CHINA OUHUA - Vineyards - China Ouhua - Annual Report... · 2017. 2. 24. · Annual Report 2015 CHINA OUHUA WINERY HOLDINGS LIMITED Annual Report 2015 Unit 30-01, Level 30, Tower

Annual Report 2015

CHINA OUHUAWINERY HOLDINGS LIMITED

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Unit 30-01, Level 30, Tower A, Vertical Business SuiteAvenue 3, Bangsar South

No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia Tel: +6(03) 2783 9191 Fax: +6(03) 2783 9111

2015

中国欧华葡萄酒控股有限公司是2009在新加坡注册成立的控股公司，主要控股中国烟台欧华葡萄酿酒有限公司95%的

股权，并于2010年11月3号在马来西亚交易所主板成功挂牌，是马交所第一家葡萄酒挂牌公司。

所控股的烟台欧华葡萄酿酒有限公司成立于1997年，公司位于亚洲唯一的“国际葡萄酒城”—烟台，是一家集酿造，

灌装及销售为一体的专业葡萄酒公司。其生产的葡萄酒产品主要在中国市场销售。公司拥有先进的意大利进口专用灌装设，

一家有着较长历史的专业葡萄酒制造公司。

China Ouhua is a company with long history in grape wine production.

Annual Report 2015

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Annual Report 2015

NOTICE IS HEREBY GIVEN THAT the 2016 Annual General Meeting of the Company will be held at Cahaya III Meeting Room, 5th Floor Best Western Hotel Petaling Jaya, No. 1, Jalan 13/1, Section 13, 46100 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Thursday, 23 June, 2016 at 10.00 a.m., for the following purposes:

As Ordinary Business:

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1. [Please refer to Explanatory Note 1]

Resolution 1

Resolution 2

Resolution 3

As Special Business:

6. Ordinary ResolutionAuthority to issue and allot new ordinary shares pursuant to Section 161 of the Companies Act (Chapter 50) of Singapore (”the Act”)

Resolution 5

To receive the Audited Financial Statements for the financial year ended 31 December 2015 together with the Reports of the Directors and the Auditors thereon.To approve the payment of Directors’ fees of RM130,000.00 for the financial year ending 31 December 2016.

To re-elect Mr Bernard Tan Chin Teik, retiring pursuant to Article 107 of the Articles of Association of the Company.

To re-elect Mr Sun Huifeng, retiring pursuant to Article 107 of the Articles of Association of the Company.

5. Resolution 4To re-appoint Messrs Helmi Talib & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration.

To consider and if thought fit, to pass the following resolution, with or without modifications, as Ordinary Resolution:

“THAT, pursuant to Section 161 of the Act and the Articles of Association of the Company and subject to the approvals from Bursa Malaysia Securities Berhad and other relevant government/regulatory authorities, where such approval is necessary, the Directors of the Company be and are hereby empowered pursuant to Section 161 of the Act to issue shares in the capital of the Company at any time until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier, and upon such terms and conditions and for such purposes and to such persons as the Board of Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares to be issued does not exceed 10% of the issued and paid-up share capital (excluding treasury shares) of the Company for the time being AND THAT the Board of Directors be and is also empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad.”

[Please refer to Explanatory Note 3]

[Please refer to Explanatory Note 3]

Annual Report 2015

29 April 2016

7.

A Member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same General Meeting. In case where a form of proxy appoints more than one (1) proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds and Section 149(1)(b) of the Malaysian Companies Act, 1965 shall not apply to the Company.

An instrument appointing a proxy shall be in writing in any usual or common form (including the form approved from time to time by the Depository) or in any other form which the Directors may approve and in the case of an individual, shall be signed by the appointor or his attorney. In the case of a corporation or Limited Liability Partnership, shall be either given under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation.

The signature on such instrument need not be witnessed. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy in accordance with item 5 below, failing which the instrument may be treated as invalid.

