The principles adopted by the Company are in accordance with the principles and practices stipulated in the Malaysian Code on Corporate Governance (Revised 2007) (the Code) and the Malaysian International Chamber of Commerce and Industry’s (MICCI) Ethics Charter (the Ethics Charter). The Code sets out the principles and best practices on structures and processes that companies may use in their operations towards achieving the optimal governance framework and the Ethics Charter is a standard guide that calls for MICCI member companies to pursue their corporate and business interests with VIGOUR, which represents the business values of Value Creation, Integrity, Governance, Obligation, Understanding and Responsibility.

The Company’s commitment and efforts in sustaining high standards of corporate governance is proven by the following accolades received by the Company:

The Board is pleased to report the Company’s application of the underlying principles set out in the Malaysian Code on Corporate Governance (Revised 2007) (the Code) and the extent to which the Company has complied with the Code throughout the financial year ended 30 June 2011.

The Group is led by an effective Board which comprises members of high calibre from a diverse blend of professional backgrounds with extensive business and financial experience, skills and expertise, supported by Independent Directors who are able to bring independent judgement on issues of strategy, performance, resources and standards of conduct. A brief profile of each Board member is presented on pages 58 to 63 of this Annual Report.

The Board has formal terms of reference to guide the Directors in the discharge of their responsibility. The Board has the overall responsibility in leading and determining the Group's strategic direction. It provides an effective oversight of the conduct of the Group’s businesses, ensuring an appropriate control system is in place as well as regularly reviewing such system to ensure its adequacy and integrity.

The principal responsibilities of the Board include the following:

• Reviewing and adopting a strategic plan for the Company
• Overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed
• Identifying principal risks and ensure the implementation of appropriate systems to manage these risks
• Succession planning, including appointing, training, fixing of compensation and where appropriate, replacing Senior Management
• Developing and implementing an investor relations programme or shareholder communications policy for the Company
• Reviewing the adequacy and the integrity of the Company’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines

• Managing Director
• Finance Director
• Chief Financial Officer
• Marketing Director
• Sales Director
• Supply Chain Director
• Corporate Relations and Legal Director
• Human Resources Director

The Board currently comprises nine (9) members, of whom four (4) (including the Chairman) are Independent Non-Executive Directors, four (4) are Non-Independent Non-Executive Directors, and one (1) is an Executive Director. The proportion of Independent Non-Executive Directors complies with the requirements prescribed by the Listing Requirements.

The four (4) Independent Non-Executive Directors fulfill the criteria of independence as defined in the Bursa Securities Main Market Listing Requirements. They do not participate in the day-to-day management of the Company and do not involve themselves in business transactions or other relationship which could materially compromise their independent judgement.

There is a clear division of responsibility between the Chairman and the Managing Director to ensure that there is a balance of power and authority in the Board, such that no one individual has unfettered powers of decision-making.

The Chairman of the Board is primarily responsible for ensuring the effective functioning of the Board and ensuring all directors are enacted and encouraged to play their full part in the Group’s activities. The Chairman has never held any executive position in the Group.

The Managing Director is responsible for the day-to-day management of the Group’s business and operations including the implementation of business plans and strategies approved by the Board and communicating matters to the Board.

The current size of the Board is appropriate and commensurate with the complexity, scope and operations of the Group. It has a balanced composition with adequate Board independence that reflects the interest of minority shareholders and provides an effective check and balance in the functioning of the Board. Although all Directors have an equal responsibility for the Group’s operations, the Independent Non-Executive Directors play an important role in bringing impartiality and scrutiny to Board deliberations and decision-making, and also serve to stimulate and challenge the Management in an objective manner. The decisions are arrived at after taking into account the long-term interests, not only of the shareholders, but also of employees, customers, suppliers, and the many communities in which the Group conducts its business.

The Chairman of the Board, Tan Sri Saw Huat Lye, is the designated Senior Independent Non- Executive Director, to whom concerns pertaining to the Group may be conveyed by shareholders and other stakeholders.

The Directors of the Group adhere to the Code of Ethics established by the Companies Commission of Malaysia for Company Directors. The Code of Ethics sets out the principles in relation to sincerity, integrity, responsibility and corporate social responsibility.

The annual meetings schedule which sets out the dates for meetings of the Board, Board Committees and shareholders, as well as the closed period for dealings in securities by Directors based on the targeted date of announcement of quarterly results of the Group, is prepared and circulated to Directors before the beginning of each year to facilitate the Directors to plan ahead.

