performance of the Board, the Committees as well as the contribution by the Chairman and for each individual director. The NC evaluates and assesses the effectiveness of the Board taking into consideration appropriate performance criteria and upon its recommendation, the Board makes a formal annual assessment of its effectiveness as a whole, its Board Committees and each Director.

The NC has implemented a formal appraisal process to assess the performance and effectiveness of the Board as a whole annually. It focuses on a set of performance criteria which includes the evaluation of the size and composition of the Board, the Board’s access to information and Board accountability. The findings of such evaluations were analysed and discussed with a view to identifying areas for improvement and implementing certain recommendations to further enhance the effectiveness of the Board. In its evaluation, the NC considers the expertise and experience of each Board member, their attendance, participation and contributions to the Board both inside and outside of Board meetings which can be in many forms, including Management's access to him for guidance or exchange of views outside the formal environment of the Board.

Each Director submits an assessment of the Board and the board committees, and a peer assessment of each of the other Directors to assess the contributions by the Chairman and each individual director to the effectiveness of the Board. These detailed forms assess directors in various different areas and competencies, including their attendance and contributions at meetings, preparedness for meetings etc. The evaluation of the Board and the Board Committees focus on a set of performance criteria approved by the Board which includes the size and composition of the Board, Board independence, the Board's access to information and Board's accountability, board committee performance in relation to discharging their responsibilities as set out in their respective terms of reference. The responses are collated by the external Company Secretary and a consolidated report is submitted to the Board. The responses are then discussed by the Board to determine the areas for improvement and enhancement of the effectiveness of the Board and its Board Committees.

Following the review in FY2023, the Board is of the view that the Board and its Board Committees operate effectively and that each director is contributing to the overall effectiveness of the Board and its Board Committees.

No external facilitator was involved in the Board evaluation process in FY2023.

REMUNERATION MATTERS

PROCEDURES FOR DEVELOPING REMUNERATION POLICIES AND LEVEL AND MIX OF REMUNERATION

Principle 6: The Board has a formal and transparent procedure for developing policies on director and executive remuneration, and for fixing the remuneration packages of individual directors and key management personnel. No director is involved in deciding his or her own remuneration.

Principle 7: The level and structure of remuneration of the Board and key management personnel are appropriate and proportionate to the sustained performance and value creation of the company, taking into account the strategic objectives of the company.

Composition and Role

The RC comprises three Non-Executive and Independent Directors. It is chaired by Mr Sam Chong Keen and the members are Mr Leslie Mah Kim Loong and Mr Kazumichi Mandai.

The RC is guided by written terms of reference approved by the Board and its principal responsibilities are:

1. reviewing and making recommendations to the Board on:
   1. a comprehensive framework of remuneration and guidelines for the Board and key management personnel of the Group; and
   2. the specific remuneration packages for each Director, CEO as well as for the key management personnel,
      and in doing so the RC considers all aspects of remuneration, including termination terms, to ensure they are fair;
2. reviewing the Company's obligations arising in the event of termination of the Executive Directors, CEO and key management personnel's contracts of service;
3. where an external remuneration consultant is appointed, reviewing whether the remuneration consultant has any relationship with the Company that could affect his or her independence and objectivity; and
4. reviewing annually the remuneration of employees who are substantial shareholders of the Company, or are immediate family members of a director, the CEO or a substantial shareholder of the Company, and whose remuneration exceeds S$100,000 during the year.

The RC has explicit authority to seek appropriate expert advice in the field of executive compensation outside the Company on remuneration matters when necessary. During the financial year, the RC did not engage the service of an external remuneration consultant.

Remuneration Framework

The RC reviews and recommends to the Board the framework of remuneration for key executives and for directors serving on the Board and Board committees. The review of specific remuneration packages includes fees, salaries, bonuses and incentives. It also administers the Company's Employee Share Option Schemes and Performance Share Schemes, if any. Although the recommendations are made in consultation with Management, the remuneration packages are ultimately approved by the Board. No Director is involved in deciding his or her own remuneration. In setting the remuneration framework, the RC has considered all aspects of remuneration. The RC aims to be fair and avoids rewarding poor performance.

Remuneration for key executives is based on corporate and individual performance with certain key executives entitled to profit-sharing bonuses based on certain profit on a realized basis. There are appropriate and meaningful measures in place for the purposes of assessing the performance of the Executive Directors and key management personnel. Although the recommendations are made in consultation with Management, the remuneration packages are ultimately approved by the Board. No Director is involved in deciding his own remuneration.