An instrument appointing a proxy whether executed in the States of Malaysia or outside the States of Malaysia shall be attested by a solicitor, commissioner for oaths, notary public, consul or magistrate, but the Directors may from time to time waive or modify this requirement either generally or in a particular case. An instrument appointing a proxy must be deposited at the Malaysia Registered Office of the Company situated at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia, not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint not more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

For the purpose of determining a member who shall be entitled to attend the 2016 Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 74A.2 of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 issue a General Meeting Record of Depositor as at 13 June 2016. Only a depositor whose name appears therein shall be entitled to attend, vote and speak at the meeting or appoint a proxy to attend, vote and speak on his stead.

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Yang Bin（ISCA818941)Secretary

(i) Notes on Appointment of Proxy

Annual Report 2015

(ii)Personal data privacy:

(iii)Explanatory Notes on Ordinary Business:

(iv)Explanatory Note on Special Business:

By submitting a proxy form appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the Annual General Meeting (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the Annual General Meeting (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the ”Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

Item 1 of the Agenda

This Agenda item is meant for discussion only as the provision of Section 203(1) of the Companies Act (Chapter 50) of Singapore does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this item is not put forward to shareholders for voting.


Proposed Resolution 1 – Approval for Directors’ Fees for the financial year ending 31 December 2016

The Directors’ fees proposed for the financial year ending 31 December 2016 are calculated based on the assumption that all Directors will hold office until the end of the financial year. This resolution is to facilitate payment of Directors’ fees on current financial year basis. In the event the Directors’ fees proposed is insufficient (e.g. due to the enlarged Board size), approval will be sought at the next Annual General Meeting for additional fees to meet the shortfall.

Proposed Resolution 5 - Approval for Issuance of new ordinary shares pursuant to Section 161 of the Companies Act (Chapter 50) of Singapore (”the Act”)

The Proposed Resolution 5 is the renewal of the mandate obtained from the members at the last Annual General Meeting (”the previous mandate”). The previous mandate was not utilized and accordingly no proceeds were raised.

The Proposed Resolution 5, if passed, will give the Directors of the Company, from the date of the above Meeting, the authority to issue and allot ordinary shares from the unissued share capital of the Company upto an amount not exceeding in total ten per centum (10%) of the nominal value of the issued and paid up Share Capital (excluding treasury shares) of the Company for such purposes as the Directors consider would be in the interest of the Company.

This authority, unless revoked or varied by the Company at a general meeting, shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.

The General Mandate is to provide flexibility to the Company to issue new securities without the need to convene separate general meeting to obtain its shareholders’ approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund raising exercise including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of bank borrowings, acquisitions and/or for issuance of shares as settlement of purchase consideration.

As at the date of this Notice, the Company did not issue shares pursuant to the mandate granted to the Directors at the last Annual General Meeting held on 26 June 2015.

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3. Item 3 and 4 of the Agenda

In line with Recommendation 3.1 of the Malaysian Code on Corporate Governance 2012, the Nomination Committee and the Board had undertaken an annual assessment on the independence of Mr Bernard Tan Chin Teik and Mr Sun Huifeng, who are seeking for re-election pursuant to Article 107 of the Articles of Association of the Company,at the forthcoming 2016 Annual General Meeting. The annual assessment had been disclosed in the Corporate Governance Statement.


CHINA OUHUA WINERY HOLDINGS LIMITED Annual Report 2015

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Corporate Information

BOARD OF DIRECTORS

AUDIT COMMITTEESUN HUIFENGChairman (Independent Non-Executive Director)

ZHANG FUWEIMember (Independent Non-Executive Director)

BERNARD TAN CHIN TEIKMember (Independent Non-Executive Director)

NOMINATION COMMITTEEBERNARD TAN CHIN TEIKChairman (Independent Non-Executive Director)

SUN HUIFENGMember (Independent Non-Executive Director)

ZHANG FUWEIMember (Independent Non-Executive Director)

REMUNERATION COMMITTEEZHANG FUWEIChairman (Independent Non-Executive Director)

SUN HUIFENGMember (Independent Non-Executive Director)

BERNARD TAN CHIN TEIKMember (Independent Non-Executive Director)

ANG YEE HOOIMember (Independent Non-Executive Director)

COMPANY SECRETARYYang Bin（ISCA818941)