The Board meets on a quarterly basis and additional meetings are convened as and when necessary, to consider urgent proposals or matters that require the Board’s consideration. The Board met four (4) times during the financial year ended 30 June 2011 and attendance of Directors at Board meetings, was as follows:

Note: Mr Edward McShane and Mr Edmond Neo Kim Soon were appointed to the Board on 25 July 2011

At the quarterly Board meetings, the Board reviews Management reports on the business and financial performance of the Group and discusses major operational and financial issues. The key matters reserved specifically for the Board’s decision include the approval of quarterly financial statements, the annual strategy plan, major acquisitions or disposal of a business or assets, appointment of Board / Board Committee members, declaration of dividends, related party transactions, changes to management and control structure of the Group, key policies, procedures and authority limits. The Board also reviews issues deliberated and recommendations made by the Board Committees and such other relevant matters significantly affecting the Group’s operations.

The Directors are provided with a structured agenda together with comprehensive Management reports and proposal papers at least 7 days before the Board meeting. This is to accord sufficient time for the Directors to peruse the meeting papers and enable them to effectively discharge their duties and responsibilities. Management reports presented to the Board include the following information:

• Business and financial performance of the Group
• Productivity and product quality measures
• Marketing and sales activities
• Market share and market trends
• Developments on human resource
• Environmental and industry issues
• Legal and regulatory updates

Where necessary, Senior Management will be invited to attend Board meetings to provide additional information and clarify any issues raised by the Directors relating to any relevant business tabled at Board meetings. Directors are encouraged to share their views and insight in the course of deliberation and partake in discussions. Any Director / Board Committees member who has a direct or deemed interest in the subject matter to be deliberated shall declare their interest and abstain from deliberation and decisions on the subject matter during the meeting.

All issues discussed and all decisions made during the Board Meeting will be properly recorded by the Company Secretary. Minutes of Board Meetings are circulated to all Directors for their perusal prior to it being tabled for confirmation at the following Board Meeting. Upon receiving confirmation from all the Board members, the minutes will be signed by the Chairman of the meeting as a correct record of the proceedings of the meeting. Decisions made and policies approved by the Board at Board Meetings will be communicated to the Senior Management for action after the meeting.

The Board is regularly updated and kept informed of the latest developments in the legislation and regulatory framework affecting the Group. All members of the Board have unrestricted and constant access to and interaction with the Senior Management on issues under their respective purview. All Directors have access to the advice and services of the Company Secretary to enable them to discharge their duties effectively.

The Board, whether as a full Board or in their individual capacity, may seek independent professional advice on specific issues at the Company’s expense, where necessary, to enable them to discharge their duties.

Any Director appointed to the Board is required to complete the Mandatory Accreditation Programme (MAP) within 4 months from the date of appointment. All Directors have completed the MAP except for Mr Edward McShane and Mr Edmond Neo Kim Soon, the two newly appointed Directors who joined the Board on 25 July 2011. They will complete the MAP within the required timeline.

Induction programme is arranged for newly appointed Directors to enable them to have a full understanding of the nature of the businesses, current issues within the Group and corporate strategies as well as the structure and management of the Group.

On a yearly basis, an in-house training programme will be arranged by the Company Secretary for the Directors. The Directors may also request to attend additional training courses according to their needs from time to time to keep abreast with relevant changes in laws and regulations, and the business environment.

The in-house training programme which covered the following topics, was held on 16 June 2011 and attended by the Directors of the Company:

• Global Grocery Retail Trends and Implications for Food and Beverage Retail Account Management
• Commodity Trends and Impact
• Malaysia’s New Economic Policy (Economic Transformation Programme / 10th Malaysia Plan)

The in-house training programme was conducted by consultants and professionals with the relevant experience and expertise.

Some of the Directors have also attended individually the various training programmes and conferences organised by the relevant regulatory authorities and professional bodies during the financial year ended 30 June 2011, amongst others, the following:

• “Design features of value-added tax: putting concepts into legislation” organised by IFA Malaysia
• International Indirect Tax Forum organised by International Tax & Investment Centre
• Roundtable discussion on “Sales and Service Tax” organised by KPMG
• FIDE Pilot Simulation of Board and Committee meetings organised by Bank Negara Malaysia and PIDM
• Presentation on “Semiconductor Industry outlook” by Jim Walker of Gartner
• Directors’ Continuing Education Programme “Aviation and the Governing Body” organised by Transmile Group Berhad
• ICLIF Leadership Programme “Too Many Bosses, Too Few Leaders”
• “Recent Tax Developments” organised by International Fiscal Association, Malaysia Branch
• Business Sustainability Programme organised by Bursa Malaysia
• “Risk and Control Environment” organised by Bursa Malaysia
• 2011 In-House Congress organised by In- House Community/Pacific Business Press
• CEO Debate organised by MICCI
• Discharging the Audit Committee & Internal Audit Function in compliance with Risk Management Best Practices organised by Bursatra Sdn Bhd
• Directors’ Training “Avoiding Minefields Amidst A Changing Anti-Corruption Landscape” organised by Sime Darby Berhad

The Board will on a continuous basis, evaluate and determine the training needs of the Directors to assist them in the discharge of their duties as Directors.

