Compliance with the Model Code for Securities Transactions by Directors

During the year, the Group adopted the code of conduct for securities transactions by Directors (“Securities Dealings Code”) on terms no less exacting than that set out in Appendix 10 of the Listing Rules. Upon the Group’s specific enquiry, all Directors confirmed that during the year ended 31 March 2015, they had fully complied with the Securities Dealings Code.

Board of Directors

The composition of the Board reflects the necessary balance of skills and experience desirable for effective leadership of the Company and independence in decision making.

The Board comprises two executive Directors and three independent non-executive Directors and is accountable to Shareholders. The powers and duties of management and control of the business of the Company are generally vested in its Board. It is the duty of the Board to enhance value of the Company to the Shareholders. The composition of the Board and biographies of the Directors are set out on pages 12 to 13 of this annual report.

The two executive Directors are responsible for the leadership and control of the Company, oversee the Group’s businesses, strategic decisions and performances and are collectively responsible for promoting the success of the Company by directing and supervising its affairs.

The three independent non-executive Directors are responsible for ensuring a high standard of financial and other mandatory reporting of the Board as well as providing adequate checks and balances in the Board in order to protect Shareholders’ interest and overall interest of the Group.

Each independent non-executive Director has given the Company an annual confirmation of independence pursuant to Rule 3.13 of the Listing Rules. The Company considers that all the independent non-executive Directors are independent and meet the independent guidelines set out in Rule 3.13 of the Listing Rules.

Roles of Chairman and Chief Executive Officer

The position of the Chairman and the chief executive officer are held by Mr. Wong Chun Chau and Ms. Kwok Yin Ning respectively. This ensures a clear distinction between the Chairman’s duty to manage the Board and the chief executive officer’s duty to oversee the overall internal operation of the Group.

Division of Responsibilities of the Board and Management

The following types of matters are reserved for the Board’s approval:
(a) corporate and capital structure;
(b) corporate strategy;
(c) policies (including but not limited to those relating to corporate governance);
(d) business and management;
(e) key financial matters;
(f) appointment of Board members, senior management and auditor;
(g) remuneration of directors and senior management; and
(h) communication with Shareholders and the Stock Exchange.

The matters delegated by the Board to the management’s decision include:
(a) approval of extension of the Group’s activities not in a material manner into a new geographical location or a new business;
(b) approval and assessment of the performance of all business units;
(c) approval of expenses up to a certain limit;
(d) approval of connected transactions not requiring disclosure under the Listing Rules;
(e) approval of the nomination and appointment of personnels other than the members of the Board and senior management;
(f) approval of press release concerning matters decided by the Board;
(g) approval of any matters related to routine matters or day-to-day operation of the Group; and
(h) matters further delegated by the Board from time to time.

Appointment, Re-election and Removal

Under article 84 of the Company’s Article of Association, at each annual general meeting, not less than one third of the Directors for the time being shall retire from office by rotation provided that every Director shall be subject to retirement at an annual general meeting at least once every three years. The Directors to retire by rotation shall include any Director who wishes to retire and not to offer himself for re-election. Any further Directors who have been longest in office since their last re-election or appointment shall also retire by rotation.

Under code provision A.4.1 of the Code, non-executive Directors should be appointed for a specific term, subject to re-election. The term of appointment for each of the independent non-executive Directors appointed by the Company is 3 years commencing from 16 March 2015 for Mr. Lau Siu Ki and 16 June 2015 for Mr. Tang Tat Chi and Mr. Jean-pierre Philippe, subject to re-election and other requirements under the Company’s Articles of Association, the Code and the respective letter of appointment.

Number of Meetings and Directors’ Attendance

Regular Board meetings should be held at least four times a year at approximately quarterly intervals for reviewing and approving the financial and operating performance, and considering and approving the overall strategies and policies of the Company.

The shares of the Company were listed on the GEM on 24 August 2012 and were transferred for listing on the Main Board of the Stock Exchange on 20 March 2015. During the year ended 31 March 2015, the Board held 4 regular Board meetings and 11 additional meetings. The Company held the annual general meeting on 18 July 2014 during the year ended 31 March 2015. The table below sets out the individual attendance record of each Director at the Board meetings and general meeting during the year:

The company secretary attended all the scheduled Board meetings to report matters relating to corporate governance, risk management, statutory compliance, accounting and finance.

* No Board meeting or general meeting was held since the appointment of Mr. Lau Siu Ki on 16 March 2015.

Under code provision A.6.7 of the Code, independent non-executive Directors and other non-executive Directors should attend general meetings and develop a balanced understanding of the views of the Shareholders.

Due to other pre-arranged commitments which must be attended to by them, Mr. Ang Wing Fung and Mr. Jeanpierre Philippe, being independent non-executive Directors, were not present at the annual general meeting of the Company held on 18 July 2014.

Practice and Conduct of Meetings

Schedules and draft agenda of each meeting are normally made available to Directors in advance.

Code provision A.1.3 stipulates that at least 14 days’ notice should be given for a regular Board meeting. For other Board and committee meetings, reasonable notices are generally given.

