Corporate Governance

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Principle 10: Accountability

The Board is accountable to the shareholders while the Management is accountable to the Board.

The Board provides the shareholders with a detailed and balanced explanation and analysis of the Company’s performance, position and prospects on a half-yearly basis.

In order to keep the Board informed about the developments in the Company, the Management provides the Board with appropriately detailed management accounts of the Group’s performance, position and prospects on a half-yearly basis. The Management also provides the Board with timely, accurate and complete information on all matters requiring the Board’s decision.

Principle 11: Risk Management and Internal Controls

The Board is responsible for ensuring that there is a system of internal financial controls, operational and compliance controls and information technology controls, and risk management policies and for reviewing its adequacy and effectiveness. The Management is responsible for internal control and for ensuring compliance therewith. The Audit Committee assists the Board in discharging its internal control review responsibilities. The Board makes continuous efforts to embed internal controls into the operations of the businesses and to deal with areas of improvement which come to the attention of Management and the Board.

The Company does not have a Risk Management Committee. However, Management regularly reviews the Group’s business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks. The Management reviews all significant control policies and procedures and highlights all significant matters to the Board and the AC. The Group’s financial risk management is disclosed under Note 28 of the Notes to the Financial Statements on Pages 68 to 77 of the Annual Report.

The Company has engaged Moore Stephen Advisory Services Limited, the internal auditor, to perform a risk assessment update and perform a follow-up review and test of key controls for identified risks in key areas of the Group’s operations, with the objectives of mitigating the risks and enhancing operating effectiveness. Material non-compliance and internal control weaknesses as well as recommendations for improvements noted during the audit will be reported to the AC. The AC will review the effectiveness of the action taken by the Management on the recommendations made by the internal auditor in this respect.

The Board notes that these internal control systems are designed to manage rather than to eliminate the risk of failure to achieve business objectives. In addition, these systems can only provide reasonable but not absolute assurance against material misstatement or loss.

For FY2019, the AC has reviewed the Internal Auditor Report presented by the Internal Auditors. The AC and the Board are of the view that based on the reports from the internal auditor, the system of internal controls that has been maintained by Management throughout the financial year is adequate to meet the needs of the Company.

The Board has received written assurances from the CEO and the Group Financial Controller (a) that the financial records have been properly maintained and the financial statements give a true and fair view of the Company’s operations and finances; and (b) that the risk management and internal control systems of the Company is adequate and effective to deal with major risks relating to financial, operational, information technology and compliance aspects.

Based on the systems of risk management and internal controls established and maintained by the Group, work performed and reports by the internal and external auditors and the above written assurances, the Board, with the concurrence of the AC, is of the opinion that the Group’s risk management and internal controls systems, addressing the financial, operational, compliance and information technology risks, are effective and also adequate.

Principle 12: Audit Committee (“AC”)

The AC comprises three independent Non-Executive Directors, with Mr Koji Miura as Chairman, and Mr Michael Yap Kiam Siew and Mr Chan Ching Chuen as members. The Board is of the view that the AC members are appropriately qualified, having the necessary recent and relevant accounting and/or related financial management expertise or experience as the Board interprets such qualifications to discharge their responsibilities.

The AC has kept the recent and relevant accounting or related financial management expertise or experience up-to-date by attending the training provided by the relevant regulatory parties.

In addition, the auditor of the Company provides update on recent developments to accounting standards to AC members on half yearly basis to ensure all AC members and management to keep abreast of the changes to accountings standards and issues which have a direct impact on financial statements.

The AC will meet periodically to, inter alia:

  1. review the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of the Company and any announcements relating to the Company’s financial performance;
  2. review with the internal auditor their audit plan and report to the Board at least annually the adequacy of the internal audit procedures and their evaluation of the effectiveness of the Company’s overall internal controls, including financial, operational, compliance and information technology controls;
  3. review interested person transactions, if any, to ensure that the internal control and review procedures are adhered to;
  4. review the scope and results of the external audit, and the independence and objectivity of the external auditors; and
  5. make recommendations to the Board on the proposals to the shareholders on the appointment, re-appointment and removal of the external auditors, and approving the remuneration and terms of engagement of the external auditors.

Apart from the above functions, the AC will also commission and review the findings of internal investigations into matters where there is any suspected fraud or irregularity, failure of internal controls, or infringement of any law, rule or regulation which has or is likely to have a material impact on our Company’s operating results or financial position. Each member of the AC will abstain from voting in respect of matters in which he is interested.

The AC is empowered to investigate any matter relating to the group’s accounting, auditing, internal controls and/or financial practices brought to its attention, with full access to records, resources and personnel, so as to enable it to discharge its functions properly.

The AC, having reviewed the volume of non-audit services to the Company by the external auditors, is satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors.

The AC has accordingly recommended to the Board that the auditor, PricewaterhouseCoopers LLP, be nominated for re-appointment as auditor at the forthcoming AGM of the Company.

For the financial year ended 31 March 2019, remuneration paid and payable to PricewaterhouseCoopers LLP in relation to audit and non-audit services were HK$1,182,000 and HK$32,000 respectively.

In line with the Code, a private session between the AC with the external and the internal auditors was held to discuss any matters concerning the Company without the presence of the Management. Both the internal and external auditors have confirmed that they have access to and received the co-operation and assistance from Management and no restrictions were placed on the scope of their respective audits.

The AC has confirmed the Company has complied with Rule 712 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”) in that PricewaterhouseCoopers (“PwC”) LLP is registered with the Accounting and Corporate Regulatory Authority. The AC is satisfied that the resources and experience of PwC, the audit engagement partner and his team assigned to the audit of the Group are adequate to meet their audit obligations, given the size, nature and operations of the Group.

The Group has one Singapore subsidiary and it is dormant and not required to be audited. Other than the overseas subsidiaries which were exempted from audit requirement under their respective laws of the country of incorporation, the overseas subsidiaries of the Group are either audited by a member firm of PwC or by the suitable auditing firms in their respective country of incorporation.

The AC and the Board are satisfied that the appointment of different auditing firms for its overseas subsidiaries would not compromise the standard and effectiveness of the audit of the Company. The AC confirmed that the Company has complied with Rules 715 and 716 of the Listing Manual of the SGX-ST.

Although PwC was not appointed as the statutory auditor of the subsidiary for the issuance of the local statutory financial statements, they have performed adequate audit work on the Group independently, including the subsidiary, in forming their audit opinion for the financial year ended 31 March 2019. Please refer to Note 16 under the Notes to the Financial Statements on Page 58 of the Annual Report.

Principle 13: Internal Audit

The Company has outsourced its internal audit function to an independent qualified firm of auditors – Moore Stephens Advisory Services Limited, as its internal auditor, to review the effectiveness of the Company’s material internal controls. The AC will hire, remove, evaluate and remunerate the internal auditor.

The resulting report issued by the internal auditor is reviewed in detail by the AC in conjunction with Management. The AC will consider the effectiveness of responses / actions taken by Management on the audit recommendations and observations.