Corporate Governance Report 2024

CORPORATE GOVERNANCE REPORT

OUTLINE:

SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

SECTION B - DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.

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SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.1

The board should set the company's strategic aims, ensure that the necessary resources are in place for the company to meet its objectives and review management performance. The board should set the company's values and standards, and ensure that its obligations to its shareholders and other stakeholders are understood and met.

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deliberate on the Group's 5-Year Strategy Blueprint and Budget as well as priorities for implementation in the forthcoming year.

This year, the Strategy Retreat was conducted physically and fostered robust and strategic discussions between the Board and Management, which was important as Management updated on the progress of the Group's Next 5 Year Strategy Blueprint which was approved in 2023.

1. The retreat is a challenge session attended by Management and the Board to:
2. • Provide input and guidance on the strategies to be developed, bearing in mind the current and future operating landscape;
   • test Management's assumptions of their respective forecasts;
   • advise on challenges that they may encounter next year as well as develop strategies to overcome such challenges;
   • consider the economic and market forecasts for the coming years along with the proposed risk appetite to ensure that the strategies are robust and within acceptable boundaries;
   • evaluate the proposed capital and operational expenditures, and human resource requirements of each division and ensure that Management would have sufficient resources to execute their respective strategies.
3. Key subject matter experts (economists, management consultants, investment bankers, research analysts, venture capitalists) were invited to provide their views on market conditions, key trends and future disruptions that will impact our core businesses.
4. Management will take in the comments, suggestions and guidance from the Board and incorporate them into the final Strategy Blueprint and Budget.
5. Thereafter, in the beginning of the new financial year, the Board will review and approve the Group's 5 Year Strategy Blueprint and
   Budget for annual implementation.
6. Once the Group Business Plan and Strategy have been approved for execution by Management, the financial performance and progress of strategies employed by each sector are then monitored and supervised by the Board.

Overseeing the conduct and managing performance of the Group's businesses;

The Board oversees the conduct of the Group's businesses, including the execution of strategic plans, achievement of performance objectives against approved budgets and targets, governance

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framework, risk management practices and human capital management.

The Board also supervises and assesses the performance of Management to determine whether the businesses are being properly managed and ensures that appropriate measures are in place against which Management's performance can be assessed. It also evaluates and ensures that its businesses are being managed according to "best- in-class" practices as benchmarked against world class multinational companies. Compliance is monitored with established policies and procedures.

The Board's responsibilities also include reviewing, evaluating and approving investment and capital expenditure proposals by Management and monitoring the implementation of the strategic plan by Management. The Board will deliberate on all proposals presented and recommended by Management, including those proposed by its Board Committees to ensure they are commercially viable and allow us to achieve our strategic objectives and meet the requisite target returns.

The Board has also approved a Capital Allocation Framework that guides investment decisions in terms of business areas, geographical focus and target returns.

Promoting corporate governance culture within the Group;

The Board continues to promote good corporate governance culture, whereby the Group has put in place measures to guide its employees and partners in adhering to all applicable policies, procedures, laws, and regulations of the countries in which the Group operates in, including but not limited to: the Anti-Trust/Competition Laws, Environmental Laws and Regulations, Employment/Labour Laws and Policies, Compliance with Securities Laws and Anti-Bribery and Corruption Policies, Anti-Money Laundering and Anti-Terrorism Financing Policy.

Further, the Sime Darby Code of Business Conduct ("COBC") provides guidance on the standards of behaviour expected of all directors and employees of the Group, and where applicable, counterparts and business partners.

In line with the acquisition of UMW Holdings Berhad ("UMW") in March 2024, the Risk Management and Sustainability Committee (via Group Risk and Compliance) oversee the set up a compliance function in UMW. This newly set up compliance function is assumed by UMW's Risk and Integrity department. UMW's compliance function includes rolling out GRC's compliance activities in UMW Division

Identifying principal risks that applies to the Group and ensuring adequate process to address the risk;

The Board and Management are responsible and accountable for the establishment of the Group's system of risk management and internal

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control. The Risk Management & Sustainability Committee ("RMSC") is primarily responsible for overseeing the Group's risk management and sustainability frameworks and policies, as well as reviewing the effectiveness of internal controls across the Group. The Committee assists the Board in fulfilling its key responsibilities, including identifying principal risks, analyzing emerging trends, and deliberating on strategic action plans to mitigate the impact of these risks. Additionally, the Committee monitors the effectiveness of the Group's sustainability strategy.

The Chairman of the RMSC shall report and update the Board on significant issues and concerns discussed and where appropriate, make the necessary recommendations to the Board.

