vi.

Risk facing by the company

The Board of directors created an Enterprise Risk Management (ERM) framework to

recognise and deal with serious risks faced in the company’s operations. The Chief
Executive Officer leads a Risk Management Committee (RMC) consisting of chief
management personnel from every department. The RMC’s duty is to report to the
Audit Committee on important risks diagnosed and the execution of schemes to
alleviate the risks. The internal audit functions of the group such as risk management
is carried out externally by a professional firm called KPMG. The monitoring and
reviewing of risks by an outside firm could be done in small amount of time and full
time employees cannot be necessitated. Outsourcing improves independence and
avoids conflict therefore providing better-quality reports. The firm paid about
RM80000 for this financial year for internal audit function. This sum is huge but in
the long run, it is more cost saving to outsource internal audit than hiring full-time
employees for this function. During the financial year under review, the RMC
Meeting held a total of 12 meetings to assess and evaluate risks that may impede
the Group from achieving its objectives, as well as develop action plans to mitigate
such risks. On a quarterly basis, the RMC will update the Audit Committee and the
Board of Directors on the risk management activities. The identification and
management of risks is a big deal for the company because it is supervised by top
managers and meetings are held regularly throughout the year.
vii. Internal control

The following internal control processes have been formed :

• Strategic Business Planning Processes
Adequate business plans are developed where the group’s business goals and plans of
action are declared to the board.

• Documented Policies and Procedures

Standard operating manuals about internal schemes and approaches are maintained to
assign activities and conditional to be revised if necessary.

• Performance Monitoring and Reporting

The group’s management team supervises and appraises the group’s financial and
operational performance on a monthly basis.

• Financial Performance Review

The quarterly and annual results of the group are evaluated by the audit committee
which then suggest to the group for approval.

• Safeguarding of Assets
Ample insurance coverage and physical precautions over crucial assets of the group
are set up to ascertain that the assets are properly insured.
viii. Contingency

A contingency plan is a plan devised for an outcome other than in the usual plan. It is
often used for risk management for an exceptional risk that, though unlikely, would
have catastrophic consequences.

A contingency plan is a plan drawn up for a consequence other than the usual plan. It
is frequently used for risk management for an atypical risk, even so improbable,
would have disastrous outcomes. In this case, 7-eleven has contingent liabilities,
which are liabilities which may be incurred by an entity depending on the outcome of
an uncertain future event. The bank guarantees are worth more than RM8 million in
the forms of security deposits.

Material Litigation means any litigation that, according to generally accepted

accounting principles, is deemed significant to a person's financial health and would
be required to be referenced in a person's annual audited financial statements, report
to shareholders or similar documents. The company has has two lawsuits against two
different companies. It did not record any provision for liability in the financial
statements as it expect to come out successful of the trials.
ix. Going concern

An entity prepares financial statements on a going concern basis when, under the
going concern assumption, the entity is viewed as continuing in business for the
foreseeable future. The concept of going concern is an underlying assumption in the
preparation of financial statements, hence it is assumed that the entity has neither the
intention, nor the need, to liquidate or curtail materially the scale of its operations. For
this financial period, 7-eleven did not undergo economic difficulties, such as
significant cash flow problems. However, it seems that the management determine
that there are no material uncertainties and the business is still profitable, implying
that the group is a going concern.

x. Corporate Governance

The board of directors of 7-eleven acknowledges the weight of taking on high

corporate governance principles to ameliorate shareholders’ value while preserving
stakeholders’ interest. The board takes into account the Malaysian Code of Corporate
governance and the main market listing requirements of Bursa Securities.
Corporate governance is divided into 3 principles:

1. Principle A - Board leadership and effectiveness

Part 1 - Board responsibilities
The board of directors concedes the primordial role it engages in devising the
strategic government of the company and assumes its duties and responsibilities in
implementing its fiduciary and leadership functions

The company created and applied a Board Charter which acts as a reference point for
board activities. The Board Charter offers instruction for directors and management
concerning the responsibilities of the board, Board Committees and Senior
Management.
The board conformed a directors’ code of ethics describing the standards of ethical
business behaviour from directors and inserted it in the Board Charter.

The company secretaries perform an advisory role to the board in relation to the
company’s structure, policies, proceedings and conformity to applicable regulatory
requirements and regulations

Part II - Board composition

The attendance of independent non-executive directors carries out the critical position
in corporate accountability. Th non-executive directors give impartial and free
judgments to consider the interest of the group and stakeholders. To serve in the
conduct of its management role, the board has initiated the the following board
committee to inspect particular matters:
 Audit committee
 Nominating committee
 Remuneration committee
 Risk management committee

Part III - Remuneration

The detailed salaries of the top five senior management are not reported in the annual
report. The board deems its is preferable for the company not to divulge these figures
because of the contention in the market for quality senior management staff.
However, there is an overview of the remunerations paid to the directors for a
financial year.
Principle B - Effective audit and risk management
The board considers risk management and internal controls as an essential part of the
overall management processes.

Principle C- Integrity in corporate reporting and meaningful relationships with

customers

The board of directors are acquainted with the necessity to initiate corporate
disclosure policies and procedures to allow extensive, accurate and timely disclosures
associated with the company to be made to shareholders and stakeholders.

The Annual General Meeting (AGM) that gives opportunities for shareholders to
bring up questions referring to the annual report, audited financial statements, and
corporate developments in the group is the Annual General Meeting. The chairman,
CEO, and external auditors will reply to shareholders’ questions during the AGM, if
necessary.

xi. Audit committee

The board of directors set up an audit committee to help in the conduct of its tasks on
financial reporting. It is comprised of non-executive directors and and overseen by an
independent non-executive director. To avoid unbiased judgments, the audit
committee members ought not be a former key audit partner of the company. For
premium reports, all members of the audit committee need to possess pertinent
accounting or financial experience and know-how to achieve the duties. For
transparency, and to prove that audit committee members are engaged through
meritocracy, their qualifications and experiences are disclosed in the annual reports.
xii. Sustainability report

This is the third year that the sustainability report is incorporated in the company’s
annual report. It involves topics that are the most meaningful to the stakeholders and
the firm. The report demonstrated the business’s management in focusing on
economic, environmental and social opportunities and risks. The sustainability
statement is available on the group’s website and stakeholders can provide feedback
and comments thanks to contact details in the annual report. 7-eleven is aware of its
position as the leader in Malaysia for convenient stores. So it endeavours to contribute
to the domestic economic while protecting the environment. The company has three
strategic pillars for their sustainable strategies.