Axiata Group Berhad - Annual Report 2016

MANAGEMENT DISCUSSION & ANALYSIS

Axiata Group Berhad | Annual Report 2016

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2016 IN REVIEW: GOVERNANCE, COMPLIANCE & EES

GOVERNANCE

Axiata believes in putting in place a strong and highest standards of governance, not only in Axiata but throughout the Group. Throughout 2016, some

key highlights of corporate governance developments includes, strengthening the composition of the Board of Axiata and its major OpCos with the

appointment of new Board members with additional skillsets and increasing capable and qualified female individuals; a phased retirement plan at Axiata

Board level was adopted for its long serving Independent Non-Executive Directors (INEDs); roll out of of a digital platform across the Group to disseminate

Board documents; and execution of Axiata Group’s succession plan and appointments of OpCos’ CEOs and several senior appointments of Corporate

Executive Vice President (EVP)/Regional CEOs.

In the year 2016, Axiata’s corporate governance practices have received many recognitions including:-

Ranked 3rd in Excellence Award for Top Corporate Governance and Performance (Overall Category) and Merit Award for Corporate Governance

Disclosures; and

ii) Excellence Award for Long-Term Value Creation and for ESG Practices.

For complete details of our governance practices, please refer to our Statement on Corporate Governance on page 73 of this Annual Report.

RISK & MITIGATION

Axiata has in place a comprehensive Risk Management structure and Internal Control Framework which is overseen by the Board, assisted by the Board

Audit Committee (BAC). In 2016, some key risk factors and mitigation measures were as follows:

Risk Factors

Mitigation Measures

Financial Risk

• Forex volatilities associated with

the Indonesian Rupiah and Ringgit

Malaysia against the US Dollar

• US Dollar-denominated debt which

exposed the Group to forex impacts

The Axiata Treasury Management Centre developed hedging strategies governed by strict treasury policies.

Market Risk

• Global political and economic

developments

Axiata has been driving efficiencies and innovations through targeted investments in new digital

technologies and strategic partnerships with OTT and other digital product developers to create products

and services which meet evolving customer needs, increases share of customer wallet and rebuilds

customer loyalty.

Investment Risk

• Venturing into new growth areas

The Group has put in place a Mergers and Acquisitions Committee that oversees all acquisitions and

divestments and maintains a robust due diligence process to evaluate and manage potential risks.

Technology Risk

• Rapid technological advances

In order to remain relevant, the Group reviewed and revamped its capex governance and business planning

process, focusing on prudent cost management and capex productivity.

For complete details of Axiata’s Risk Management and Internal Control Framework, as well as a list of all our risk factors and mitigation measures, please

refer to our Statement on Risk Management and Internal Control from pages 96 to 104 of this Annual Report.