In performing its function, the RC endeavours to establish an appropriate remuneration policy to attract, retain and motivate the Executive Directors and key management personnel whilst at the same time ensuring that the reward in each case takes into account individual performance as well as corporate performance.

Executive Directors have service contracts which include terms for termination under appropriate notice.

Non-Executive Directors are paid directors' fees, which consist of a basic retainer fee as director and an additional fee for serving on any of the Board Committees. The fees paid to Directors take into consideration the knowledge and expertise of each individual Director, the responsibilities vested upon them and the effort and time commitment required from them given the complexities of the business and the business structure. Such fees are recommended for approval by shareholders as a lump sum payment at the AGM.

The Board concurred with the RC that the proposed directors' fees for the year ending 30 April 2024 are appropriate and not excessive, taking into consideration the level of contributions by the Directors and factors such as effort and time spent for serving on the Board and Board Committees, as well as the responsibilities and obligations of the Directors. The payment is subject to approval of the shareholders at each AGM. No individual Director is involved in deciding his own remuneration.

In performing its function, the RC endeavours to establish an appropriate remuneration policy to attract, retain and motivate key management personnel and Executive Directors, while at the same time ensuring that the reward in each case takes into account, individual performance as well as corporate performance. The corporate and individual performance-related elements of remuneration are designed to align the interests of Executive Directors and key management personnel with those of shareholders and other stakeholders and to promote the long-term success of the Group.

At the moment, the Company does not use any contractual provisions to reclaim incentive components of remuneration from Executive Directors and key management executives in exceptional circumstances of misstatement of financial results, or of misconduct resulting in financial loss to the Company. The RC will consider, if required, whether there is a requirement to institute such contractual provisions to allow the Company to reclaim the incentive components of the remuneration of the Executive Directors and key management personnel paid in prior years in such exceptional circumstances.

Except as disclosed below and in the Directors' Statement and Financial Statements, no material contracts (including loans) of the Company or its subsidiaries involving the interests of any of the directors or controlling shareholders, subsisted at the end of the financial year or had been entered into since the end of the previous financial year.

DISCLOSURE OF REMUNERATION

Principle 8: The company is transparent on its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationships between remuneration, performance and value creation.

Notwithstanding that it is a variation from Provision 8.1 of the Code, the Company wishes to disclose the remuneration of the Executive Directors in bands of $250,000 for FY2023. The Company is of the view that the intent of Principle 8 was met, as the remuneration policies and the procedure for setting remuneration applicable to the Executive Directors are described above, and the level and mix of remuneration is disclosed in the table below.

The Board supports and is aware of the need for transparency. However, after deliberation and debate, the Board is of the view that as the remuneration packages are confidential and sensitive in nature, full disclosure of the specific remuneration of each individual Director and the Group's key management personnel (who are not directors) is not in the best interest of the Company. Inter alia, the Board has taken into account the very sensitive nature of the matter, the relative size of the Group, the highly competitive business environment the Group operates in, the competitive pressures in the talent market and the irrevocable negative impact such disclosure may have on the Group and which would place the Group in a competitively disadvantageous position.

Details of remuneration and benefits of Directors and Key Management Personnel for the financial year ended 30 April 2023 which will provide sufficient overview of the remuneration of Directors and key management personnel as set out below:-

Key Management Personnel

The Company is of the view that the intent of Principle 8 of the Code 2018 was met, as the remuneration policies and the procedure for setting remuneration applicable to the key management personnel of the Company are described above, and the level and mix of remuneration are disclosed above.

Given the challenging and highly competitive industry conditions in which the Group operates in and in the interest of maintaining good morale and a strong spirit of teamwork within the Group, the Company has weighed the advantages and disadvantages of the disclosure relating to the remuneration of the five top key management personnel (who are not directors) of the Group for the financial year ended 30 April 2023 and believe that such disclosure may be prejudicial to its business interest given the highly competitive business environment it is operating in, the tight labour market as well as the competitive pressures in the talent market. As such, to support the Company's efforts to attract and retain executive talents, the disclosure relating to the remuneration of the top four key management personnel (who are not directors or the CEO) of the Group is only set out in bands of S$250,000 and above. Their profiles are found on pages 6 to 7 of this Report.

The Company believes that the remuneration information as disclosed above will be sufficient for shareholders to have an adequate appreciation of the remuneration of the Key Management Personnel and wishes to maintain confidentiality of remuneration in the interest of maintaining good morale and a strong spirit of teamwork within the Group.

