Corporate governance

The board recognises the importance of a sound system of internal control and of continuing to conduct the Group’s affairs according to good corporate governance principles.

Financial reporting
A detailed review of the performance and financial position of the Group is included in its annual report. The board uses the financial statements and the report of the directors to present a balanced and understandable assessment of the Group’s position and prospects.

Risk management
The directors acknowledge their responsibilities for the Group’s system of risk management. A review of the process of risk identification, evaluation and management is carried out regularly and presented to the board for discussion and approval. Such a system can provide reasonable, but not absolute, assurance against material misstatement or loss.

The review process considers the control environment and the major business risks faced by the Group. Such risks include, but are not limited to:

• the effect of palm-oil price fluctuations on profitability;
• the effect of beef-cattle price fluctuations on profitability;
• the effect of exchange-rate fluctuations on profitability and assets;
• political instability and social unrest in Indonesia;
• weather and natural disasters;
• environmental damage; and
• security of liquid funds.

Important control procedures, in addition to the day-to-day supervision of holding-company business, include regular executive visits to the areas of operation of the Group and of its associates, comparison of operating performance and monthly management accounts with plans and budgets, application of authorisation limits, internal audit of subsidiary undertakings and frequent communication with local management.