Board papers together with all appropriate, complete and reliable information are sent to all Directors at least 3 days before each Board meeting or audit committee meeting to keep the Directors abreast of the latest developments and financial position of the Company and to enable them to make informed decisions. All Directors are given an opportunity to include matters in the agenda for regular Board meetings. The Board and each Director also have separate and independent access to the senior management whenever necessary. With the support of the senior management, the chairman is responsible for ensuring that the Directors receive adequate, complete and reliable information in a timely manner and appropriate briefing on issues arising at Board meetings.

Minutes of all Board meetings recording sufficient details of matters considered and decisions reached are duly kept by the company secretary of the meetings and opened for inspection by the Directors.

Article 100 of the Company’s articles of association requires Directors to abstain from voting and not to be counted in the quorum at meetings for approving transactions in which such Directors or any of their associates have a material interest.

Training and continuing development of Directors

Each Director should participate in continuous professional development to develop and refresh their skills to ensure that he has appropriate understanding of the business and operations of the Group and that he is sufficiently aware of his responsibilities and obligations under the Listing Rules and relevant regulatory requirements.

The existing Directors are continually updated with legal and regulatory developments, and the business and market changes to facilitate the discharge of their responsibilities. Continuing briefings and professional development for Directors will be arranged where necessary.

The Company has also from time to time provided the Directors with continuous update on the latest development regarding the Listing Rules and other regulatory requirements, to ensure compliance and enhance their awareness of good corporate governance practices.

The individual training record of each Director received during the year is summarised below:

Board Committees

The Board has set up 3 Board committees, namely the audit committee, the remuneration committee and the nomination committee to oversee particular aspects of the Group’s affairs.

The committees are provided with sufficient resources to discharge their duties and, upon reasonable request, are able to seek independent professional advice in appropriate circumstances at the Company’s expenses.

Audit Committee

The Company established an audit committee (the “Audit Committee”) on 1 August 2012 which comprises all 3 independent non-executive Directors. The current members are Mr. Lau Siu Ki, Mr. Tang Tat Chi and Mr. Jeanpierre Philippe. Mr. Lau Siu Ki is the chairman of the committee.

The Audit Committee has adopted the written terms of reference in compliance with paragraph C.3.3 of the Code. Among other things, the primary duties of the audit committee are to review and supervise the financial reporting process and internal control system of the Group. During the year, the committee met its responsibilities in reviewing the annual results for the year ended 31 March 2014 and the first quarter results, interim results and third quarter results for the year ended 31 March 2015 with the assistance of the senior management and the professional accounting firm engaged by the Group, which conducted regular internal audits and report to the committee.

During the year, 4 Audit Committee meetings were held. The attendance records of each member of the audit committee at the committee meetings are set out below:

Remuneration Committee

The Company established a remuneration committee (the “Remuneration Committee”) on 1 August 2012 which comprises 3 independent non-executive Directors. The current members are Mr. Jean-pierre Philippe, Mr. Lau Siu Ki and Mr. Tang Tat Chi. Mr. Jean-pierre Philippe is the chairman of the committee.

The Remuneration Committee has adopted written terms of reference in compliance with paragraph B.1.2 of the Code. The primary duties of the Remuneration Committee include the following:

(a) evaluating the performance and making recommendations on the remuneration package of the Directors and senior management;

(b) making recommendations to the Board on the Company’s policy and structure for all Directors’ and senior management remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy;

(c) reviewing and approving the management’s remuneration proposals with reference to the Board’s corporate goals and objectives.

During the year ended 31 March 2015, the Remuneration Committee met once with presence of all the eligible members for the time being (i.e. Mr. Jean-pierre Philippe, Mr. Ang Wing Fung and Mr. Tang Tat Chi) and reviewed and made recommendation on the remuneration package of Directors of the Group.

Nomination Committee

The Company established a nomination committee (the “Nomination Committee”) on 1 August 2012 which comprises all 3 independent non-executive Directors and 1 executive Director. The current member are Mr. Jeanpierre Philippe, Mr. Lau Siu Ki, Mr. Tang Tat Chi and Mr. Wong Chun Chau. Mr. Tang Tat Chi is the chairman of the committee.

The Nomination Committee has adopted written terms of reference in compliance with paragraph A.4.5 of the Code as set out in Appendix 14 to the Listing Rules. The primary duties of the Nomination Committee include:

(a) reviewing the structure, size and composition of the Board at least annually and making recommendations on any proposed changes to the Board to complement the issuer’s corporate strategy;

(b) nominating potential candidates for directorship;

(c) reviewing the nomination of directors and making recommendations to the Board on terms of such appointment;

(d) assessing the independence of independent non-executive Directors.

During the year ended 31 March 2015, the Nomination Committee met once with the presence of all members for the time being (i.e. Mr. Tang Tat Chi, Mr. Jean-pierre Philippe, Mr. Ang Wing Fung and Mr. Wong Chun Chau) and (i) reviewed and discussed the structure, size and composition of the Board to ensure that it has a balance of expertise, skills and experience appropriate to the requirements for the business of the Group and (ii) recommendation on the re-election of the retiring Directors.