Employees related to substantial shareholder, Directors or Group CEO.

Other than as described below, there are no employees of the Group who are immediate family members of a director or the CEO and whose remuneration exceeds S$100,000 for the financial year.

Mr Wee Kok Wah, who is a substantial shareholder of the Company, is the spouse of Mrs Dawn Wee Wai Ying and father of Dr Wee Li Ann, both executive directors of the Company. Mr Wee Kok Wah took on the role of Founder and Senior Advisor with effect from 1 November 2021 and his remuneration in FY2023 for that role was S$498,000. Separately, there was also a one-off lump sum payment in FY2023 made to Mr Wee Kok Wah, when he stepped down as Managing Director of the Company, that was approved by shareholders at the AGM held on 31 August 2022 pursuant to Section 168 of the Act.

All forms of remuneration and other payments and benefit (if any), paid by the Company and its subsidiaries/ subsidiary companies or subsidiary corporations whose financial statements are consolidated with the Company's financial statements, to Directors and key management personnel of the Company are disclosed in the tables above.

Details of the Company's Employee Share Option Schemes and Share Performance Schemes, if any, will be provided in the Directors’ Statement.

ACCOUNTABILITY & AUDIT

RISK MANAGEMENT AND INTERNAL CONTROLS

Principle 9: The Board is responsible for governance of risk and ensures that Management maintains a sound system of risk management and internal controls, to safeguard the interests of the company and its shareholders.

The Board is cognisant of its responsibility for maintaining a sound system of internal controls to safeguard the investment of its shareholders and the assets and business of the Group. The Board determines the nature and extent of the significant risks which the Company is willing to take in achieving its strategic objectives and value creation and the AC assumes the duties and responsibilities of the risk management function to specifically address these issues.

Risk Management

As proper risk management is a significant component of a sound system of internal control, the Group has put in place a strategic enterprise risk management (“ERM”) framework since FY2007. The Board recognises the importance of establishing a formal ERM Framework to facilitate the governance of risks and monitoring the effectiveness of internal controls.

In addition, the Group has set up an executive Risk Management Committee (“RMC”) to oversee that appropriate risk management policies are put in place and there are processes to evaluate the risks monitored under the ERM framework. The RMC, comprising members of the Senior Management team, is responsible for setting the direction of corporate risk management and monitoring the implementation of risk management policies and procedures.

The RMC has established an enhanced risk management policy to provide guidance to Management on key risk parameters. The significant risks in the Group’s business, including mitigating measures, were also reviewed by the RMC and reported to the AC and the Board. Risk registers are maintained by the business and operational units which identify the key risks facing the Group’s business and the internal controls in place to manage those risks. These risks have been categorized as strategic, operational, financial or compliance risks and the main areas of financial risk, faced by the Group are foreign currency exchange risk, interest rate risk, credit risk and liquidity risk.

The RMC together with the Executive Director and Group Financial Controller have confirmed to the AC and the Board the adequacy and effectiveness of the risk management system and internal controls.

The AC, with the assistance of the Internal and External Auditors, reviews and reports to the Board on the adequacy of the Company’s system of internal controls, including financial, operational, compliance and information technology controls and taking into consideration the risk management perspective.

The AC may examine whatever aspects it deems appropriate of the Group’s financial affairs, its internal and external audits and its exposure to risks of a regulatory or legal nature. It keeps under review the effectiveness of the Company’s system of accounting and internal financial controls, for which the directors are responsible. It also keeps under review the Company’s programme to monitor compliance with its legal, regulatory and contractual obligations.

For the financial year under review, the Board has received written assurance from:

1. the Executive Director and the Group Financial Controller that the financial records have been properly maintained and the financial statements give true and fair view of the Company’s operations and finances; and
2. the Executive Director and other key management personnel who are responsible regarding the adequacy and effectiveness of the Company’s risk management and internal control systems.

The Board recognises the need and is responsible for maintaining a system of internal controls and processes to safeguard shareholders’ investments and the Group’s assets. The AC monitors the effectiveness of the internal control systems and procedures and risk management systems. During the year, the Board and AC reviewed the effectiveness of the Company’s internal control procedures and risk management systems.

The system of internal controls and risk management established by the Company provides reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that can be reasonably foreseen as it strives to achieve its business objectives. While acknowledging their responsibility for the system of internal controls, the Directors recognise that such a system is designed to manage, rather than eliminate risks, and therefore cannot provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors or mis-statements, poor judgment in decision-making, human error, losses, fraud or other irregularities.

