DRIVING IT UP
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ANNUAL REPORT 2016
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,
Risk Management Committee and various Board committees, the Board, with the concurrence of the AC, is of
the opinion that the system of internal controls, including financial, operational, compliance and information
technology controls and risk management, were adequate and effective as at 30 April 2016 to meet the needs
of the Group’s existing business objectives, having addressed the risks which the Group considers relevant
and material to its operations. While acknowledging their responsibility for the system of internal controls, the
Directors are aware 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 errors, losses, fraud or other irregularities.
Quarterly 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.
The AC has a “whistle blowing” or Corporate Ethics Compliance policy in place. The policy provides a channel
for staff 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 & 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.
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 30 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.
Corporate Governance
(Cont’d)