Company Secretary

Mr. Chung Man Wai, Stephen joined the Group in 2011 and has been the company secretary of the Company since 2012. He is an employee of a fellow subsidiary of the Company and has day-to-day knowledge of the Company’s affairs. As the company secretary, Mr. Chung supports the Board by ensuring Board procedures and all applicable law, rules and regulations are followed. He is responsible for advising the Board on corporate governance matters and facilitates induction and professional development of the Directors. The selection, appointment and dismissal of the company secretary are subject to the Board’s approval in accordance with the Articles. Whilst the company secretary reports to the chief executive officer on the Group’s company secretarial and corporate governance matters, all Directors have access to the advice and services of the company secretary. Pursuant to Rule 3.29 of the Listing Rules, the company secretary has taken no less than 15 hours of relevant professional training during the year under review.

Directors and Officers Insurance

Appropriate insurance covers on directors’ and officers’ liabilities have been in force to protect the Directors and officers of the Group from their risk exposure arising from the business of the Group.

Directors’ and Auditor’s Responsibilities in Respect of the Consolidated Financial Statements

The Board is responsible for presenting a balanced, clear and understandable assessment of annual and half-year reports, other inside information announcements and other financial disclosures required under the Listing Rules and other statutory requirements.

The Directors acknowledge their responsibilities for the preparation of the accounts which give a true and fair view of the state of affairs of the Group and of the results and cash flows for the year ended 31 March 2015.

The Directors are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Company’s ability to continue as a going concern, therefore the Directors continue to adopt the going concern approach in preparing the consolidated financial statements.

The statement by the auditor of the Company regarding its reporting responsibilities on the financial statements of the group is set out in the Independent Auditor’s Report on page 35 and 36.

Auditor’s Remuneration

The remuneration paid/payable to the auditor of the Group for the year ended 31 March 2015 is set out as follows:

Internal Controls and Corporate Governance Policies

The Board has overall responsibility for monitoring the internal control system and corporate governance of the Company. The Board has developed its systems of internal control and risk management and is also responsible for reviewing and maintaining an adequate internal control system and developed and reviewed the corporate governance policies at least once a year to safeguard the interests of the Shareholders and the assets of the Company and ensure compliance with legal and regulatory requirements by the Group. During the year, the Board has conducted a review of the effectiveness of the internal control system of the Company and reviewed the corporate governance policy documents and terms of reference of Board Committees of the Company and the compliance with the legal and regulatory requirements, including the Code.

Communication with Shareholders

The Company endeavours to maintain an on-going dialogue with the Shareholders and in particular, through annual general meetings or other general meetings to communicate with the Shareholders and encourage their participation.

The Company will ensure that there are separate resolutions for separate issues proposed at the general meetings.

The Company will continue to maintain an open and effective investor communication policy and to update investors on relevant information on the Group’s business in a timely manner, subject to relevant regulatory requirements.

Shareholders’ Rights

Convening an extraordinary general meeting

Pursuant to article 58 of the Articles of Association, extraordinary general meetings of the Company (the “EGM”) shall be convened on the requisition of any one or more Shareholders holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings of the Company. Such Shareholders shall have the right, by written requisition to the Board or the company secretary of the Company, to require an EGM to be called by the Board for the transaction of any business specified in such requisition; and the EGM shall be held within two months after the deposit of such requisition. If within twenty-one days of such deposit the Board fails to proceed to convene such meeting, the requisitionist(s) himself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to the requisitionist(s) by the Company.

Putting enquiries to the Board

To ensure effective communication between the Board and the Shareholders, the Company has adopted a shareholders’ communication policy (the “Policy”). Under the Policy, the Company’s information shall be communicated to the Shareholders mainly through general meetings, including annual general meetings, the Company’s financial reports (annual, interim and (if any) quarterly reports), and its corporate communications and other corporate publications on the Company’s website and the Stock Exchange’s website. Shareholders may at any time make a request for the Company’s information to the extent that such information is publicly available. Any such questions shall be first directed to Mr. Wong Chun Chau, the chairman of the Board at the Company’s principal place of business in Hong Kong by post at 902, 9th Floor, Harbour Centre, Tower 2, 8 Hok Cheung Street, Hunghom, Kowloon, Hong Kong or by email to admin@ukf.com.hk. Shareholders may also directly raise questions during the Shareholders’ meetings.

Putting forward proposals at Shareholders’ meeting

The number of Shareholders necessary for putting forward a proposal at a Shareholders’ meeting shall be any number of Shareholders representing not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings at the date of the request. The request to put forward a proposal must be made within 30 days from the date of the relevant Shareholders’ meeting.

Investor Relations

The Company believes that maintaining a high level of transparency is a key to enhance investor relations. It is committed to a policy of open and timely disclosure of corporate information to its Shareholders and investment public. The Company updates its Shareholders on its latest business developments and financial performance through its annual, interim and (if any) quarterly reports. The corporate website of the Company (http://www.ukf.com.hk) has provided an effective communication platform to the public and the Shareholders.

During the year, there had been no significant change in the Company’s constitutional documents.