Based on the internal controls established and maintained by the Group, work performed by the internal auditor, and the statutory audit conducted by the external auditor, and reviews performed by Management, RMC and various Board committees, the Board, with the concurrence of the AC, is of the opinion that the Group’s framework of internal controls (including financial, operational, compliance and information technology controls) and risk management systems, are adequate and effective to meet the needs of the Group’s existing business objectives and provide reasonable assurance of the integrity and effectiveness of the Group in safeguarding its assets and shareholders' value.

There was no material weakness in risk management and internal controls noted as at 30 April 2023.

Risk management policies

The Group has set up objectives to manage the risks that arise from the normal course of its operations. The significant risks are summarised below:

(i) General business risk

The Group’s major business is distribution of tyres and wheels. The Group is reliant on a few key suppliers for the supply of certain major brand of tyres. Some of these suppliers have granted exclusive distribution rights. Although the Group has a strong relationship with the principals (some exceeding 40 years), there is no assurance that the principals will continue to appoint the Group as their exclusive distribution agent in the future. Should any of the major principals decide to discontinue the distribution rights in the future, the Group could lose some of its market share and this could then have adverse financial impact on the Group. To mitigate this risk, the Group has been focusing on developing its own range of proprietary ‘in-house’ brands like Sumo Firenza, Sumo Tire and SSW to become less reliant on its principals.

As in any other business environment, the Group’s assets are exposed to various risks arising from normal operations and natural disasters. Especially, the Group’s inventory is highly flammable and susceptible to the risk of fire. It is the Group’s practice to annually assess these risks and/or exposure to ensure that the Group is protected from potential monetary loss. In addition to other preventive measures, the Group ensures that adequate insurance coverage is maintained at all times to mitigate such risks except where the cost of insuring the asset is considered prohibitive in relation to the risks identified.

(ii) Product liability claims

The Group is exposed to claims from its customers for products sold by the Group which contain defects or found to be unfit for their intended use. The Group may be required to make financial compensation to its customers in such circumstances. The Group’s principals are well established in the market place and their products are usually tested for safety before being marketed. The Group continues to spend considerable effort in ensuring the quality of its products and services. The Group provides its employees with relevant training, on a regular basis, to uphold the quality of services provided to its customers. The Group has no history of any significant claim made by its customers.

(iii) Credit and inventory risk

The Group faces normal business risks associated with collection of trade receivables and inventory obsolescence. The Group’s exposure to credit risks arises mainly from sales made to distributors and retailers in various geographical locations. The Group has tight credit control policies and procedures to evaluate the credit worthiness of customers before credit is granted and to prevent significant concentration of credit risk. The Group also has adequate policies and procedures to minimise the risk of inventory obsolescence. The risk of inventory obsolescence may arise from changes in consumer preference and technology. It is the Group’s policy to maintain optimum inventory level at all times. Inventory level is monitored regularly and slow-moving inventories are quickly identified for early disposal. The Group has also put in place a ‘supply chain management’ system to procure inventories in an effective manner to prevent excess inventories on hand.

The financial risk management objectives and policies are discussed in Note 35 to the financial statements.

AUDIT COMMITTEE

Principle 10: The Board has an Audit Committee which discharges its duties objectively.

AC Composition and Role

The AC comprises four Non-Executive and Independent Directors. It is chaired by Mr Leslie Mah Kim Loong and the members are Mr Sam Chong Keen, Mr Kazumichi Mandai and Ms Caroline Wee.

The profiles of each AC members are set out on pages 4 to 5 of this Annual Report. The Board is of the view that the members of the AC have recent and relevant accounting or related financial management knowledge, expertise and experience to discharge their responsibilities properly.

None of the AC members are former partners or directors of, or have any financial interests in, the Company’s existing auditing firm or auditing corporation.

The role of the AC is to assist the Board in overseeing the adequacy of the overall internal control functions, the internal audit functions within the Group, the relationship of those functions to external audit, the scope of audit by the external auditor as well as their independence.

