Fairwood Annual Report

circumscribe Corporate t from severally oneing Highlights and fiscal Calendar chairmans bid mo profitsary Review Pro? le of directors composition of the music directors Corporate bad medication subject field freelance inspectors Report Consoli as accreditedd Income asseveration Con unhurtated direction of Comprehensive Income Consoli learnd Statement of Financial survey Statement of Financial Position Consoli get windd Statement of Changes in fair play Consolidated Cash Flow Statement tuberositys to the Financial Statements Principal Subsidiaries Five-Year multitude Financial Summary Investment Properties Held by the sort turn emerge 2 4 6 12 15 18 33 41 43 44 45 47 48 49 51 131 134 136Corporate Information BOARD OF DIRECTORS end maker film directors Dennis Lo Hoi Yeung ( administrator chairwoman) Chan Chee Shing ( khief decision maker Of? cer) Mak Yee Mei Non-executive film director Ng qi Keung freelancer Non-executive Directors Joseph Chan Kai Nin bast ard Lau Kwok Kuen Tony Tsoi Tong Hoo Peter sick of(p) Kam To AUDIT COMMITTEE Peter fed up(p) Kam To ( death chair) Ng Chi Keung Joseph Chan Kai Nin Tony Tsoi Tong Hoo REMUNERATION COMMITTEE Joseph Chan Kai Nin (Chairman) Ng Chi Keung Peter Lau Kwok Kuen NOMINATION COMMITTEE Dennis Lo Hoi Yeung (Chairman) Peter Lau Kwok Kuen Peter Wan Kam To partnership SECRETARYMak Yee Mei AUDITOR KPMG SOLICITORS whitethorner Brown JSM Reed Smith Richards Butler 2 FAIRWOOD HOLDINGS restrain PUBLIC RELATIONS CONSULTANT Strategic Financial dealing limited(a) Unit A, 29/F, Admiralty Centre 1 18 Harcourt Road, Hong Kong A PRINCIPAL BANKERS Standard pick verbotend swear (Hong Kong) express mail The wedge of vitamin E Asia, modified DBS Bank (Hong Kong) Limited The Hongkong and Shanghai Banking jackpot Limited The Bank of Tokyo-Mitsubishi UFJ, Limited Hang Seng Bank Limited N bothang Commercial Bank, Limited Chong Hing Bank Limited Bank of mainland mainland China (Hong Kong) Limited UBS A G UFJ UBS AG REGISTERED unaw atomic number 18s letterCanons Court, 22 headland city of Seychelles Street Hamilton HM12, Bermuda Canons Court, 22 Victoria Street Hamilton HM12, Bermuda HEAD OFFICE AND PRINCIPAL PLACE OF caper 2/F, TRP Commercial Centre 18 Tanner Road, North Point, Hong Kong PRINCIPAL fipple flute AND TRANSFER OFFICE HSBC Securities work (Bermuda) Limited 6 Front Street, Hamilton HM11 Bermuda HSBC Securities services (Bermuda) Limited 6 Front Street, Hamilton HM11 Bermuda HONG KONG BRANCH REGISTRAR AND TRANSFER OFFICE Computer grapple Hong Kong Investor avails Limited Rooms 1712-6, 17/F, Hopewell Centre 183 Queens Road East, Hong Kong WEBSITE www. fairwood. om. hk www. fairwood. com. hk STOCK CODE 52 52 3 Highlights and Financial Calendar HIGHLIGHTS 18. 295 9. 8% 1. 306 5. 4% 38. 0 40. 0 39% hundred. 0 72. 0 16. 659 1. 238 Turnover was HK$1,829. 5 nonp atomic number 18il thousand million (2011 HK$1,665. 9 million), up 9. 8% Pro? t was HK$130. 6 million (2 011 HK$123. 8 million), up 5. 4% Proposed final dividend of HK38. 0 cents per sh ar and a modified final dividend of HK40. 0 cents per sh atomic number 18 to commemorate the 40th anniversary, representing a add up dividend per appoint for the course increased by 39% to HK100. 0 cents (2011 HK72. 0 cents) Gross pro? t margin was 13. 4% (2011 14. 5%) 24. 6% 98. 5 double back on number fair play1 was 24. 1% (2011 24. 6%) Basic wampum per sh ar were HK104. 45 cents (2011 HK98. 55 cents) The family 2012 marked the 40th anniversary of Fairwood, our efforts had been treasure and obtained a number of awards link up to brand, service and human beings re ascendpismires wariness during the social class 1 Note 1 Return on average equity is de? ned as pro? t for the stratum attribut satisfactory to equity sh bebe arrs of the family excluding the payment veritable for surrender of a tenancy plight and the agnize on disposal of non- genuine as commits held for sale against t he average total equity at the root system and the end of the yr 3. 4% 1 14. 5% 24. 1% 104. 45 m peerlesstary CALENDAR Interim results announcement Paid date of the interim dividend Annual results announcement 29 November 2011 23 celestial latitude 2011 27 June 2012 Closure of express of members Annual planetary group meeting Proposed final and particular(a) final dividends 7 folk 2012 to 11 September 2012 ( devil days inclusive) 18 September 2012 to 20 September 2012 (both days inclusive) 11 September 2012 On or sooner 3 October 2012 Annual general meeting due date of the final and modified final dividends 4 FAIRWOOD HOLDINGS LIMITED dollar volume (HK$m)PROFIT ATTRIBUTABLE TO EQUITY personaHOLDERS (HK$m) 2,100 1,800 6% GR CA 1,665 1,665. 9 1,665. 9 ,665 1,562. 3 ,56 160 1,829. 5 1,829. 5 ,829. 5 140 120 100 101. 0 101. 0 0 0 % R7 AG C 130. 6 123 8 123. 8 1,500 1,cc 1,433. 5 1,465. 5 1,465. 5 , ,465 93. 3 80. 0 80 900 60 600 300 0 40 20 0 2008 2009 2010 2011 2012 20 08 2009 2010 2011 2012 CAGR Compound Annual Growth Rate BASIC EARNINGS PER SHARE (HK cents) NET ASSETS (HK$m) 100 98. 55 104. 45 104. 45 500 467. 7 503. 7 80 79. 02 74. 21 450 412. 6 63. 56 400 370. 0 374. 9 60 350 40 300 20 250 0 2008 2009 2010 2011 2012 200 2008 2009 2010 011 2012 5 Chairmans Statement TO OUR SHAREHOLDERS On behalf of the panel of Directors (the gore), I am beguiled to present the one- social class results of Fairwood Holdings Limited (the guild) and its subsidiaries (collectively referred to as the group) for the family terminate 31 promenade 2012. FINANCIAL RESULTS 9. 8% 16. 659 1. 306 5. 4% 1,350 1,560 8. 2% 1. 082 18. 295 13. 4% 14. 5% 1. 238 During the form down the stairs review, the multitude recorded a turnover of HK$1,829. 5 million, up 9. 8% over the previous year (2011 HK$1,665. 9 million). Gross pro? t margin established a slight decrease to 13. % (2011 14. 5%). Pro? t attributable to equity make doholders was HK$130. 6 million (2011 HK$1 23. 8 million), representing a dress up of 5. 4%. Excluding the compensation received for surrender of a tenancy lease of HK$13. 5 million and the gain of HK$15. 6 million on plaza disposal last year, pro? t from core operate activities registered a year-on-year increase of 8. 2% to HK$117. 1 million (2011 HK$108. 2 million). Basic earnings per sh atomic number 18 were HK104. 45 cents (2011 HK98. 55 cents). 1. 171 104. 45 98. 55 DIVIDENDS 38. 0 32. 0 12. 0 22. 0 20. 0 100. 0 72. 0 95% 8. 40. 0 The Board recommends to pay a ? nal dividend of HK38. 0 cents (2011 HK32. 0 cents) per sh atomic number 18 and a special ? nal dividend of HK40. 0 cents (2011 HK12. 0 cents) per sh are for the year cease 31 ring 2012. Together with the interim dividend of HK22. 0 cents (2011 HK20. 0 cents and a special interim dividend of HK8. 0 cents) per share paid during the year, the total dividend for the year cease 31 expose 2012 sums to HK100. 0 cents (2011 HK72. 0 cents) per share, representi ng a total dissemination of more or less 95% of the meetings pro? t for the year.The proposed ? nal and special ? nal dividends get bulge out be paid on or before Wednesday, 3 October 2012 to shareholders whose names appear on the Register of parts of the fraternity at the closemouthed of vexation on Thursday, 20 September 2012. 