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The Company is committed to establish and uphold good corporate governance practices and procedures. The corporate governance principles of the Company emphasise an effective Board, prudent internal and risk control, transparency and accountability to its shareholders.
During the year ended 30 June 2011, being the financial year under review, the Board of Directors (the "Board") and the management of the Company have been continually reviewing and enhancing the corporate governance practices of the Company with reference to local and international standards. The Board believes that its continued efforts in enhancing the Company's corporate governance practices have contributed to the business growth of the Company and its subsidiaries (the "Group") in the past years.
Corporate Governance Practices
For the year ended 30 June 2011, the Company has applied the principles and adhered to the code provisions in the Code on Corporate Governance Practices (the "CG Code") set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as amended from time to time (the "Listing Rules"), save for minor deviation from one of the principles of the CG Code as to number of independent non-executive directors and audit committee members; and the code provisions of the CG Code relating to the requirement of a majority of Independent Non-executive Directors as members of remuneration committee for the period from 2 June 2010 to 31 August 2010 as mentioned below.
The Company has also adopted an internal corporate governance code in line with the CG Code which was approved by the Board in 2005 and was subsequently revised from time to time according to the relevant amendments to the Listing Rules (the "Internal CG Code"). The Internal CG Code aims to facilitate compliance with the CG Code and to give guidance to directors of the Company (the "Directors") and the senior management of the Company in this respect. The Board will continue to monitor and review the Company's corporate governance practices and procedures to ensure compliance with the CG Code and to enhance its practices and procedures.
Directors' Securities Transactions
The Company has adopted a code for securities transactions by Directors on the same terms as set out in Appendix 10 to the Listing Rules as amended from time to time (the "Model Code"). Each Director is specifically required to confirm with the Company that he has complied with the required standard set out in the Model Code on a regular basis. Having made such specific enquiry to each of the Directors, there has not been any non-compliance of the required standard as set out in the Model Code by any Directors in this respect.
Board of Directors
The Board currently comprises eight executive Directors of the Company (the "Executive Directors") and three independent non-executive Directors of the Company (the "Independent Non-executive Directors"). The members of the Board during the year and at present are as follows:
| Mr. CHUA Domingo |
(Chairman and Executive Director) |
| Dr. CHAN Wing Kit, Frank |
(Chief Executive Officer and Executive Director) |
| Mr. TAN Harry Chua |
(Executive Director) |
| Mr. TAN Lucio Jr. Khao |
(Executive Director) |
| Mr. CHEUNG Chi Ming |
(Executive Director) |
| Mr. PASCUAL Ramon Sy |
(Executive Director) |
| Mr. CHIU Siu Hung, Allan |
(Executive Director) |
| Mr. WONG Sai Tat |
(Executive Director) |
| Mr. CHONG Kim Chan, Kenneth |
(Independent Non-executive Director) |
| Mr. SY Robin |
(Independent Non-executive Director) |
Mr. FOK Kam Chu, John
(appointed on 1 September 2010) |
(Independent Non-executive Director) |
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During the period from 2 June 2010 to 31 August 2010, the number of Independent Non-executive Directors of the Company fell below the minimum of three as required under rule 3.10(1) of the Listing Rules. With effect from 1 September 2010, the Company has appointed Mr. FOK Kam Chu, John as an Independent Non-executive Director, and hence the Company has been in compliance with the Listing Rules.
The Board is responsible for establishing the overall strategic development and direction of the Group, setting business objectives and development plans, monitoring the performance of the business and senior management, and ensuring good corporate governance. It also monitors the financial performance and the internal controls of the Group's business operations. Executive Directors are responsible for running the operation of the Group and executing the strategies adopted by the Board.
The day-to-day operations of the Group is delegated to the management with department heads responsible for different aspects of the business and functions. Non-executive Directors (including the Independent Non-executive Directors) serve the relevant function of bringing independent judgment on the development, performance and risk management of the Group through their contributions in Board meetings.
The Board considers that each Independent Non-executive Director of the Company is independent in character and judgment, without financial or other interest in the business of the Group or any connection with any connected person (as such term is defined in the Listing Rules). The Company has received from each Independent Non-executive Director a written confirmation of his independence pursuant to Rule 3.13 of the Listing Rules.
The Board meets regularly and held at least four times per year on a quarterly basis to discuss the business development, operations and financial performance of the Group. During the year, a total of five regular Board meetings were held. Details of Directors' attendance record of such regular Board meetings during the year are as follows:
| Directors |
Attendance/
Nos. of meetings
to be attended |
| Mr. CHUA Domingo |
5/5 |
| Dr. CHAN Wing Kit, Frank |
5/5 |
| Mr. TAN Harry Chua |
5/5 |
| Mr. TAN Lucio Jr. Khao |
5/5 |
| Mr. CHEUNG Chi Ming |
5/5 |
| Mr. PASCUAL Ramon Sy |
5/5 |
| Mr. CHIU Siu Hung, Allan |
5/5 |
| Mr. WONG Sai Tat |
5/5 |
| Mr. CHONG Kim Chan, Kenneth |
5/5 |
| Mr. SY Robin |
5/5 |
Mr. FOK Kam Chu, John
(appointed on 1 September 2010) |
5/5 |
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Notice of at least 14 days is given to all Directors for all regular Board meetings to give all Directors an opportunity to attend. All regular Board meetings adhere to a formal agenda in which a schedule of matters is addressed to the Board. All Directors have access to Board papers and related materials, and are provided with adequate information which enable the Board to make an informed decision on the matters to be discussed and considered at the Board meetings. Minutes of Board meetings are kept by the Company Secretary and are open for inspection at any reasonable time on reasonable notice by any Directors.