The AC is guided by written terms of reference approved by the Board and its duties include:

1. reviewing the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of the Company and any announcements relating to the Company’s financial performance;
2. reviewing at least annually the adequacy and effectiveness of the Company’s internal controls and risk management systems;
3. reviewing the assurance from the Executive Director and the Group Financial Controller on the financial records and financial statements;
4. making recommendations to the Board on: (i) the proposals to the shareholders on the appointment and removal of external auditors; and (ii) the remuneration and terms of engagement of the external auditors;
5. reviewing the adequacy, effectiveness, independence, scope and results of the Company’s external audit;
6. reviewing the adequacy, effectiveness, independence, scope and results of the Company’s internal audit function;
7. reviewing the policy and arrangements for concerns about possible improprieties in financial reporting or other matters to be safely raised, independently investigated and appropriately followed up on;
8. deciding on the appointment, termination and remuneration of the head of the internal audit function, if any, as the primary reporting line of the internal audit function is to the AC;
9. meeting with the external auditors, and with the internal auditors, in each case without the presence of Management, at least annually;
10. reviewing and recommending the nature and extent of the significant risks which the Company is willing to take in achieving its strategic objectives and value creation;
11. reviewing any matters relating to suspected fraud or irregularity, or suspected infringement of any Singapore laws or regulations or rules of the SGX‑ST or any other regulatory authority in Singapore, which has or is likely to have a material impact on the Company’s or Group’s operating results and/or financial position, and the findings of any internal investigations, and Management’s response thereto, discussing such matters with the external auditor and, at an appropriate time, reporting the matter to the Board;
12. carrying out the functions set out in Section 201B of the Companies Act;
13. with reference to the Practice Guidance, having explicit authority to investigate any matter within its terms of reference, full access to and co-operation by Management, full discretion to invite any Director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its functions; and
14. reporting to the Board the significant issues and judgements that the AC considered in relation to the financial statements, and how these issues were addressed.

The AC has been given full access and obtained the co-operation from the Management of the Company. The AC has the explicit authority to investigate any matter within its terms of reference. It also has full access to and co-operation 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.

Quarterly (where applicable), half year and full year results are reviewed by the AC prior to their submission to the Board as are interested person transactions that fall within the scope of Chapter 9 of the Listing Manual of the SGX‑ST.

Internal Audit

The AC approves the hiring, removal, evaluation and compensation of the internal auditors. The internal audit function is outsourced to Yang Lee & Associates (“YLA”), an external professional firm. The internal auditor conducts regular audit of internal control systems of the Group’s companies, recommends necessary improvements and enhancements, and reports directly to the AC. The AC reviews and approves the annual internal audit plan. The internal auditor has unrestricted access to documents, records and personnel, including the AC and has appropriate standing within the Company.

The AC examines the effectiveness of the Group’s internal control systems. The many assurance mechanisms operating are supplemented by the Internal Auditor’s reviews of the effectiveness of the Group’s material internal controls, including financial, operational and compliance and information technology controls. Any material non-compliance or failures in internal controls and recommendations for improvements are reported to the AC. The AC reviews the effectiveness of the actions taken by Management on the recommendations made by the internal auditors in this respect.

YLA is guided by the International Standards for the Professional Practice of Internal Auditing issued by the Institute of Internal Auditors and staffed with professionals with the relevant qualifications and experience. The AC is satisfied that the Company’s internal audit function is independent, effective and adequately resourced to perform its functions and is staffed by suitably qualified and experienced professionals.

External Auditors

The Company’s external auditor is Ernst & Young LLP (“EY”), an accounting firm registered with the Accounting and Corporate Regulatory Authority of Singapore.

Updates on the changes in accounting standards and treatment are prepared by the external auditor and circulated to members of the AC periodically for information.

To keep abreast of the changes in financial reporting standards and related issues which have a direct impact on financial statements, discussions are held with the external auditor where applicable, when they attend the AC Meetings.

The external auditor has full access to the AC which can conduct or authorise investigations into any matters within its terms of reference. The AC also has full access to and co-operation from Management and the discretion to invite any Director or Executive Officer to attend its meetings and has reasonable resources to enable it to discharge its functions. Minutes of the AC meetings are regularly submitted to the Board for its information and review.

The AC confirms that it has reviewed the nature and extent of all audit and non-audit services performed by the external auditor, to establish if their independence and objectivity as external auditor of the Company, had in any way been compromised. EY did not provide any significant non-audit services in FY2023. The fees payable to EY are disclosed on page 90 of this Annual Report.

The AC has also reviewed and confirmed that EY is a suitable audit firm to meet the Company’s audit obligations, after taking into consideration the Audit Quality Indicators Disclosure Framework published by the ACRA and having regard to the adequacy of resources and experience of the firm and the assigned audit engagement partner, EY’s other audit engagements, size and complexity of the Stamford Tyres Group, number and experience of supervisory and professional staff assigned to the audit.