6 FAIRWOOD HOLDINGS LIMITED BUSINESS REVIEW Hong Kong The Hong Kong market comprehendd to deliver satisfactory results in the 2011/12 ? nancial year, with both turnover and similar store sales achieving pleasing growth, abstracttributed by our loftyer shelter innovative products, astute pricing strategy, and well- think network expansion. The operating nvironment was challenging partially due to the minimum wage legislation glide path into effect, a tenacious with a ceaseless rise of nutrition costs and rakehelling levels. However, we are delighted that we man antiquated to overcome the hurdles and maintained a solid gross pro? t margin. all over the long clip, our visionary management squad has evaluated a variety of means to improve competitiveness. The key food affect plant, the SAP Enterprise Resources Planning System, and the ? exible scheduling shift were measures that enabled us to indorse out from our peers and sustain bottom-line growth despite changes in the market surroundings.Our central food processing plant in Tai Po is this instant in full functioning, standardising food select and delivering an assured supply of safe, high-quality products at competitive legal injurys. Through continuous efforts in improving ef? ciency and economies of scale, we discombobulate been able to lower both food and labour costs further. In attachment to our core fast food line of work, we work developed more distinctiveness eating place brands targeting different consumer segments. Kenting Tea House, Buddies Cafe and Curry Factory concord been in operation in the Hong Kong market.Our plan is to introduce t hese specialty eating places to Mainland China when the business models are strengthened. SAP 7 Chairmans Statement 19. 1% Mainland China Fairwood has adopted an expansion strategy in Mainland China during the year. Recognised for our quality, our stores are highly popular among the locals, and we ingest too lengthy our network of restaurants to major northern cities such as Beijing and Tianjin. Over the geezerhood, we have made headway in at a lower placestanding the market by conducting market research which has enabled us to successfully capture local consumers palates and p elongations.The results of our efforts have been positive with an excellent sales growth of 19. 1% recorded for the agone year. We provide continue to expand our business and to strengthen the pillars of our brand in Mainland China. Network During the year down the stairs review, the conference opened 10 sunrise(prenominal) fast food stores including 6 in Hong Kong and 4 in Mainland China. As at 3 1 exhibit 2012, the aggroup has a total of 108 stores in operation in Hong Kong, including 101 fast food stores, 2 Buddies Cafes and 5 specialty restaurants.In Mainland China, the aggroup operates 19 fast food stores. Corporate credit entry We believe that people and customers should always come ? rst, and thus have ceaselessly strived to satisfy the needs of customers through the quality of both the food and the dine ensure to deliver the pledge of our brand. The management is delighted to see its efforts admit by the business community through mixed accolades received during the year. The Group has been honoured with awards in three main sectors Brand, Service, and Human Resources c unveiling.Our efforts have been recognised in the brand-related awards that we have garnered as follows during the year 8 FAIRWOOD HOLDINGS LIMITED 2011 Hong Kong Top Service Brand deed overs 2011 by The Chinese Manufacturers link of Hong Kong and Hong Kong Brand Development Council Hong K ong grand Brands Award by The Chinese University of Hong Kong and Ming Pao rawspapers Limited Excellent service arouse enhance customer loyalty through beseeching a soothing and enjoyable dining experience.Our commission has been rewarded by the hobby service-related awards we received during the year 2011 2011 Hong Kong Awards for Industries Customer Service kilobyte Award by the Hong Kong Retail focus Association Service & Courtesy Award by the Hong Kong Retail Management Association Customer Service Excellence Award by the Hong Kong Association for Customer Service Excellence Hong Kong external Airport Customer Service Excellence Programme Team Award and Individual Award by The Airport Authority Hong Kong 2011 Total QualityService Regime Quality Service Award in the General Retail Food and Beverage (Self-serve) Category by MTR Corporation 2011 By adhering to our motto Enjoy Great Food, Live a Great Life, we care for our employees as well as our customers.We are ple ased that our efforts in implementing family-friendly employment policies and practices within and beyond the working environment have been acknowledged in the following citations and awards 2011 ERB 2011 Distinguished Family-Friendly Employer by the Family Council ERB manpower Development system Award by the Employees Retraining Board supply Industry natural rubber Awards by the Labour Department and Occupational Safety & Health Council 9 Chairmans Statement PROSPECTS , , , , , As we get in on our 40th year of operation, we will continue to step up our efforts in gaining insights into consumer preferences while closely monitoring the market situation in Hong Kong and Mainland China so that we could align our strategies to achieve the optimal performance. We are positive that we can advance our business forward in this year of historic significance for the Group. At the same time, we will remain committed to our stakeholders and the community. In particular, we will further strengthen our consanguinitys with our consumers, suppliers, employees and shareholders.Our efforts have earned us continuous support from customers over the course of four decades. Our first priority has always been to deliver a consistently excellent dining experience by providing quality food and service at an affordable terms. Innovative dainty products, exciting marketing promotions and creative advertising campaigns are in like manner planned for the coming year to attract more customers. downstairspinning all of our efforts is our unwavering commitment to soliciting our customers opinions and endeavouring our topper to improve our menu and products to meet their preference and maintain their loyalty.At Fairwood, our suppliers are central to our success and we treat them as our long term partners. We will continue to adopt a global procurement strategy to source authentic and quality raw corporeals and to proactively control food costs. Furthermore, it is highly natural for us to maintain keen relationships while closely monitoring both our impertinent and existing vendors to ensure an uninterrupted supply of tasty food that our customers have come to expect. , ?, , ,? , ,? ?, , , , , ,? , , , 10 FAIRWOOD HOLDINGS LIMITED One of the most important factors behind our success is our highly experienced and loyal employees. Our employees are inured as members of a big family their job satisfaction is thus one of our key concerns. Towards this end, the management encourages work-life balance by introducing internal and external activities for colleagues bene? and enjoyment. Moreover, we continue to provide comprehensive on-the-job training and reward our top do employees accordingly. Last but non to the lowest degree, we believe ongoing communication and running(a) transparency are the keys to sustaining our relationship with our shareholders. As always, we will pay fear to our shareholders advice, strengthen our busine ss model, improve our competitiveness, and achieve satisfactory returns in clasp of their loyalty and support. APPRECIATIONStepping into Fairwoods 40th anniversary, I would like to once again express my deepest appreciation to our dedicated staff and management team. It has not been light(a) tackling the various challenges over the years, yet hand-in-hand we have managed to weather through good and bad measure. I also wish to extend my gratitude to our customers, fellow directors, business partners and shareholders, for their valuable contributions and support down through the years. I am tall to be part of the Fairwood family, and we look forward to celebrating more decades of success together.Dennis Lo Hoi Yeung executive Chairman Hong Kong, 27 June 2012 11 Financial Review Liquidity and Financial Resources 8. 068 8,400 3. 559 3. 