The Company and the Board are devoted to achieve and maintain the highest standards of corporate governance as the Board believes that effective corporate governance practices are fundamental to enhancing shareholder value and safeguarding interests of the shareholders and other stakeholders. Accordingly, the Company has adopted sound corporate governance principles that emphasise a quality Board, effective internal control, stringent disclosure practices and transparency and accountability to all stakeholders.

During the period commencing 7 May 2010 and ending 31 December 2010, the Company has complied with the code provisions of the Code on Corporate Governance Practices set out in Appendix 14 to the Listing Rules.

The Company has adopted a code of conduct regarding Directors’ securities transactions on terms no less exacting than the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules (the “Model Code”). Having made specific enquiry of all Directors, all Directors confirmed that they have complied with the required standard set out in the Model Code and the code of conduct regarding Directors’ securities transactions adopted by the Company.

THE BOARD OF DIRECTORS

The Board is responsible for leading and controlling the business operations of the Group. It formulates strategic directions, oversees the operations and monitors the financial performance of the Group. The management manages the businesses of the Group within the delegated power and authority given by the Board.

The Company’s articles of association set out matters which are specifically reserved to the Board for its decision.

As at 31 December 2010 and at the date of this report, the Board comprises of two executive Directors, five non-executive Directors and three independent non-executive Directors. The number of independent non-executive Directors fulfilled the minimum requirement of the Listing Rules throughout the period from the listing of the Company’s shares on 7 May 2010 to 31 December 2010. A description of the Directors is set out in the “Biographical Details of Directors and Senior Management” section on pages 24 to 29 and on the Company’s website.

For a Director to be considered independent, the Board must be satisfied that the Director does not have any direct or indirect material relationship with the Group. In determining the independence of Directors, the Board follows the requirements set out in the Listing Rules and considers all of the independent nonexecutive Directors as independent.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

The roles of the chairman are segregated from the chief executive officer. The chairman is responsible for managing the Board, steering the Board to formulate overall strategies and business development plans, ensuring the receipt of sufficient, complete and reliable information by each Director and the receipt of reasonable explanations for the issues raised in the Board meetings. The chief executive officer is responsible for managing the business of the Company and implementing policies, business objectives and plans formulated by the Board, and is accountable to the Board for the Company’s overall operation. The senior management team is responsible for the day-to-day operations of the Group under the leadership of the chief executive officer of the Company.

APPOINTMENT, RE-ELECTION AND REMOVAL

The Company’s articles of association set out a formal procedure for the appointment of new Directors to the Board. Any Director appointed by the Board either to fill a casual vacancy or as addition to the Board shall retire and be eligible for reappointment at the next general meeting after appointment. At every annual general meeting one-third of the Directors, including the chairman, shall be subject to retirement by rotation and re-election by shareholders.

CHANGES OF DIRECTORS AND SENIOR MANAGEMENT

The Board has approved (1) the resignation of Mr. Robert Peter Thian as an independent non-executive Director, member of the audit committee and member of the remuneration committee, effective from 10 February 2011; (2) the appointment of Mr. Fritz Heinrich Horlacher as an independent non-executive Director, member of the audit committee and member of the remuneration committee, effective from 10 February 2011; (3) the resignation of Mr. Chan Sheung Chi as the company secretary, chief financial officer and authorised representative, effective from 25 September 2010; and (4) the appointment of Mr. Mui Chi Hung as the company secretary, chief financial officer and authorized representative, effective from 18 February 2011.

BOARD MEETINGS

The Board is expected to meet regularly at least four times a year. Between scheduled meetings, the senior management of the Group provides information to Directors on a regular basis regarding the activities and development in the businesses of the Group. The Directors have full access to information on the Group and independent professional advice at all times whenever deemed necessary by the Directors.

The Board held four meetings during the period from the listing of the Company’s shares on 7 May 2010 to 31 December 2010 with the attendance of each Director as follows:

With respect to regular meetings of the Board, the Directors will be given written notice of the meeting at least 14 days in advance and an agenda with supporting Board papers no less than three days prior to the meeting. For other meetings, Directors are given as much notice as is reasonable and practicable in the circumstances. Except for those circumstances permitted by the articles of association of the Company, a Director who has a material interest in any contract, transaction, arrangement or any other kind of proposal put forward to the Board for consideration, will abstain from voting on the relevant resolution and such Director is not counted as quorum.

BOARD COMMITTEES

The Board has established the audit committee, the remuneration committee and the executive committee. Please see below for the composition and responsibilities of the committees. Each committee shall provide their recommendations to the Board based on their respective terms of reference. The decisions of the Board on such recommendations shall be final, unless otherwise stated in the terms of reference of these committees.

AUDIT COMMITTEE

The audit committee of the Company consists of three independent non-executive Directors and two non-executive Directors. Mr. Chan Kee Huen, Michael currently serves as the chairman of the audit committee.