Accordingly, the AC recommended to the Board the re-appointment of EY as external auditor of the Group for the year ending 30 April 2024. EY has been engaged to audit the accounts of the Company and its Singapore-incorporated subsidiaries. The accounts of the significant foreignincorporated subsidiaries are audited by EY member firms in the respective countries. The Group has complied with Rules 712 and 715 of the Listing Manual in relation to its auditing firms.

AC's Activities in FY 2023

The AC has discussed with Management the accounting principles that were applied and their judgment of items that might affect the integrity of the financial statements. Provision 1.4 of the Code recommends, inter alia, that a summary of the AC’s activities be disclosed in the annual report. The AC performs the functions specified in Section 201B of the Act, the Listing Manual of the SGX‑ST and the Code. The AC met four times during FY2023. The AC reviewed and approved the internal audit plan for execution.

In FY2023, the Group with the assistance of its internal auditors carried out an internal review of key operating cycles of its Thailand subsidiary. Any material non-compliance or lapses in internal controls together with corrective measures recommended by internal and external auditors were reported to the AC.

The AC also reviewed the effectiveness of the measures taken by management in response to the recommendations made by the internal and external auditors. The systems of internal controls and risk management are continually being refined by Management, the AC and the Board.

The AC has met with the internal and external auditors separately without the presence of Management for the year in review. In addition, updates on changes in accounting standards and treatment are prepared by the external auditor and circulated to the members of the AC periodically for information.

Significant financial statement reporting matters

The significant issues considered by the AC in relation to financial statements during the year ended 30 April 2023 are detailed below, alongside the actions taken by the AC to address these issues.

Whistle Blowing Policy

The AC has put in place a “whistle blowing” or Corporate Ethics Compliance policy. The policy provides a channel for staff and third parties to confidentially report violations of the Group’s Code of Ethics, business conduct, and improprieties in financial accounting, trade practices, conflict of interest, employee discrimination and health and safety. Reports can be made on an anonymous basis directly to the AC. Appropriate investigation will be carried out and the informant (if not anonymous) will be informed of the results. The objective is to ensure that arrangements are in place for independent investigations of such matters and for appropriate follow up action. The AC is responsible for oversight and monitoring of whistleblowing and the AC reviews all whistleblowing complaints, if any, at its quarterly and half-yearly meetings to ensure independence, thorough investigation and appropriate follow-up actions are taken. The Company is committed to ensuring that whistle-blowers will be treated fairly and protected against detrimental or unfair treatment for whistleblowing in good faith.

There was no whistle-blower complaint received by the Group in respect of FY2023.

SHAREHOLDERS' RIGHTS AND ENGAGEMENT

SHAREHOLDER RIGHTS, CONDUCT OF SHAREHOLDERS MEETINGS

Principle 11: The company treats all shareholders fairly and equitably in order to enable them to exercise shareholders' rights and have the opportunity to communicate their views on matters affecting the company. The company gives shareholders a balanced and understandable assessment of its performance, position and prospects.

Conduct of General Meetings and Interaction with Shareholders

The Company provides shareholders with the opportunity to participate effectively in and vote at general meetings of shareholders. All shareholders are informed through notices of general meetings sent by post and such notices are also advertised in newspapers and made available on the SGX‑ST’s website.

All registered shareholders of the Company are invited and encouraged to attend and vote at general meetings. At the general meeting, shareholders have the opportunity to vote in person or by proxy and will be informed of voting procedures. Participation of shareholders is encouraged at the AGM through the open question and answer session. The Directors and Management will be available to address any queries or concerns on matters relating to the Company and the external auditor will also be present to address shareholders’ queries about the conduct of audit and the preparation and content of the auditor’s report.

The Board has developed several channels, such as the Group’s website, email or fax, for shareholders who are not able to attend the AGM to contribute their feedback and inputs regarding the Company and its operations.

Every matter requiring shareholders’ approval is proposed as a separate resolution on each substantially separate issue unless the issues are interdependent and linked so as to form one significant proposal. Where resolutions are “bundled” the Company will explain the reasons and material implications in the notice of meeting.

Each item of special business included in the notice of meeting is accompanied, where appropriate, by an explanation for the proposed resolution. Proxy forms are sent with the Notice of meeting to all shareholders. Except for a shareholder who is a Relevant Intermediary as defined under Section 181(6) of the Act, a shareholder may appoint up to two proxies to attend and vote on his behalf at the general meeting through proxy forms deposited 72 hours before the meeting.