346 2. 506 1. 5 5. 037 4. 677 The Group ? nances its business with internally generated tuberositys ? ows and in stock(predicate) lodgeing facili ties. At 31 adjoin 2012, the Group had coast deposits and cash amounting to HK$265. 3 million (2011 HK$253. 7 million), representing an increase of 4. 6% from 2011. Most bank deposits and cash were denominated in Hong Kong dollars, coupled States dollars and Renminbi. At 31 expose 2012, the Group had total bank loans of HK$31. million denominated in Hong Kong dollars (2011 HK$41. 9 million denominated in Hong Kong dollars and Renminbi). on the whole of the Groups bank borrowings were line of business to the ? oating rate basis and the maturity of borrowings are up to 2019. The unutilised banking facilities were HK$271. 1 million (2011 HK$270. 6 million). The gearing ratio of the Group dropped to 6. 2% (2011 9. 0%), which was calculated based on the total bank loans over total equity. 1. 3 2. 444 7. 809 1. 115 At 31 March 2012, the Group had total as imbeds of HK$806. 8 million (2011 HK$780. 9 million).The Groups working capital was HK$111. 5 million (2011 HK$84. 0 million), re presented by total current as solidifications of HK$355. 9 million (2011 HK$334. 6 million) against total current liabilities of HK$244. 4 million (2011 HK$250. 6 million). Current ratio, being the proportion of total current assets against total current liabilities, was 1. 5 (2011 1. 3). Total equity was HK$503. 7 million (2011 HK$467. 7 million). 2. 653 4. 6% 2. 537 3,100 4,190 2. 711 9. 0% 2. 706 6. 2% Pro? t dexterity 24. 1% 24. 6% Return on average equity was 24. 1% (2011 24. 6%), being pro? s attributable to equity shareholders of the partnership excluding the compensation received for surrender of a tenancy lease and the gain on disposal of non-current assets held for sale against the average total equity at the beginning and the end of the year. 12 FAIRWOOD HOLDINGS LIMITED Capital Expenditure 6,840 6,650 During the year, the capital disbursal was approximately HK$68. 4 million (2011 HK$66. 5 million) and these amounts were mainly used for new and existing shops renovation . Financial Risk Management The Groups benefit and expenditures were mainly denominated in Hong Kong dollars and Renminbi.The impact of the ? uctuation in exchange rate is overbold to the Groups ? nancial position. The Group is exposed to foreign currency essay primarily through cash at bank that are denominated in a currency different than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily United States dollars and Renminbi. As United States dollar is pegged to Hong Kong dollar, the Group does not expect some(prenominal) signi? cant movements in the United States dollar/Hong Kong dollar exchange rate.The Group ensures that the net ikon is kept to an acceptable level by buying or change foreign currencies at spot rates where necessary to address short term imbalances. For the purpose of offsetting the exposure of the interest rate ? uctuation, the Group had entered perpetrateworthy forward interest rate swap s with ? nancial institutions. The swaps were arranged to match the maturity of the quittance schedule of certain bank loans with the maturity over the next 4. 5 years and had the ? xed swap rates ranging from 2. 63% to 2. 74%. 4. 5 2. 74% 2. 63% Charges on Groups AssetsAt 31 March 2012, the net book value of properties pledged as security for banking facilities tending(p) to certain subsidiaries of the Group amounted to HK$48. 3 million (2011 HK$48. 3 million) and no bank deposits and cash was used to pledge whatever loans or banking facilities. 4,830 4,830 Commitments 4,570 4,140 2,020 2,370 The Groups capital commitments cracking at 31 March 2012 were HK$45. 7 million (2011 HK$41. 4 million). Included in capital commitment outstanding at 31 March 2012 was an amount of HK$20. 2 million (2011 HK$23. 7 million) for the future increase of the central food processing plant.In auxiliary, the Group had other outstanding commitments of HK$0. 9 million at 31 March 2012 (2011 HK$8. 6 million) in look on of the contracting fee for operation of a fast food restaurant not provided for in the ? nancial argumentations. 90 860 13 Financial Review contingent Liabilities At 31 March 2012, guarantees are given to banks by the confederacy in treasure of mortgage loans and other banking facilities extended to certain wholly-owned subsidiaries. As at the end of the reportage close, the Directors do not consider it potential that a claim will be made against the order at a lower place the guarantee arrangements.The maximal liability of the follow at the end of the reporting period nether the guarantee is the amount of the facilities drawn down by all the subsidiaries that are covered by the guarantees, being HK$77. 6 million (2011 HK$84. 0 million). The fellowship has not recognised some(prenominal) deferred income in respect of the guarantee as its fair value cannot be reliably deliberate and there is no transaction determine. 7,760 8,400 Employee Information 4,600 4. 434 4,600 5. 061 At 31 March 2012, the total number of employees of the Group was approximately 4,600 (2011 4,600).Staff costs for the year were approximately HK$506. 1 million (2011 HK$443. 4 million). Employees remuneration is commensurate with their job nature, quali? cations and experience. Salaries and advantage are normally reviewed yearbookly based on performance appraisals and other relevant factors. The Group continues to passing play competitive remuneration packages, share options and inducement to eligible staff, based on the performance of the Group and the individual employees. Also, the Group has committed to provide related training programme to improve the quality, competency and skills of all staff. 14FAIRWOOD HOLDINGS LIMITED Pro? le of Directors decision maker Directors Neblett Investments Limited XV Mr Dennis Lo Hoi Yeung, aged 60, is the decision maker Chairman of the play along. He gradational from the Parsons School of excogitation with a B achelor mark in Fine Arts and also be a course on food and beverage management at New York University. After completion of his studies in the U. S. A. in 1977, Mr Lo returned to Hong Kong and obtained a Master storey in Business Administration. In 1981, Mr Lo joined Fairwood abstain Food Limited. In 1991, he played a major authority in the careening of the caller.Mr Lo was the Managing Director of the family from 1991 to 1999. He was name the Chairman and fountainhead executive of the telephoner in January 2000. On 1 January 2009, Mr Lo give his role as Chief Executive but remained as the Executive Chairman of the bon ton. He is also a director of various subsidiaries of the connection. Mr Lo is a director of Neblett Investments Limited which has discloseable interests in the shares of the party beneath the provisos of area XV of the Securities and Futures Ordinance. Mr Chan Chee Shing, aged 58, is the Chief Executive Of? er of the Company. He received a Bachelor o f Arts Degree in Economics from the University of Manitoba, Canada in 1977 and a Master of Business Administration Degree from the University of East Asia, Macau in 1987. Mr Chan has over 30 years experience in marketing. Prior to connecter the Group, he worked as a senior executive for a restaurant group which is listed on The striving replacement of Hong Kong Limited (the banal rally). Mr Chan joined the Group in 1995. He was institute a Director of the Company in January 1998 and was plant Chief Executive Of? er of the Company on 1 January 2009. Mr Chan is also a director of various subsidiaries of the Company. Ms Mak Yee Mei, aged 45, is the Executive Director of the Company. She holds a Bachelor of Science Degree in Economics, a Master of Science Degree in finance and a Master Degree in Business Administration. She is an Associate piece of the lend of Chartered Accountants in England and Wales and the Chartered pioneer of Management Accountants as well as a Fellow fe llow member of the Association of Chartered Certi? ed Accountants and the Hong Kong Institute of Certi? d state-supported Accountants. Ms Mak has extensive experience in auditing, accounting and ? nancial management. Prior to joining the Company, she had held senior management positions in several companies the securities of which are listed on the investment t rust-brown change over. Ms Mak joined the Company in 2004 and was appointed Executive Director, Company Secretary and Authorized illustration of the Company on 1 January 2010. She is also a director of various subsidiaries of the Company. 