In discharging its responsibilities, the RMSC is assisted functionally by both Group Risk & Compliance and Group Safety & Sustainability departments.

The Group had established the Investment Committee ("IC") of the Board which has the objective of reviewing major business proposals which include mergers and acquisitions, new partnerships, disposals, capital expenditure and to monitor the implementation of the Group's strategic blueprints as approved by the Board and ensure that they remain robust and relevant.

The Chairman of the IC shall report and update the Board on significant issues and concerns discussed and where appropriate, make the necessary recommendations to the Board.

Ensure effective, transparent and regular communication with its stakeholders to facilitate mutual understanding of each other's objectives and expectations;

The Company has a sound Investor Relations programme which reaches out to the investing community and other stakeholders through continuous engagement via one-on-one meetings, quarterly analyst briefings and regional investor roadshows to explain our business performance, strategies and plans. We also have a comprehensive, informative website for our shareholders with regularly updated information.

Ensure that Senior Management has the necessary skills and experience and there are measures in place to provide the orderly succession of board and Senior Management; and

The Nomination & Remuneration Committee ("NRC") is established as a committee of the Board. The NRC oversees matters related to the nomination of new Directors and Senior Management, annually reviews the required mix of skills, experience and other requisite qualities of Directors and Senior Management, as well as undertakes the annual assessment of the effectiveness of the Board as a whole, its Committees and the contribution of each individual Director.

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The Chairman of the NRC shall report and update the Board on significant issues and concerns discussed and where appropriate, make the necessary recommendations to the Board.

The NRC is also primarily responsible for recommending to the Board the remuneration framework for Directors, reviewing the remuneration package for Executive Director ("ED") and Senior Management as well as the remuneration framework of employees based on the competitive industry practices and the Group's succession plan.

Reviewing the adequacy and the integrity of the management information and internal control systems of the Group

The Governance & Audit Committee ("GAC") is established as a committee of the Board. The GAC assists and supports the Board's responsibility of overseeing the Group's operations by providing a means for reviewing the Group's processes for producing financial data, its internal controls, and policies and procedures to assess the suitability, objectivity and independence of the Group's external auditor and internal audit function.

The GAC reviews the quarterly financial reports which are presented by the Group Chief Financial Officer ("GCFO") prior to recommending them for approval by the Board and the release to Bursa Malaysia Securities Berhad ("Bursa Securities"). The Board reviewed the financial statements and is of the view that the financial statements give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year.

The Chairman of the GAC shall report and update the Board on significant issues and concerns discussed and where appropriate, make the necessary recommendations to the Board.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

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Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.2

A Chairman of the board who is responsible for instilling good corporate governance practices, leadership and effectiveness of the board is appointed.

Charter and the TOR of the Board Committees. Additionally, ensuring that comprehensive induction and ongoing education programmes for Directors are in place to enhance their skills and knowledge.

1. 1. Arranging the regular evaluation of the performance of the Board, its Committees and individual Directors. Following these assessments, engaging in discussions with individual Directors and Committee Chairmen to provide feedback and identify areas for improvement;
   2. Ensuring that prior to new appointments to the Board, the relevant assessments are conducted on the candidates. This includes evaluating candidates based on the Board Composition Policy and Fit and Proper criteria to ensure that they possess the necessary qualifications and attributes to contribute effectively to the Board; and
   3. Ensuring that the Board and senior executive succession planning is considered on an ongoing basis.
2. Managing Board/Management interface by:
3. 1. Serving as the bridge between Management team and the Board, acting as the primary conduit for information exchange. However, it is essential to ensure that all Directors have the opportunity to get to know key members of the Management team to gain insights and perspectives directly;
   2. Cultivating a positive and constructive relationship with the GCEO, and acting as a trusted confidant and advisor to the GCEO; and
   3. Facilitating the selection and appointment process of a successor to the current GCEO.
4. Being the public face by:
5. 1. Serving as the official spokesperson for the Board; and
   2. Acting as the representative of Sime Darby at shareholders' meetings and other events or occasions when actions are taken or statements are made on behalf of the Group, both domestically and internationally.
6. Ensuring the implementation of appropriate actions to facilitate effective communication with stakeholders and the conveyance of their views to the Board.

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The roles and responsibilities of the Chairman of the Board are clearly specified in Paragraph 5.2 of the Board Charter, which is available on Sime Darby's website at https://www.simedarby.com/operating- responsibly/governance.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

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Timeframe:

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Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.3

The positions of Chairman and CEO are held by different individuals.