For qualifications, experience and expertise of the members of the Board and relationships (if any) among them and between the chairman and chief executive officer, please refer to the "Profile of Management" and the section on "Directors' interests in competing business" in the "Directors' Report" on pages 14 to 17 and pages 19 to 28 respectively of the Annual Report 2010-2011.
Chairman and Chief Executive Officer
The roles and responsibilities of the chairman (the "Chairman") and the chief executive officer (the "CEO") of the Company are segregated and separately undertaken by different officers to ensure a balance of power and authority as set out in writing in the Internal CG Code.
Mr. CHUA Domingo, the Chairman, is responsible for leading the Board, as well as the assignment of responsibilities among members of the Board, and the proper conduct and proceedings of meetings of the Board and shareholders of the Company, and overseeing the Group's overall direction and strategic planning. In addition, the Chairman also plays a key role in driving all Directors to actively contribute to Board affairs and establishing good corporate governance practices and procedures.
Dr. CHAN Wing Kit, Frank, the CEO, is responsible for managing the business and affairs of the Company; recommending and implementing strategic, business and operational plans; directing and monitoring the activities of the Company; developing and implementing operational policies under the strategic directions adopted by the Board; developing and recommending organisational structure; managing shareholders and public relations and ensuring that the Board has all the information it requires to fulfill its duties.
Non-executive Directors
Currently, all non-executive Directors of the Company (including Independent Non-executive Directors) are appointed for a term of two years subject to retirement by rotation in accordance with the bye-laws of the Company. The Company's bye-laws stipulate that every Director will be subject to retirement by rotation at least once every three years.
Remuneration of Directors
In regard of remuneration policy of Directors, the Company has established a remuneration committee of the Board (the "Remuneration Committee") with terms of reference, which meet the requirements as set out in paragraph B.1.3 of the CG Code.
The Remuneration Committee was established in 2005 and its members during the year and at present are as follows:
| Mr. CHUA Domingo |
(Chairman and Executive Director) |
| Dr. CHAN Wing Kit, Frank |
(Chief Executive Officer and Executive Director) |
| Mr. CHONG Kim Chan, Kenneth |
(Independent Non-executive Director) |
| Mr. SY Robin |
(Independent Non-executive Director) |
Mr. FOK Kam Chu, John
(appointed on 1 September 2010) |
(Independent Non-executive Director) |
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During the period from 2 June 2010 to 31 August 2010, a majority of the members of the Remuneration Committee was not composed of a majority of Independent Non-executive Directors as required under B.1.1 of the CG Code. With effect from 1 September 2010, Mr. FOK Kam Chu, John, an Independent Non-executive Director, has been nominated as a member of Remuneration Committee and hence the Company has been in compliance with the CG Code. Of the five members of the Remuneration Committee, three are Independent Non-executive Directors. No chairman has been formally appointed for the Remuneration Committee. However, a chairman will be appointed at the commencement of each meeting of the Remuneration Committee.
The Remuneration Committee is primarily responsible for reviewing, determining and/or recommending to the Board as to the Company's policy and structure for all remuneration of Directors and senior management and on establishment of a formal and transparent procedure for developing the policy on such remuneration, and to determine the specific remunerations packages of all Executive Directors and senior management.
During the year, the members of the Remuneration Committee, having regard to the operating results of the Group, individual performance and comparable market statistics, ratified the emoluments of the Directors of the Company for the year ended 30 June 2011, pursuant to consent in writing signed by all members of the Remuneration Committee in accordance with its terms of reference. Besides, no meeting was held by the Remuneration Committee.
Nomination of Directors
Currently, the Company does not have a nomination committee for appointment of new Directors to the Board or removal of Directors from the Board.
The responsibilities of identifying and selecting suitably qualified individuals to become members of the Board are undertaken by the Board collectively. Where the Board or a Director considers necessary or desirable to appoint a new member to the Board (whether to fill a casual vacancy or otherwise), each member of the Board may nominate suitable individual(s) as candidate(s) of member(s) of the Board for the decision of the Board. In selecting a suitable candidate to become a member of the Board, the Board will consider various criteria such as education, qualification, experience, skills and possible contribution of such candidate.
During the year, the Board has identified and selected a qualified and appropriate individual to be Independent Non-executive Director, hence a written resolution signed by all members of the Board has been passed on 31 August 2010 to approve, among others, the appointment of Mr. FOK Kam Chu, John as the Independent Nonexecutive Director effective on 1 September 2010. Besides, no meeting was held by the Board in relation to the appointment and removal of Directors.