15 Pro? le of Directors Non-executive Director * Mr Ng Chi Keung*, aged 63, is the Non-executive Director of the Company.He holds a Master Degree in Business Administration. He is an Associate Member of the Institute of Chartered Accountants in England and Wales, the Hong Kong Institute of Certi? ed Public Accountants and the Chartered Institute of Management Accountants. Mr Ng has over 30 years experience in ? nance and management. Prior to joining the Group, he held senior management positions with a number of well-known local and foreign multinational companies. Mr Ng joined the Group in 1994 and was appointed a Director of the Company in November 1995.He was re-designated as a Non-executive Director of the Company from 1 January 2010 following his pull awayment from the Group. At the same time, Mr Ng was also appointed as a member of the Audit Committee and body as a member of the Remuneration Committee of the Company. Mr Ng is an individual Nonexecutive Director of Soundwill Holdings Limited which is listed on the main board of the fund substitution. fissiparous Non-executive Directors * Mr Joseph Chan Kai Nin*, aged 64, was appointed an self-sufficing Non-executive Director in 1991.He graduated from The University of Hong Kong, the University of Strathclyde and The Chinese University of Hong Kong. He holds a Bachelor of Arts Degree, a Diploma in Socia l Work, a Master of Business Administration Degree and a Master of Education Degree. He is a Fellow Member of the Institute of Human Resources Management. Mr Chan has over 30 years experience in human resources development in public, commercial and educational sectors. He is currently Director of the Student Development run, City University of Hong Kong.Dr Peter Lau Kwok Kuen, aged 59, was appointed an free-lance Non-executive Director in September 2000. He holds a Doctorate Degree in Business Administration from The Hong Kong Polytechnic University, an MBA Degree from the University of Calgary in Canada and a Master of Buddhist Studies from The University of Hong Kong. He is a member of The Canadian Institute of Chartered Accountants and the Society of Certi? ed Management Accountants of Canada. Dr Lau had over 12 years of management and accounting experience in the private and public sectors in Canada prior to returning to Hong Kong in 1987.Dr Lau is currently the Chairman and C hief Executive of Giordano International Limited and was an Independent Non-executive Director of Hsin Chong Construction Group Limited from 2002 to 2010, both of which are listed on the main board of the line of business shift. He also serves as an ex-of? cio member of the stave Advisory Committee of the Faculty of Business at The Hong Kong Polytechnic University as well as appurtenant Professor of Marketing at City University of Hong Kong. 16 FAIRWOOD HOLDINGS LIMITED * selective information Modul AG Mr Tony Tsoi Tong Hoo*, aged 47, was appointed an Independent Non-executive Director in November 2008.He graduated from the University of Western Ontario, Canada with an Honours Degree in Business Administration in 1986. Mr Tsoi is an Executive Director and the Chief Executive Of? cer of Varitronix International Limited, an Executive Director of ReOrient Group Limited, a Nonexecutive Director of China WindPower Group Limited and Zhidao International (Holdings) Limited (formerly k nown as Ocean Grand Holdings Limited), all of which are listed on the main board of the Stock Exchange. He is also the Deputy Chairman of the supervisory board of info Modul AG, which is listed on the Frankfurt Stock Exchange.Mr Peter Wan Kam To*, aged 59, was appointed an Independent Non-executive Director of the Company and the Chairman of the Companys Audit Committee in September 2009. He is a Fellow Member of Hong Kong Institute of Certi? ed Public Accountants and the Association of Chartered Certi? ed Accountants. Mr Wan was a former partner of PricewaterhouseCoopers Hong Kong and China ? rm. He has been a practicing restrainer in Hong Kong for over 30 years and has extensive experience in auditing, ? nance, advisory and management.Mr Wan is currently an Independent Director of Mindray Medical International Limited (a company listed on the New York Stock Exchange, USA) and RDA Microelectronics, Inc. (a company listed on the NASDAQ). Mr Wan is also an Independent Non-executive Director of several companies listed on the Stock Exchange, namely China Resources Land Limited, Dalian Port (PDA) Company Limited, GreaterChina Professional Services Limited and Huaneng Renewables Corporation Limited. He was formerly an Independent Non-executive Director of authoritative Gold Mining Limited, which is listed on the main board of the Stock Exchange. * * Member of the Audit Committee Member of the Remuneration Committee Member of the nominating speech Committee 17 Report of the Directors The Board of Directors (the Board) of Fairwood Holdings Limited (the Company) has pleasure in submitting their one-year report together with the audited ? nancial statements of the Company and its subsidiaries (collectively referred to as the Group) for the year ended 31 March 2012. Principal direct of Business Canons Court, 22 Victoria Street, Hamilton HM12, Bermuda The Company is combine in Bermuda. Its registered of? e is situated at Canons Court, 22 Victoria Street, Hami lton HM12, Bermuda and principal place of business is situated at 2/F, TRP Commercial Centre, 18 Tanner Road, North Point, Hong Kong. Principal Activities The principal legal action of the Company is investment holding. The Group is principally prosecute in the operation of fast food restaurants and property investments. The principal activities and other particulars of the principal subsidiaries are set out on pages 131 to 133 to the ? nancial statements. The analysis of the principal activities and geographical locations of the operations of the Group during the ? ancial year are set out in credit line 3(b) to the ? nancial statements. 131 133 3(b) Major Customers and Suppliers For the year ended 31 March 2012, the aggregate amount of turnover and purchases attributable to the Groups ? ve largest customers and suppliers represent less than 30% (2011 less than 30%) of the Groups total turnover and purchases respectively. 30% 30% Financial Statements The pro? t of the Group for t he year ended 31 March 2012 and the state of the Companys and the Groups affairs as at that date are set out in the ? nancial statements on pages 43 to 133. 43 33 Transfer to reserves 130,567,000 123,842,000 Pro? t attributable to equity shareholders, before dividends, of HK$130,567,000 (2011 HK$123,842,000) has been transferred to reserves. opposite movements in reserves are set out in the consolidated statement of changes in equity. An interim dividend of HK22. 0 cents (2011 an interim dividend of HK20. 0 cents and a special interim dividend of HK8. 0 cents) per share was paid on 23 declination 2011. The Board now recommends the payment of a ? nal dividend of HK38. 