Agent in MalaysiaPFA Corporate Consultants Sdn Bhd (232360 T)

AUDITORHELMI TALIB & CO.133 Cecil Street, #15-02, Keck Seng Tower,Singapore 069535Tel: +65-6339 2776 Fax: +65-6339 6716

MALAYSIAN SHARE REGISTRARTricor Investor & Issuing House Services Sdn Bhd (11324-H)

PRINCIPAL BANKERS China Construction BankBank of ChinaChina Merchants Bank

Overseas Chinese Banking Corporation

REGISTERED OFFICESingapore82 Lorong 23 Geylang, #06-09 Atrix,Singapore 388409.Tel: +65- 6203 2789 Fax: +65-6491 5194

BUSINESS OFFICEYantai Fazenda Ouhua Winery Co., Ltd.No. 3 North Wolong Road Yan Tai City Shan Dong Province The PRCTel: +86-535-6020999 Fax: +86-535-6012708Email: [email protected]

STOCK EXCHANGE LISTINGMain Market of Bursa Malaysia Securities BerhadStock name/code: CNOUHUA5188

WANG CHAO

WANG WEI

Director

SUN HUIFENG

BERNARD TAN CHIN TEIK

ZHANG FUWEI

ANG YEE HOOI

Annual Report 2015 CHINA OUHUA WINERY HOLDINGS LIMITED

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MalaysiaUnit 30-01, Level 30, Tower A, Vertical Business SuiteAvenue 3, Bangsar SouthNo. 8, Jalan Kerinchi, 59200 Kuala LumpurTel: +6(03) 2783 9191 Fax: +6(03) 2783 9111

Unit 30-01, Level 30, Tower A, Vertical Business SuiteAvenue 3, Bangsar SouthNo. 8, Jalan Kerinchi, 59200 Kuala Lumpur, MalaysiaTel: +6(03) 2783 9191 Fax: +6(03) 2783 9111

Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, JalanKerinchi, 59200 Kuala Lumpur, Malaysia. Tel +6(03) 2783 9299, Fax: +6(03) 2783 9222

Wang Chao

Profiles of Our Directors

Wang Chao, Chinese, aged 54, is our founder and was appointed to the Board on 12 January 2009 and subsequently appoined as Executive Chairman and CEO on 23 November 2009.

He is responsible for the overall direction and management

of our Group. He studied in Shandong TV University, PRC

and obtained a Diploma in Industrial Business Management

in 1987. From 1979 to 1997, he held various managerial

positions such as Investment Manager of China

Construction Bank's Yantai Branch, Credit Planning

Manager of the People's Bank of China, Yantai Branch, and

General Manager of Yantai Municipal People's Bank

Industrial Development Corporation.

He left the banking industry in 1997 to set up Yantai Ouhua Winery Co., Ltd. (”YO Winery”) in order to pursue his

interest and passion in the wine industry. Since then, Mr. Wang has played a pivotal role in steering our Group's

growth and success in the wine industry in PRC. His experience in the finance and banking industry prior to founding

our Group, coupled with his drive and passion for our wine business have been instrumental to our Group's success

to date. He has conceptualised and implemented various strategies that have led our Group to current position in the

PRC wine industry.

He is a member of the Yantai's Chinese People's Political Consultative Committee, a Foreign-owned Enterprise

Association and the Vice President of Huangwu Chamber of Commerce, Yantai City.

Annual Report 2015

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Profiles of Our Directors (cont’d)

Wang Wei

Sun HuiFeng

Wang Wei, Chinese, aged 52, was appointed as our Executive Director on 23 November 2009 and is currently our Chief Operating Officer.

He obtained a Diploma in Industrial Business Management from Shandong TV University, PRC in 1987 and subsequently graduated with a Degree in Finance and Accounting in 1987 from Shandong Ganbu Hanshou University, PRC in 1997.

He has held various positions such as Supervising Accountant in Yantai Standard Parts Factory from 1983 to 1997, Assistant General Manager to Yantai City Zhifu District City Construction and Development Corporation from 1986 to 1997, and General Manager of YO Winery from 1997 to 2002. In 2002, he joined Yantai Fazenda Ouhua as the Deputy General Manager overseeing the operations of Yantai Fazenda Ouhua.