As authentication of shareholder identity information and other related security issues is still a concern, the Company has decided, for the time being, not to implement voting in absentia by mail, facsimile or email.

To promote greater transparency and effective participation, the Company has conducted the voting of all its resolutions by poll at all general meetings since 2012. Upon the conclusion of the general meetings, the detailed voting results, including the total number of votes cast for or against each resolution tabled, are announced at the general meetings and via SGX‑ST’s website. The Company will consider measures and legislations that may be introduced by the relevant authorities as a result of the current environment in formulating the framework and procedures to effect additional methods of voting.

The Directors, Management and the external auditor are present and available at the general meetings to address any queries or concerns on matters relating to the Group and its operations.

Conduct of AGM in 2022 amidst the Covid-19 pandemic

In FY2022, due to the Covid-19 pandemic crisis and in line with the initiatives implemented by the regulatory bodies (i.e. the Joint Guidance issued by the Accounting and Corporate Regulatory Authority, the Monetary Authority of Singapore (“MAS”) and the SGX‑ST), the Company conducted a virtual annual general meeting (“2022 AGM”). The virtual 2022 AGM was conducted on 30 August 2022 in accordance with the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debentures Holders) Order 2020 issued by the Ministry of Law (the “Meeting Order”). Shareholders were invited to participate in the virtual 2022 AGM by (a) observing and/or listening to the proceedings via liveaudio webcast and (b) submitting questions in advance of the 2022 AGM and (c) appointing the Chairman of the Meeting as proxy to attend, speak and vote on their behalf at the 2022 AGM. The results of the poll votes on each resolution tabled at the AGM (including the total number of votes cast for or against each resolution) were announced at the virtual AGM and via SGXNet thereafter.

All Board members were present at the 2022 AGM with some of them attending the AGM remotely. All key executives (or executives of equivalent rank) and the external auditor attended the AGM remotely as well.

In compliance with the checklist jointly issued by ACRA, MAS and Singapore Exchange Regulation which provides further guidance to listed and non-listed entities on the conduct of general meetings, the Company published the minutes of the 2022 AGM on SGXNet and the Company’s corporate website including responses to questions raised by shareholders in advance of the 2022 AGM.

Dividend Policy

While the Company has not formally instituted a dividend policy, it has a good track record of paying annual dividends to shareholders. In proposing any dividend payout and/or determining the form, frequency and/or the amount of such dividend payout, the Board will take into account, inter alia, the Group’s financial position, retained earnings, results of operation and cash flow, the Group’s expected working capital requirements, the Group’s expected capital expenditure and future expansion and investment plans and other funding requirements, general economic conditions and other internal or external factors that may have an impact on the business or financial performance and position of the Group.

The Board endeavours to maintain a balance between meeting shareholders’ expectations and prudent capital management with a sustainable dividend payout.

The declaration and payment of any dividend will be recommended by the Directors and the final dividend (if any) will be subject to approval by shareholders.

ENGAGEMENT WITH SHAREHOLDERS

Principle 12: The company communicates regularly with its shareholders and facilitates the participation of shareholders during general meetings and other dialogues to allow shareholders to communicate their views on various matters affecting the company.

Communication with shareholders and the investment community is maintained through regular dissemination of information such as announcements on half-yearly and full year results, press releases on the SGXNet and the Company’s corporate website.

To facilitate shareholders’ ownership rights, the Company ensures that all material information is disclosed in a comprehensive, accurate and timely basis via SGXNet especially information pertaining to the Company’s business development and financial performance which could have a material impact on the price or value of its shares so as to enable shareholders to make informed decisions in respect of their investments in the Company.

Although the Company does not have an investor relations policy, the Company has an Investor Relations Section on its corporate website which shareholders and other stakeholders may contact the Company with feedback or questions and there are procedures in place for following up and responding to stakeholders’ queries as soon as applicable.

General meetings have been and are still the principal forum for dialogue with shareholders. Shareholders’ views are sought at general meetings and shareholders are given the opportunity to air their view and ask the directors and management questions regarding the Company and the Group.

The Company is committed to treating all shareholders fairly and equitably and keep all shareholders and other stakeholders informed of its corporate activities, including changes in the Company or its business which would be likely to materially affect the price or value of its shares on a timely basis.

