Internal Control and Risk Managment

INTERNAL CONTROL AND RISK MANAGEMENT

Internal Control

The Board of Directors of the Company emphasizes on the importance of effective and efficient management in order to achieve the operational goals and minimize losses caused by fluctuating circumstances. It is also ensured that the operation of the Company is efficient and in accordance with the goal, objectives and related laws and regulations. Anti-corruption policy is established and communicated to staff at all level for acknowledgement and strict compliance with the policy. The audit and report of audit results to the Board of Directors are regularly conducted. The Board of Directors has assessed the internal control system based on the report on the result of the assessment of the Audit Committee using the assessment form on the adequacy of the internal control system of the Securities and Exchange Commission of Thailand and Stock Exchange of Thailand which is in line with internal control international standard of The Committee of Sponsoring Organizations of the Treadway Commission (COSO). Five aspects with 17 subtopics of the internal control system of the Company are assessed as follows:

1. Control Environment

- The Company has effectively adjusted its organizational structure to be in correspondence with situation. The chain of command, approval authority and designation of responsibilities for the balance of power are established under the supervision of the Board of Director. - Internal control activities that sufficiently and appropriately cover all activities are established and the operations are regularly examined to ensure that they are in compliance with related laws and regulations. - The Code of Conduct is in writing and communicated to every level of staff so they can strictly comply with. - The Board of Directors is independent from the Management and has the responsibility to oversee and audit internal control system in order for the organization to efficiently and effectively achieve its business goals. - The anti-corruption policy of the Company is established together with clear and concrete channels for receiving complaints and information about wrongdoings and corruptions. - The Company demonstrates commitment in personnel development. LPN Academy plays an important role in identifying capacity development plan for staff to promote the Company as a learning organization and to respond to future business expansion and move toward sustainability.

2. Risk Assessment

- Vision, mission and objectives of the Company are clearly established in the business plan. The internal and external risks are assessed and analyzed. The Risk Management Committee is established to efficiently manage risks to be at acceptable level.

3. Control Activities

- The organization prepares an operational manual for all departments to identify control points and to be used as a reference.

The Executive Committee is responsible for ensuring compliance with the policy of the Company. - Scope of authority, approval limit, financial transactions process, purchasing process and others are clearly established in written format in order to control the Company’s assets and control connected transaction or conflict of interest transaction. - The Internal Audit Department has implemented the monitoring system for the process with a risk of corruption. Related operational systems are also improved. - The Whistleblower Policy is established to protect the informant who exposes wrongdoings that violate the Code of Conduct, rules and regulations of the Company or incidents of corruption.

4. Information and Communication System

- The Company develops information and communication technology systems to continuously support all operational processes in preparation for the expansion of the Company. Payments are controlled by budget system and approval authority. A network is established and monitored to ensure that the information received is accurate and reliable. The Company also gives importance to secure information technology system, the right of access to information and electronic filing system and backup system. - The Company has effective internal communication channels. Thus, employees at all levels receive accurate, reliable, and up-todate information. For communication with external publics, the Company provides information and receives complaints and suggestions on its products through its website, www.lpn.co.th, or Call Center, 02-689-6888.

5. Monitoring Activities

- The Company systematically monitors and controls every level of operation, from supervisors, their lines of supervision to high-ranking executives in charge of that line of work to ensure the completion and appropriateness of the process. - The internal audit department inspects and assesses internal control activities and reports to the Audit Committee directly and later to the Board of Directors. The Board of Directors will discuss how to adjust the direction of operation in response to fluctuating circumstances.

Risk Management

The Company focuses on the Risk Management in order to achieve the set goals. The Board of Directors of the Company has established the Risk Management Committee to be responsible for identifying the risk management policy and directions to be inclusive of all processes in the business plan. Related risks on various aspects have been taken into consideration and analyzed during the preparation of the business plan to be used as a guideline for the establishment of risk management strategy. The risks are assessed, monitored, controlled and reported to the Board of Directors on a quarterly basis. The risks associated with the operation of the Company are as follows: 1. Strategic Risk 2. Financial Risk 3. Operational Risk 4. Compliance Risk 5. Corruption Risk overall economic situation including the present real estate business situation that is under recession. In 2019 the Company has expanded its income base to other related business to increase business opportunity. Important policies of the company are also communicated to staff at all levels via various communication channels so the staff also plays a part in risk management, enabling the Company to oversee risk management efficiently. The Board of Directors’ Meeting Ref. 1/2020 on 13 February 2020 provided comments on the internal control system and risk management as appears in the report as follows:

Comments of the Board of Directors of the Company on Internal Control System In the Board of Directors’ Meeting Ref. 1/2020 on 13 February 2020, the Board of Directors assesses the internal control system from the report on the assessment of the sufficiency of internal control system of the Securities and Exchange Commission and the Stock Exchange of Thailand. The Audit Committee agrees that the internal control system of the Company is appropriate and efficient enough for its business operation and in accordance with internal control international standard of The Committee of Sponsoring Organizations of the Treadway Commission (COSO) in all five aspects, namely, organization control, risk assessment, operation control, information and communication system and monitoring system. The Board of Directors opines that the internal control system of the Company in terms of transactions with major stakeholders is sufficient and able to respond to inconstant risks. The allocation of human resources is sufficient and the tool development is promoted in order to ensure effective operation. In 2019, the Company keeps on organizing Code of Conduct trainings for staff and executives. It is the guideline for best practice and comply with anti-corruption guideline. The Company has also focused on special communication channels both within and outside the organization in a written format and a Whistleblower policy to protect the informant providing information on any wrongdoings that violate the law and Code of Conduct. As for internal control of other issues, the Board of Directors opines that the internal control of the Company is also sufficient. Moreover, the auditor of the Company, Mr. Wirote Satjathamnukul from D.I.A. International Auditing Co., Ltd. who is the auditor of the quarterly financial statements of 2019 does not recognize any insufficiencies of the internal control system of the Company.

(Mr. Amornsuk Noparumpa) Chairman of the Board of Directors