Audit Committee
The Company has established an audit committee of the Board (the "Audit Committee") with terms of reference, which meet the requirements as set out in paragraph C.3.3 of the CG Code.
The Audit Committee was established in 1999 and its members during the year and at present are as follows:
| Mr. CHONG Kim Chan, Kenneth* |
(Independent Non-executive Director) |
| Mr. SY Robin |
(Independent Non-executive Director) |
Mr. FOK Kam Chu, John
(appointed on 1 September 2010) |
(Independent Non-executive Director) |
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* Chairman of Audit Committee
During the period from 2 June 2010 to 31 August 2010, the number of the members of Audit Committee fell below the minimum of three as required under rule 3.21 of the Listing Rules. With effect from 1 September 2010, Mr. FOK Kam Chu, John, an Independent Non-executive Director, has been nominated as a member of Audit Committee and hence the Company has been in compliance with the Listing Rules.
The Audit Committee is primarily responsible for the following duties:
- to make recommendation to the Board on the appointment, re-appointment and removal of the external auditor;
- to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards;
- to review and monitor integrity of financial statements of the Company and the annual report, half-year report and accounts of the Company and to review significant financial reporting judgments contained in them; and
- to oversee the financial reporting system and procedures of internal control of the Group.
None of the members of the Audit Committee is a former partner of the existing auditor of the Group.
During the year, two meetings have been held by the Audit Committee for, among others, recommending the re-appointment of the external auditor and reviewing the financial reporting system and procedures of internal controls of the Group, the draft audited consolidated financial statements of the Group for the year ended 30 June 2010 and the draft unaudited consolidated financial statements of the Group for the six months ended 31 December 2010, for submission to the Board for discussions and approval in accordance with the terms of reference of the Audit Committee.
Details of attendance record of members in the meetings of Audit Committee during the year are as follows:
| Members |
Attendance/
Nos. of meetings
to be attended |
| Mr. CHONG Kim Chan, Kenneth |
2/2 |
| Mr. SY Robin |
2/2 |
Mr. FOK Kam Chu, John
(appointed on 1 September 2010) |
2/2 |
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Auditor's Remuneration
During the year ended 30 June 2011, audit and non-audit services were provided to the Group by Deloitte Touche Tohmatsu, the auditor of the Company (the "Auditor"), and the amounts of remuneration paid and payable in connection therewith are as follows:
| Services |
Amount
HK$'000 |
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| Audit services |
- Audit fee paid and payable for final results and provident funds of the Group for the year ended 30 June 2011
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1,059 |
| Non-audit services |
- Fee paid and payable for reviewing preliminary announcement of final results and continuing connected transactions for the year ended 30 June 2011
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77 |
- Fee paid for tax consultancy service of Beijing project for the year ended 30 June 2011
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319 |
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The Audit Committee is of the view that the Auditor's independence and objectivity will not be affected by the provision of the abovementioned limited scope of the non-audit services to the Group.
The Board has not had any disagreement with the Audit Committee on the selection, re-appointment, resignation or dismissal of its external auditor.
Directors' and Auditor's Responsibility for Financial Statements
The Directors acknowledge their responsibility for preparing the consolidated financial statements of the Group and ensure that the preparation of the consolidated financial statements is on a going concern basis in accordance with statutory requirements and applicable accounting standards.
Auditor's statement of reporting responsibilities is set out in the "Independent Auditor's Report" on pages 29 to 30 to the Annual Report 2010-2011.
The Board is collectively responsible for ensuring clear and understandable assessment in annual and interim reports, announcement of price-sensitive information and other financial disclosures and reports under regulatory requirements. In addition, the Audit Committee has been established to monitor the integrity of financial statements of the Company.
Internal Controls
During the year, the Board and the Audit Committee have conducted and completed internal review in respect of the effectiveness of the system of internal control of the Group with the objectives of ensuring:
- high level management controls are adequately defined;
- operational controls are in place, sufficient and effective;
- income is properly received, recorded and supported;
- expenses are of proper nature and are properly approved; and
- assets are properly safeguarded.
Such review covers all material controls including financial, operational and compliance controls, and risk management functions. No material control failure or significant areas of concern which might affect the shareholders' interests were identified during the reviews.
Shareholders' Rights and Investor Relations
The Company is committed to ensure shareholders' interest. To this end, the Company communicates with its shareholders through various channels, including annual general meetings, special general meetings, annual reports, notices of general meetings, circulars sent to shareholders of the Company, announcements, press releases and other corporate communications available on the Company's website.
The Chairmen of the Board and committees of the Board attended the annual general meeting of the Company held on 10 December 2010 to answer questions raised by the shareholders of the Company thereat. In respect of the year ended 30 June 2011, an annual general meeting of the Company will be held on 9 December 2011, at which the Company will arrange for the Chairmen of the Board and committees of the Board to attend and answer questions raised by the shareholders of the Company thereat.
The Company regards communication with its shareholders and investors as an important means to enhance the transparency of the Group and regularly collects views and feedback from them.
Shareholders, investors and the media can make enquiries or proposals to the Company through the following means:
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