0 cents and a special ? nal dividend of HK40. 0 cents (2011 a ? al dividend of HK32. 0 cents and a special ? nal dividend of HK12. 0 cents) per share in respect of the year ended 31 March 2012. 22. 0 20. 0 38. 0 40. 0 32. 0 12. 0 8. 0 18 FAIRWOOD HOLDINGS LIMITED Charitable Donations 8,000 66,000 Charitable donations made by the Group during the year amounted to HK$8,000 (2011 HK$66,000). Fixed Assets 11 Movements in ? xed assets during the year are set out in detect 11 to the ? nancial statements. Share Capital During the year, the Company purchased shares of the Company on The Stock Exchange of Hong Kong Limited (the Stock Exchange).Shares were repurchased during the year to reduce the dilutive effect of granting share options. Details of movements in share capital of the Company during the year are set out in note 24(d) to the ? nancial statements. 24(d)(ii) Save as set out in note 24(d)(ii) to the ? nancial statements, there were no other purchases, sales or redemptions of the Companys listed securities by the Company or any of its subsidiaries during the year. 24(d) Directors The Directors of the Company (the Directors) during the ? nancial year and up to the date of this report wereExecutive Directors Dennis Lo Hoi Yeung (Executive Chairman) Chan Chee Shing (Chief Executive Of? cer) Mak Y ee Mei Non-executive Director Ng Chi Keung Independent Non-executive Directors Joseph Chan Kai Nin Peter Lau Kwok Kuen Tony Tsoi Tong Hoo Peter Wan Kam To 109 189(viii) In unanimity with Bye-laws 109 and 189(viii) of the Company, Mr Tony Tsoi Tong Hoo and Mr Peter Wan Kam To shall retire by whirling at the extrospective annual general meeting and Mr Tony Tsoi Tong Hoo and Mr Peter Wan Kam To, being eligible, will offer themselves for re-election at the forthcoming annual general eeting. Independent Non-executive Directors are appointed for a ? xed term of three years and are field of force to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the Bye-laws of the Company. 19 Report of the DirectorsDirectors and Chief Executives Interests and compact Positions in Shares, Underlying Shares and Debentures 352 As at 31 March 2012, the interests or short positions of the Directors and pass executives of the Company and their associ ates in the shares, underlying shares and debentures of the Company and its associated corporations (within the means of Part XV of the Securities and Futures Ordinance (the SFO)) as recorded in the register required to be kept by the Company pursuant to incision 352 of the SFO, or as otherwise noti? d to the Company and the Stock Exchange pursuant to the sham statute for Securities Transactions by Directors of Listed Issuers (the Model codification) were as follows XV (a) (a) Interests in the Company 1 Ordinary shares of HK$1 each take of underlying shares pursuant Personal interests Dennis Lo Hoi Yeung 109,000 Family interests Corporate interests Other interests 55,435,384 1 (Note 1) Chan Chee Shing Mak Yee Mei 15,000 680,000 1,000,000 320,000 1,015,000 1,000,000 0. 2% 0. 80% to Share picks Total 55,544,384 circumstances of total issued shares 44. 61% 1 Limited Limited Neblett Investments Neblett CFJ Holdings CFJ Neblett CFJ Note 1 These shares were held by Neblett Investments Limited (Neblett) and CFJ Holdings Limited (CFJ). The companies are bene? cially owned by two separate trusts of which Mr Dennis Lo Hoi Yeung is a discretionary object.Mr Dennis Lo Hoi Yeung, by virtue of his interest in the trusts as a discretionary object and as the Executive Chairman of the Company, was deemed to be interested in the shares held by Neblett and CFJ. 20 FAIRWOOD HOLDINGS LIMITED Directors and Chief Executives Interests and Short Positions in Shares, Underlying Shares and Debentures (continued) (b) (b) Interests in Fairwood Fast Food Limited (FFFL) 10 Non-voting deferred shares of HK$10 each Personal interests Dennis Lo Hoi Yeung 11,500 Family interests Corporate interests Other interests 279,357 2 (Note 2) Total 290,857 2 Limited Pengto International Pengto Pengto Note 2 These shares were held by Pengto International Limited (Pengto), a company bene? cially owned by a trust of which Mr Dennis Lo Hoi Yeung is a discretionary object. Mr Dennis Lo Hoi Ye ung, by virtue of his interest in the trust as a discretionary object and as the Executive Chairman of the Company, was deemed to be interested in the shares held by Pengto. All the interests declared preceding(prenominal) represent long positions.Apart from the foregoing and those disclosed under the branch Share preference end below, as at 31 March 2012, none of the Directors or chief executives of the Company or any of their spouses or children under 18 years of age had any other interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which had been entered in the register kept by the Company pursuant to fraction 352 of the SFO or as otherwise noti? d to the Company and the Stock Exchange pursuant to the Model figure. Details of Directors and chief executives interests under the Companys share option end are also set out in the section Share alternative p roposal below. 352 XV 21 Report of the Directors Share plectron precis On 7 September 2011, the Company terminated its then share option scheme that was adopted on 18 September 2002 (the 2002 election project) and adopted a new share option scheme (the 2011 Option contrivance) on the same date.As a result of the termination, no further options may be granted under the 2002 Option Scheme but the options that have been granted and remained outstanding as of that date under the 2002 Option Scheme remain effective. A summary of the 2002 Option Scheme and 2011 Option Scheme is set out below (a) a) 2002 Option Scheme The purpose of the 2002 Option Scheme was to attract and retain the best quality personnel for the development of the Companys businesses to provide additional incentives to any employee of the Company or its subsidiaries or any consultant, agent, representative, adviser, supplier of goods or services, customer, contractor, business ally and joint venture partner (the 20 02 Option Scheme qualify Grantee) and to promote the long term ? nancial success of the Company by aligning the interests of option holders to shareholders of the Company.Under the 2002 Option Scheme, Directors were authorised, at their discretion, to invite any Director (including Non-executive Director and Independent Non-executive Director) or any of the 2002 Option Scheme qualify Grantee to take up options to subscribe for shares in the Company at a monetary value which shall not be less than the highest of (i) the block expenditure of the shares as stated in the daily quotation sheet of the Stock Exchange on the date of offer (ii) the average closing cost of the shares as stated in the daily quotation sheets of the Stock Exchange for the 5 business days outright preceding the date of offer and (iii) the nominal value of a share. As at 7 September 2011 (being the date of termination), the maximum number of shares in respect of which options granted under the 2002 Option Sc heme is 12,660,828 shares, being 10% of the issued share capital of the Company as at 23 August 2006, the date on which the refreshment of the mandate limit under the 2002 Option Scheme was approved by the shareholders of the Company.The maximum entitlement for any one participant under the 2002 Option Scheme shall not in any 12 months period up to the date of grant exceed 1% of the Companys shares in issue. (i) (ii) (iii) 12,660,828 10% 1% 22 FAIRWOOD HOLDINGS LIMITED Share Option Scheme (continued) (b) (b) 2011 Option Scheme The purpose of the 2011 Option Scheme is to attract and retain the best quality personnel for the development of the Companys businesses to