The Board has established the audit committee with specific written terms of reference setting out the duties, responsibilities and authorities delegated by the Board. The major duties and responsibilities of the audit committee include the following:

oversee the relationship with the external auditor, including:

    making recommendations to the Board on the appointment, reappointment and removal of the external auditor, approving the remuneration and terms of engagement of the external auditor, and addressing any questions of resignation or dismissal of such auditor;

    reviewing and monitoring the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standards; and

    developing and implementing policy on the engagement of the external auditor to supply non-audit services; 

    monitor the integrity of financial statements and reports of the Group and to review significant financial reporting judgments contained therein; and

    review the effectiveness of the financial reporting and internal control systems of the Group.

The audit committee held three meetings from the Listing Date to 31 December 2010 with the attendance of each member as follows:

During the period from the Listing Date to 31 December 2010, the audit committee had:

    discussed with the external auditor and the management on the audit plan and the impact on the Group in respect of the amendments to the accounting principles and standards and the development of corporate governance;

    reviewed the remuneration and terms of engagement of the external auditor, and recommended the Board on the appointment of the external auditor;

    reviewed the effectiveness of the audit process and met with the external auditor for reviewing (i) the Company’s interim results for the six months ended 30 June 2010, (ii) financial and accounting policies and practices, and (iii) relevant disclosure requirements under the Listing Rules; and

    recommended the Board on the change of auditor from Grant Thornton Hong Kong to BDO Limited.

During the year, the Company has formulated an internal self-assessment process covering all the key controls including financial, operational and compliance controls and risk management functions. Also, management has analysed the control environment and risk assessment, assessed the various controls implemented and agreed with the Board on the scope of review over the system of internal controls. The approach of the review includes conducting interviews with relevant management and staff members, reviewing relevant documentation of the internal control system and evaluating findings on any deficiencies in the design of the internal controls and developing recommendations for improvement, where appropriate.

Subsequent to the year end, the management has reported the results of the review to the audit committee for its evaluation on the effectiveness of the system. A meeting was held by the committee to discuss the findings and the results of the review which were endorsed for reporting to the Board. The Board is satisfied that, based on the information supplied, coupled with its own observations and with the assistance of the audit committee, the present internal controls and risk management processes are satisfactory for the nature and size of the Group’s operations and business. The Board will continue to ensure that appropriate review of the systems and procedures is being carried out by the management from time to time to maintain a high standard of internal control and will make appropriate changes to the internal control system, if necessary.

At the same meeting, the audit committee also reviewed and endorsed the financial statements of the Company for the year ended 31 December 2010 for approval by the Board. From 2011 onwards, the audit committee will meet at least three times a year to discuss the internal control and other audit related issues.

During the year under review, the fees paid/payable to the auditor in respect of audit and non-audit services provided by the auditor to the Group were as follows:

REMUNERATION COMMITTEE

The remuneration committee of the Company consists of three independent non-executive Directors and two non-executive Directors. Mr. Lee Jin Yi currently serves as the chairman of the remuneration committee.

The Board has established the remuneration committee with specific written terms of reference setting out the duties, responsibilities and authorities delegated by the Board. The major duties and responsibilities of the remuneration committee are to make recommendations to the Board on the remuneration policies and structure of the remuneration for the Directors and senior management and to set up a formal and transparent procedure for determination of such remuneration policies.

No meeting of the remuneration committee was held from the Listing Date to 31 December 2010.

Subsequent to the year end, the remuneration committee had assessed the performance of the executive Directors and the senior management, reviewed the remuneration structure/package of the executive Directors and the senior management, and made recommendation to the Board on their remuneration. From 2011 onwards, the remuneration committee will meet at least once per year.

EXECUTIVE COMMITTEE

The executive committee of the Company consists of two executive Directors and three non-executive Directors. Mr. Lee Jin Yi currently serves as the chairman of the executive committee.

The Board has established the executive committee with specific written terms of reference setting out the duties, responsibilities and authorities delegated by the Board. The major duties and responsibilities of the executive committee include reviewing the financials and financial-related matters, assisting in developing annual and medium- to long-term corporate strategies, reviewing and approving new business development plans, and reviewing and approving research and development projects.

Executive Committee members normally meet every month to keep abreast of the latest activities and performance of the Group and to monitor and ensure that the management carries out the directions and strategies set by the Board.

ACCOUNTABILITY AND INTERNAL CONTROL

The Directors acknowledge their responsibilities for preparing the financial statements of the Group in accordance with statutory requirements and accounting standards. The Directors also acknowledge their responsibilities to ensure that the financial statements for the Group are published in a timely manner. The Directors’ and auditors’ responsibilities in respect of the financial statements are set out in the “Independent Auditor’s Report” on pages 49 to 50 in this report.

The Board is responsible for the internal control system of the Group and has the responsibility for reviewing its effectiveness including financial, operational and compliance controls. The Board is committed to implementing an effective and sound internal control system to safeguard the interest of shareholders and the Group’s assets.

COMMUNCIATIONS WITH SHAREHOLDERS

The Directors recognise the importance of long-term support from the shareholders of the Company. The Board highly respects the shareholders’ rights to express their views and appreciates their suggestions to the Company. The Company communicates with the shareholders in the following ways: (i) the holding of an annual general meeting which provides an opportunity for the shareholders to communicate directly with the Board; (ii) the publication of announcements, interim reports, annual reports and/or circulars as required under the Listing Rules providing updated information of the Group; and (iii) the availability of latest information of the Group on the Company’s website.