CORPORATE GOVERNANCE reference and has direct and unrestricted access to the external and internal auditors. It may invite any Director, Management, officer or employee of the Company to attend its meetings. It is also authorised to engage any firm of accountants, lawyers or other professionals as it sees fit to provide independent counsel and advice to assist in the review or investigation of such matters within its terms of reference as it deems appropriate at the Company’s expense. The principal responsibility of the ARC is to assist the Board in maintaining a high standard of corporate governance, particularly by providing an independent review of the adequacy and effectiveness of the Group’s financial reporting process (including reviewing the accounting policies and practices of the Company and the Group on a consolidated basis) and key internal controls, including financial, operational, compliance, IT and risk management controls. Other duties within its written terms of reference include: • to review with Management and, where appropriate, with the external auditors the significant financial reporting issues and judgements to ensure the integrity of the half-year and full year financial statements of the Group to be issued by the Company before their submission to the Board and any other announcements relating to the Group’s financial performance; • to review the scope annually and results of the external audit and the independence and objectivity of the external auditors, and in this regard to also review the nature and extent of any non-audit services provided by the external auditors to the Group; • to make recommendations to the Board on the nomination for the appointment, re-appointment and removal of external auditors, and to approve the remuneration and terms of engagement of the external auditors; • to assess the role and effectiveness of the internal audit function in the overall context of the Group’s internal controls and risk management systems, and to consider the results of their review and evaluation of the Group’s internal controls, including financial, operational, compliance and IT controls, and risk management policies and systems; • to approve the appointment, resignation or dismissal of the Head of Internal Audit; • to review interested person transactions falling within the scope of Chapter 9 of the Listing Manual; and • to oversee the establishment and operation of the Company’s whistle-blowing policy and arrangements put in place for raising concerns about possible improprieties on matters of financial reporting or any other matters. In the review of the financial statements for the year ended 31 December 2024, the ARC has discussed with both Management and the external auditors, the accounting principles that were applied and their judgement of items that might affect the integrity of the financial statements. The following significant matters impacting the financial statements were discussed with Management and the external auditors: Significant Matters How the ARC reviewed these matters and what decisions were made Valuation of development properties The ARC considered the approach and methodology applied in assessing the net realisable values of development properties especially those with low margins. Where appropriate, the ARC had inquired of Management on its basis and its strategy to sell the unsold units. The ARC reviewed either Management’s or the valuers’ underlying assumptions on estimated future selling prices by comparing them to recently transacted prices of subject properties or comparable properties located in the vicinity of the Group’s development projects. The ARC also noted the historical accuracy of Management’s estimate of future selling prices in assessing the reasonableness of the estimated future selling prices. The ARC was satisfied with the approach and assessment adopted by Management in arriving at the net realisable values of the development properties as at 31 December 2024. The valuation of the development properties was also an area of focus for the external auditors. The external auditors have included this item as a key audit matter in their audit report for the financial year ended 31 December 2024. Refer to page 87 of the annual report. CORPORATE GOVERNANCE REPORT CITY DEVELOPMENTS LIMITED 22
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