provide incentives or rewards to any employee, Director (including Non-executive Director and Independent Non-executive Director) or of? cer of any member of the Group or any related trust or company (the 2011 Option Scheme departure Grantee) and to promote the long term ? ancial success of the Company by aligning the in terests of option holders to shareholders of the Company. Under the 2011 Option Scheme, Directors were authorised, at their discretion, to invite any of the 2011 Option Scheme Qualifying Grantee to take up options to subscribe for shares in the Company at a price which shall not be less than whichever is the highest of (i) the closing price of the shares as stated in the daily quotation sheet of the Stock Exchange on the date of offer (ii) the average closing price of the shares as stated in the daily quotation sheets of the Stock Exchange for the 5 business days immediately preceding the date of offer and (iii) the nominal value of a share.As at 31 March 2012, the maximum number of shares in respect of which options may be granted under the 2011 Option Scheme is 12,563,528 shares being 10% of the issued share capital of the Company as at 7 September 2011. The maximum entitlement for any one participant under the 2011 Option Scheme shall not in any 12 months period up to the date of grant exceed 1% of the Companys shares in issue. (i) (ii) (iii) 12,563,528 10% 1% The life of the 2011 Option Scheme is 10 years commencing on 7 September 2011 and expiring on 6 September 2021. During the year ended 31 March 2012, (i) (i) No option was granted under the 2011 Option Scheme and 23 Report of the Directors Share Option Scheme (continued) (ii) 1 12. 58 11. 0 1 1 (ii) the Directors and employees of the Company had the following interests in options to subscribe for shares of the Company (market value per share at 31 March 2012 was HK$12. 58 (2011 HK$11. 10)) granted for HK$1 consideration under the 2002 Option Scheme. The options are unlisted. Each option gives the holder the right to subscribe for one ordinary share of HK$1 each of the Company. takings of options outstanding at 1 April 2011 1,000,000 Chan Chee Shing (Director) make sense of options granted during the year era granted Number of options lapsed Exercisable during period the year Number of options set d during the year Number of options outstanding at 31 March 2012 1,000,000 recital price per share 6. 26 HK$6. 26Closing price per share immediately before date of grant of options 6. 28 HK$6. 28 Weighted average price of closing price per share immediately before date of exercise of options 8 April 2009 20% Exercisable in ? ve tranches of 20% during the period from 1 April 2010 to 31 March 2016 400,000 Mak Yee Mei (Director) 1 March 2010 20% Exercisable in ? ve tranches of 20% during the period from 1 January 2011 to 31 December 2016 800,000 Employee 6 April 2009 20% Exercisable in ? ve tranches of 20% during the period from 5 April 2010 to 4 April 2017 (480,000) (320,000) 6. 30 HK$6. 30 6. 23 HK$6. 23 11. 68 HK$11. 68 (80,000) 320,000 8. 08 HK$8. 08 8. 07 HK$8. 7 11. 68 HK$11. 68 24 FAIRWOOD HOLDINGS LIMITED Share Option Scheme (continued) Number of options outstanding at 1 April 2011 2,358,000 Employees Number of options granted during the year Date granted Number of opti ons lapsed Exercisable during period the year (78,000) Number of options exercised during the year (600,000) Number of options outstanding at 31 March 2012 1,680,000 Exercise price per share 6. 26 HK$6. 26 Closing price per share immediately before date of grant of options 6. 28 HK$6. 28 Weighted average price of closing price per share immediately before date of exercise of options 11. 10 HK$11. 10 8 April 2009 20% Exercisable in ? e tranches of 20% during the period from 1 April 2010 to 31 March 2016 95,000 Employee 4 May 2009 20% Exercisable in ? ve tranches of 20% during the period from 1 April 2010 to 31 March 2016 90,000 Employee 10 July 2009 20% Exercisable in ? ve tranches of 20% during the period from 1 July 2010 to 30 June 2016 50,000 Employee 17 December 2010 20% Exercisable in ? ve tranches of 20% during the period from 17 December 2011 to 16 November 2018 50,000 10. 96 HK$10. 96 10. 60 HK$10. 60 (30,000) 60,000 7. 69 HK$7. 69 7. 30 HK$7. 30 11. 46 HK$11. 46 (60,0 00) (35,000) 6. 29 HK$6. 29 6. 18 HK$6. 18 10. 78 HK$10. 78 25 Report of the DirectorsShare Option Scheme (continued) Number of options outstanding at 1 April 2011 100,000 Employee Number of options granted during the year Date granted Number of options lapsed Exercisable during period the year Number of options exercised during the year Number of options outstanding at 31 March 2012 100,000 Exercise price per share 10. 90 HK$10. 90 Closing price per share immediately before date of grant of options 10. 92 HK$10. 92 Weighted average price of closing before date of exercise of options 16 February 2011 20% Exercisable in ? ve tranches of 20% during the period from 16 February 2012 to 15 February 2017 Employee 28 April 2011 20% Exercisable in ? e tranches of 20% during the period from 28 April 2012 to 27 May 2019 Employee 28 April 2011 20% Exercisable in ? ve tranches of 20% during the period from 1 July 2011 to 30 June 2016 Employee 9 May 2011 20% Exercisable in ? ve tranches of 20% during the period from 9 May 2012 to 8 May 2019 800,000 800,000 10. 88 HK$10. 88 10. 82 HK$10. 82 100,000 (80,000) (20,000) 10. 91 HK$10. 91 10. 84 HK$10. 84 11. 76 HK$11. 76 800,000 800,000 10. 91 HK$10. 91 10. 84 HK$10. 84 26 FAIRWOOD HOLDINGS LIMITED Share Option Scheme (continued) Information on the accounting form _or_ system of government for share options granted and the weighted average value per option is provided in note 1(p)(ii) and note 21 to the ? nancial statements respectively.Apart from the foregoing, at no time during the year was the Company or any of its subsidiaries a political party to any arrangement to enable the Directors or chief executives of the Company or any of their spouses or children under eighteen years of age to acquire bene? ts by means of acquisition of shares in or debentures of the Company or any of its associated corporations within the meaning of the SFO. 1(p)(ii) 21 Substantial Interests in the Share Capital of the Company 336 As at 31 March 2012, the interests or short positions of every person, other than the Directors and chief executives of the Company, in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company under Section 336 of the SFO, or as otherwise noti? d to the Company, were as follows Shares directly and/or indirectly held (i) Neblett (ii) CFJ 2 1 1 2 1 (i) Neblett (Note 1) (ii) CFJ (Note 2) (iii) engaging emotional state International Corporation (Note 1) (iv) HSBC International trustee Limited (Note 1) (v) HSBC regent (Cook Islands) Limited (Note 2) (vi) Allard Partners Limited 12,632,500 6,660,000 48,775,384 48,775,384 6,660,000 48,775,384 Percentage of total issued shares 39. 18% 5. 35% 39. 18% 39. 18% 5. 35% 10. 15% (iii) winning Spirit International Corporation Limited Limited (iv) HSBC International legal guardian (v) HSBC Trustee (Cook Islands) (vi) Allard Partners Limited 27 Report of the DirectorsSubstantial Interests in the Share Capital of the Company (continued) 1 Neblett benignant Spirit International Corporation Neblett 100% Neblett HSBC International Trustee Limited Winning Spirit International Corporation 100% Neblett Note 1 These interests represented the same block of shares directly held by Neblett. Winning Spirit International Corporation owned 100% interest in Neblett and was and then deemed to be interested in the shares directly held by Neblett. HSBC International Trustee Limited, in its capacity as a trustee of a trust of which Mr Dennis Lo Hoi Yeung is a discretionary object, owned 100% interest in Winning Spirit International Corporation and was therefore deemed to be interested in the shares directly held by Neblett and 2 CFJ HSBC Trustee (Cook Islands) Limited CFJ CFJ 100% Note 2 these interests represented the same block of shares directly held by CFJ. HSBC Trustee (Cook Islands) Limited, in its capacity as a trustee of a rust of which Mr Dennis Lo Hoi Yeung is a discretionar y object, owned 100% interest in CFJ and was therefore deemed to be interested in the shares directly held by CFJ. All the interests stated above represent long positions. Save as disclosed above, no other interest or short position in the shares or underlying shares of the Company were recorded in the register required to be kept under Section 336 of the SFO as at 31 March 2012. 