MANAGING STAKEHOLDERS RELATIONSHIPS ENGAGEMENT WITH STAKEHOLDERS

Principle 13: The Board adopts an inclusive approach by considering and balancing the needs and interests of material stakeholders, as part of its overall responsibility to ensure that the best interests of the company are served.

The Company values input from all of its stakeholder groups and uses a variety of channels and platforms to engage with them as well as receive their feedback. The Company identifies stakeholders as groups that have an impact or have the potential to be impacted by its business, as well as those external organisations that have expertise in aspects that the Company consider material.

The Company’s efforts on sustainability are focussed on creating sustainable value for our key stakeholders, which include communities, customers, staff, regulators, shareholders and vendors. More details will be disclosed in the standalone Sustainability Report for the financial year ended 30 April 2023 which will be issued not later than 4 months after the end of the financial year.

Shareholders are encouraged to attend the Company’s general meetings to ensure a greater level of shareholder participation and for them to be kept up to date on the strategies and goals of the Group. Annual reports, notices of annual general meetings and circulars and notices pertaining to any Extraordinary General Meetings of the Company are sent to all shareholders by post or by electronic transmission in accordance with the Act, the SGX‑ST Listing Manual and the Company’s Constitution.

To facilitate participation by shareholders, the Company’s Constitution allows shareholders to attend and vote at general meetings of the Company by proxies. A shareholder who is not a relevant intermediary is entitled to appoint not more than two proxies to attend, speak and vote at the general meetings while a member who is a relevant intermediary is entitled to appoint more than two proxies to attend, speak and vote at the general meetings through proxy forms deposited 72 hours before the meeting. Notices of general meetings are advertised in the newspapers and available on the SGX‑ST’s website.

The Company does not practice selective disclosure. Shareholders are kept informed of the developments in the Group’s businesses and operations through announcements via SGXnet as well as through the annual report. Announcements are made as soon as possible to ensure timely dissemination of the information to shareholders and the public. Results and the annual reports are announced or issued within the mandatory periods.

To further enhance its communication with investors, the Company's website www.stamfordtyres.com allows the public to access information on the Group directly. The Company's website is updated regularly and contains various information on the Company and the Group and serves as an important resource for investors and all stakeholders.

OTHER CORPORATE GOVERNANCE MATTERS

DEALINGS IN SECURITIES

The Group has put in place an internal compliance code which prohibits dealings in the securities of the Company by the Company, Directors and employees while in possession of unpublished material price-sensitive information, and during the one month preceding, and up to the time of announcement of the Company’s results for the first half financial year (both dates inclusive) and the Company’s full financial year (the “Compliance Code”).

As the Company had ceased quarterly reporting since financial year ended 30 April 2020, the Compliance Code has been updated whereby the Company, Directors and employees of the Group are not permitted to deal with the securities of the Company during the period beginning one month before the announcement of the half year and full year financial statements results and ending on the date of the announcement.

The Compliance Code also discourages all the Directors and employees of the Group to deal in securities on short-term considerations. Directors are required to report securities dealings within two business days of such dealings, to the Company Secretary, who will assist to make the necessary announcements via the SGXNet.

In addition, Directors and officers are expected to observe insider trading laws at all times even when dealing in securities within the permitted trading period and report securities dealings to the Company Secretary accordingly.

MATERIAL CONTRACTS

Save as disclosed below, there were no material contracts of the Company or any of its subsidiaries involving the interest of any director or controlling shareholder, either still subsisting at the end of the financial year or if not then subsisting, entered into since the end of the previous financial year.

INTERESTED PERSON TRANSACTIONS

The Group has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the AC and that the transactions are conducted at arm’s length basis and on normal commercial terms and will not be prejudicial to the interests of the Company and its shareholders. All interested person transactions are subject to review by the AC to ensure compliance.

The following interested person transactions were conducted during the year:-

The Company does not have a shareholders’ mandate for interested person transactions pursuant to Rule 920 of the Listing Manual.

Save as disclosed above, there were no other significant interested person transactions (excluding transactions less than S$100,000) during the financial year ended 30 April 2023.

OTHER DISCLOSURE REQUIREMENTS

There are no material developments after the preliminary announcement that would affect the performance of the Group.

CORPORATE SOCIAL RESPONSIBILITY

In the introduction to the Code, it is stated that companies that embrace the tenets of good governance, including accountability, transparency and sustainability, are more likely to engender investor confidence and achieve long-term sustainable business performance. Details of the Group’s sustainability practices, including the corporate social responsibility initiatives during FY2023, are set out in the Company’s Sustainability Report that will be issued for FY2023.