The Board has delegated specific responsibilities to Board Committees as well as various subcommittees to assist the Board in the running of the Group. The functions and terms of reference of the Board Committees as well as authority delegated by the Board to these Committees have been clearly defined by the Board.

There are four (4) Board Committees namely the Nomination Committee, Remuneration Committee, Executive Committee and Audit Committee. These Committees examine specific issues and report to the Board with their recommendations. The ultimate responsibility for decision-making lies with the Board. Details of the responsibilities and activities of these Committees are set out below.

The Nomination Committee was established by the Board on 28 May 2001. It has been entrusted with responsibility to recommend suitable candidates for appointment to the Board and Board Committees.

The Nomination Committee comprises entirely of Non-Executive Directors with the majority being Independent, as follows:

• Tan Sri Saw Huat Lye (Chairman, Senior Independent Non-Executive Director)
• Dr Leslie Buckley (Non-Independent Non-Executive Director)
• Sreesanthan Eliathamby (Independent Non-Executive Director)
• Siobhan Mary Hamilton (Non-Independent Non-Executive Director)
• Martin Giles Manen (Independent Non-Executive Director) (Appointed on 4 November 2010)

The salient terms of reference of the Nomination Committee are set out below:

In discharging the above responsibilities, the Nomination Committee needs to report the following to the Board of Directors:

The Nomination Committee conducts the Board Effectiveness Evaluation via questionnaires, which comprise Board and Board Committees effectiveness assessment and Directors self and peer assessment on a yearly basis. The Nomination Committee assessed the effectiveness in terms of composition, conduct, accountability and responsibility of the Board and Board Committees in accordance with the terms of reference. The Directors self and peer assessment was conducted to evaluate the mix of skills, experience and the individual Director’s ability to exercise independent judgement and their contribution to the effective functioning of the Board.

The Nomination Committee, pursuant to its recent annual evaluation, was satisfied that the current size and composition of the Board is appropriate and well-balanced with the right mix of skills and experience and the Board has adequate independent element that reflects the interest of minority shareholders and provides an effective check and balance. The Nomination Committee was also satisfied that the Board comprises individuals of calibre credibility with necessary skills and qualifications which will enable the Board discharge its responsibility effectively. Through the Directors self and peer assessment, the Non-Executive Directors have indicated their satisfaction with the level of independence of each of their peers and their ability to act in the best interest of the Company in decision-making.

Meetings of the Nomination Committee are held at least once a year and as and when required. During the financial year ended 30 June 2011, one (1) meeting was held and the details of attendance of the members of the Nomination Committee are as follows:

The Nomination Committee reviews and assesses annually the re-election / re-appointment of retiring Directors who seek re-election / reappointment at the Company’s Annual General Meeting (AGM). The Nomination Committee will thereupon submit its recommendation on the proposed re-election / re-appointment of Directors to the Board for consideration before tabling the same for shareholders’ approval.

In accordance with Article 96 of the Company’s Articles of Association (Articles), any new Director appointed by the Board shall hold office only until the next AGM of the Company and shall be eligible for re-election.

Article 89 of the Articles provides that onethird of the Directors shall retire from office by rotation at each AGM and all Directors, including the Managing Director, shall retire from office at least once every three years but shall be eligible for re-election. A Director seeking reelection or re-appointment shall abstain from all deliberations regarding his/her re-election or re-appointment to the Board. In August 2010, the Nomination Committee recommended to the Board for the re-appointment of Mr Sreesanthan Eliathamby and Mr Low Teng Lum who were subsequently re-elected as Directors at the AGM on 4 November 2010.

Pursuant to Section 129 of the Companies Act, 1965, Directors who are of the age of 70 and above shall retire at every AGM and may offer themselves for re-appointment to hold offi ce until the next AGM. At the 46th AGM on 4 November 2010, Tan Sri Saw Huat Lye was re-appointed pursuant to this provision.

At the forthcoming 47th AGM scheduled for 3 November 2011, Tan Sri Saw Huat Lye will retire pursuant to Section 129 of the Companies Act, 1965. Tan Sri Saw Huat Lye has offered himself for re-appointment as a Director of the Company.