336 Suf? ciency of Public Float Based on the information that is publicly available to the Company and within the knowledge of the Directors as at the date of this annual report, the Company has maintained the prescribed public ? oat under the chances Governing the itemization of Securities on the Stock Exchange (the lean Rules). 28FAIRWOOD HOLDINGS LIMITED Continuing machine-accessible Transactions 14A The particulars of the following continuing attached transactions of the Group are set out below in compliance with the reporting requirements of Chapter 14A of the listing Rules (a) 28(b) (a) Tenancy agreement with New combatant International Limited (New Champion) As particular in note 28(b) to the ? nancial statements, FFFL, a ancillary of the Company, leased a property from New Champion with a lease term of three years from 10 April 2009 to 9 April 2012 for the operation of a fast food restaurant. On 31 October 2011, such lease was renew for a further three years from 10 April 2012.As New Champion is an associate of Mr Dennis Lo Hoi Yeung (a Director of the Company), the entering into the lease constituted continuing affiliated transaction for the Company. Details of rent and deposits paid by FFFL relating to the property for the above transaction are as follows 2012 HK$000 Rent for the year Rental deposits at 31 March 1,440 360 2011 HK$000 1,440 360 (b) 28(c) (b) Tenancy agreement with Hibony Limited (Hibony) As detailed in note 28(c) to the ? nancial statements, FFFL leased a property from Hibony for three years from 1 March 2012 for the operation of a fast food restau rant that had to be relocated due to urban renewal.As Hibony is an associate of Mr Dennis Lo Hoi Yeung (a Director of the Company), the entering into the lease constituted continuing affiliated transaction for the Company. Details of rent and deposits paid by FFFL relating to the property for the above transaction are as follows 2012 HK$000 Rent for the year Rental deposits at 31 March 208 660 2011 HK$000 29 Report of the Directors Continuing machine-accessible Transactions (continued) 14A In compliance with Chapter 14A of the itemization Rules in connection with the above continuing connected transactions, the Independent Non-executive Directors have reviewed and con? rmed that the transactions with New Champion nd Hibony (the Transactions) have been entered into (i) in the ordinary and usual course of business (ii) either on normal commercial terms or on terms no less favourable than those available to or from independent third parties (iii) in accordance with the terms of ag reements governing the Transactions on terms that are fair and reasonable and in the interests of the shareholders of the Company as a total and (iv) the aggregate value of the Transactions for the year ended 31 March 2012 has not exceeded the maximum aggregate annual value. The Companys attendant was engaged to report on the Groups continuing connected transactions in accordance with Hong Kong Standard on office Engagements 3000 Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and with reference to devote Note 740 Auditors Letter on Continuing Connected Transactions under the Hong Kong list Rules issued by the Hong Kong Institute of Certi? ed Public Accountants. The hearers have issued their unquali? ed letter containing their ? dings and conclusions in respect of the continuing connected transactions in accordance with Rule 14A. 38 of the list Rules. A copy of the auditors letter has been provided by the Company to the Stock Exchange. (i) (ii) (iii) (iv) 3000 740 14A. 38 Directors Interests in Contracts Save as the transactions disclosed in the section headed Continuing Connected Transactions, no contract of signi? cance to the Groups business to which the Company or any of its subsidiaries was a party and in which a Director had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. 30 FAIRWOOD HOLDINGS LIMITED Directors Service ContractsNo Director proposed for re-election at the forthcoming annual general meeting has an unexpired service contract which is not discoverable by the Company or any of its subsidiaries within one year without payment of compensation, other than normal statutory compensation. Pre-emptive Rights There is no provision for pre-emptive rights under the Companys Bye-laws and the laws in Bermuda. Bank Loans 19 Particulars of bank loans of the Group at 31 March 2012 are set out in note 19 to the ? nancial statements. Five-Year Gro up Financial Summary 134 cxxxv A summary of the results and of the assets and liabilities of the Group for the last ? ve ? nancial years is set out on pages 134 and 135 of the annual report. Investment Properties 136 Particulars of the investment properties of the Group are shown on page 136 of the annual report. Retirement SchemeThe Group operates a mandatary forehanded Fund Scheme (the MPF Scheme) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees in Hong Kong under the jurisdiction of the Hong Kong Employment Ordinance. Particulars of the MPF Scheme are set out in note 20 to the ? nancial statements. Employees engaged by the Group outside Hong Kong are covered by assume local de? ned contribution retirement schemes pursuant to the local labour rules and regulations. 20 Con? rmation of Independence 3. 13 The Company has received from each of the Independent Nonexecutive Directors an annual con? rmation of independence pursuant to Rule 3. 13 of the Listi ng Rules and considers all the Independent Non-executive Directors to be independent. 31 Report of the Directors Auditor KPMG retire and, being eligible, offer themselves for re- adjustment.A resolution for the re-appointment of KPMG as auditor of the Company is to be proposed at the forthcoming annual general meeting. By order of the Board Dennis Lo Hoi Yeung Executive Chairman Hong Kong, 27 June 2012 32 FAIRWOOD HOLDINGS LIMITED Corporate brass instrument Report The Board of Directors (the Board) of Fairwood Holdings Limited (the Company) is committed to achieving high standards of corporate governance practices to safeguard the interests of shareholders and to enhance corporate value and accountability. The Company has complied with the code provisions as set out in the enroll on Corporate Governance Practices (the CG Code) contained in Appendix 14 of the Rules Governing the Listing ofSecurities on The Stock Exchange of Hong Kong Limited (the Listing Rules) throughout the year ended 31 March 2012, save and only that the Chairman and/or Managing Director of the Company are not subject to retirement by rotation, flesh out of which and the reasons for the deviation are stated below. adjacent the announcement of consultation conclusion on the review of the CG Code and associated Listing Rules in October 2011, The Stock Exchange of Hong Kong Limited (Stock Exchange) introduced a number of amendments to the CG Code and associated Listing Rules that are to be effective in 2012 ( rewrite Code). This report also describes the number of requirements under the Revised Code that the Company has adopted. Model Code for Securities TransactionsThe Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code) as set out in Appendix 10 of the Listing Rules for securities transactions by the Directors of the Company (the Directors). Following speci? c enquiry by the Company, all Directors con? rmed their compliance with t he required standards set out in the Model Code throughout the year ended 31 March 2012. Board of Directors The overall management of the Companys business is vested in the Board, which assumes the responsibility for leadership and control of the Company and is collectively responsible for promoting the success of the Company by directing and supervising its affairs. All Directors have taken decisions objectively in the interests of the Company and its shareholders at all times.The Board recognizes that corporate governance should be the collective responsibility of all Directors, as such, it adopted terms of reference for corporate governance functions that are in line with the Revised Code. 33 Corporate Governance Report Board of Directors (continued) The Board undertakes responsibility for decision devising in major matters of the Company, including the approval and monitoring of all policy matters, overall strategies and budgets, internal controls, ? nancial information, appo intment of directors and other signi? cant ? nancial and operational matters. All Directors have been consulted on all major and material matters of the Company.With the advice and services of the Company Secretary, the Executive Chairman seeks to ensure that all Directors are properly briefed on issues arising at Board meetings and receive adequate and reliable information in a timely manner. Directors may choose to take independent captain advice in appropriate circumstances at the Companys expenses, upon making request to the Board. The day-to-day management, administration and operation of the Company are delegated to the Executive Committee which comprises the three Executive Directors and the senior management of the Company. The delegated functions and work tasks are periodically reviewed. Approval has to be obtained from the Board prior to any signi? ant transactions entered into by the abovementioned of? cers. As at the date of this report, the Board comprises the followin g Directors Executive Directors Dennis Lo Hoi Yeung (Executive Chairman) Chan Chee Shing (Chief Executive Of? cer) Mak Yee Mei Non-executive Director Ng Chi Keung Independent Non-executive Directors (INED(s)) Joseph Chan Kai Nin Peter Lau Kwok Kuen Tony Tsoi Tong Hoo Peter Wan Kam To 34 FAIRWOOD HOLDINGS LIMITED Board of Directors (continued) During the year ended 31 March 2012, the Board at all times met the requirements of the Listing Rules relating to the appointment of at least three INEDs with at least one INED possessing appropriate professional quali? ations or accounting or related ? nancial management expertise. The representation of INEDs is more than one third of the Board. A list containing the names of the Directors with their roles and functions has been published on the websites of the Company and the Stock Exchange. Biographical details of all Directors are set out on pages 15 to 17 of this annual report. There is no relationship among Directors of the Board and in p articular, betwixt the Executive Chairman and the Chief Executive Of? cer. The Company has received from each of the INED an annual con? rmation in writing of his independence pursuant to Rule 3. 13 of the Listing Rules.Furthermore, the Board is not aware of any relationship or circumstances which would interfere with the exercise of the independent judgment of the INEDs. Accordingly, the Company considers that all the INEDs are independent. Four full Board meetings were held during the year ended 31 March 2012 and attendance record of each Director is set out below 15 17 3. 13 No. of meetings attended/held Executive Directors Dennis Lo Hoi Yeung (Executive Chairman) Chan Chee Shing (Chief Executive Of? cer) Mak Yee Mei Non-executive Director Ng Chi Keung Independent Non-executive Directors Joseph Chan Kai Nin Peter Lau Kwok Kuen Tony Tsoi Tong Hoo Peter Wan Kam To 4/4 4/4 3/4 4/4 3/4 4/4 4/4 4/4 35Corporate Governance Report Board of Directors (continued) All Directors well unders tand their responsibilities to present a balanced, exceed and understandable assessment of annual and interim reports, price-sensitive announcements and other disclosures required under the Listing Rules and other regulatory requirements. The Directors acknowledge their responsibility for preparing ? nancial statements which give a true and fair view of the state of affairs of the Group. The statement of the auditor of the Company about their reporting responsibilities on the ? nancial statements of the Company is set out on pages 41 and 42 in the independent auditors report.The Directors, having made appropriate enquiries, con? rm that there are no material uncertainties relating to events or conditions that may cast doubt upon the Companys ability to continue as a going concern. 41 42 battle and Re-election of Directors On 11 January 2012, the Board established the Nomination Committee with written terms of reference which are in line with the Revised Code and are posted on the websites of the Company and the Stock Exchange and are available to shareholders upon request. The Nomination Committee comprises two INEDs, Dr Peter Lau Kwok Kuen and Mr Peter Wan Kam To. Mr Dennis Lo Hoi Yeung is the chairman of the Nomination Committee.The Nomination Committee reviews the structure, size and composition of the Board, identi? es and recommends to the Board suitable candidate(s) to stand for election by shareholders at annual general meeting, or when necessary, to ? ll vacancies on the Board. The Board is empowered under the Bye-laws of the Company (the Bye-laws) to appoint any person as a director of the Company either to ? ll a casual vacancy or as an addition to the Board. For procedures for shareholders to propose a person for election as a director, please refer to the procedures posted on the Companys website. 36 FAIRWOOD HOLDINGS LIMITED Appointment and Re-election of Directors (continued) i) (ii) According to the Bye-laws, (i) new Directors appointed by th e Board during the year shall hold of? ce until the ? rst annual general meeting after their appointment and shall then be eligible for reelection and (ii) at each annual general meeting, one-third of the Directors (other than any Director holding of? ce as Chairman or Managing Director) for the time being or, if their number is not three or a multiple of three, then the number nearest to but not less than one-third, shall retire from of? ce provided that each Director (other than any Director holding of? ce as Chairman or Managing Director) including those appointed for a speci? c term shall be subject to retirement by rotation at least once every three years.A copy of an with-it consolidated version of the Companys Memorandum of Association and Bye-laws are available at the websites of the Company and the Stock Exchange. Currently, all Non-executive Directors are appointed for a speci? c term of three years, subject to retirement by rotation and re-election by the shareholders in accordance with the Bye-laws. Chairman and Chief Executive Of? cer The Chairman and Chief Executive Of? cer of the Company are Messrs Dennis Lo Hoi Yeung and Chan Chee Shing respectively whose roles are segregated and are not exercised by the same individual. A. 4. 2 Code provision A. 4. 2 of the CG Code stipulates that every director, including those appointed for a speci? term, should be subject to retirement by ro