Sun Huifeng, Singaporean, aged 37, and was appointed as our Independent Non-Executive Director on 27 September 2013.

He is also the Chairman of Audit Committee and member of Nomination and Remuneration Committees.

He is a full member of Institute of Certified Public Accountants of Singapore (ICPAS). He is also a fellow member of the Association of the Chartered Certified Accounts (FCCA). He obtained Bachelor Degree in applied accounting from Oxford Brookes University in United Kingdom.

Mr. Sun joined Deloitte & Touche LLP Singapore as an auditor since May 2004, his job scope include general audit and review, supervision of fieldwork, staff training, IPO consultancy, etc; his client portfolio are from various industries such as manufacturing, shipping, trading and real estate. He left Deloitte & Touche LLP as Assistant Manager and join ARA Assets Management Limited(”ARA”) in 2009, his job scope include oversee China subsidiary finance team’s daily operation, annual budget and tax review, he also participated in project acquisition and disposal. Mr. Sun left ARA as Finance Manager and set up his own business in 2009, mainly focus on accounting, tax, IPO and management consultancy.


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Zhang Fuwei

Zhang Fuwei, Chinese, aged 60, was appointed as our Independent Non-Executive Director on 15 January 2014.

He is also the Chairman of Remuneration Committee and member of Audit and Nomination Committees.

Bernard Tan Chin Teik

Bernard Tan Chin Teik, Malaysian, aged 44, was appointed as our Independent Non-Executive Director on 2 May 2012.

He is also the Chairman of Nomination Committee and member of Remuneration Committee and Audit Committee.

Mr Zhang has Bachelor of Science Degree in Physics. Mr Zhang Fuwei (Mr Zhang) joined Yantai Bureau of Standard

Measurement as an Assistant Engineer in August 1979. In February 1984, he joined Yantai Economic Commission as

a Technology Quality Manager, his job scope includes enterprise technology development and management as well

as enterprise quality management. In September 2002, Mr Zhang joined Yantai Comprehensive Information Center

as a Deputy Controller. He is responsible for enterprise informatisation. He left Yantai Comprehensive Information

Center and joined Yantai Information Industry Bureau as deputy director in May 2003. He is responsible for

management of electric information product. He retired from the position since October 2010.

He is a commerce graduate and holds a Master of Business Administration (Major in Finance) from Multimedia

University, Malaysia. In 2009, he obtained a Certificate of Investor Relations, a professional qualification for IR

practitioners by the IR Society of UK and he is also a member of the Malaysian Investor Relations Association. He

started his career in 1996 as a Project Executive in Osram Semiconductor SdnBhd (“Formerly known as Siemens

Semiconductor SdnBhd”) and then joined Orix Leasing Malaysia Berhad as Credit & Marketing Officer. In 1999, he

moved to Orix Insurance Agencies SdnBhd as Senior Marketing Executive. From September 2001 to February 2003,

he worked as Sales Manager in Magna Able Sdn Bhd. Subsequently, he joined Concept Associates SdnBhd as Finance

Manager until June 2007. He is currently the Vice President, Corporate Communications & Investor Relations with

Sino Hua-An International Berhad.


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Ang Yee Hooi

Notes:-1. Directorship in Public Companies

None of the Directors hold any directorship in any public companies incorporated in Malaysia or companies which are the subsidiaries of public companies incorporated in Malaysia.

2. Family RelationshipSave for the relationship between Wang Chao and Wang Wei who are brothers, none of the other Directors are related to each other nor has any family relationship with the substantial shareholder of the Company. In addition, other than as disclosed, they do not have any personal interest in any business arrangement involving the Company.

3. Directors' ShareholdingsDetails of Directors' shareholdings in the Company can be found in the ”Analysis of Shareholdings” section onpage 94 of this Annual Report.

4. Non-Conviction of OffencesNone of the Directors has been convicted of any offences, other than traffic offences, within the past ten (10) years.

5. No Conflict of InterestNone of the Directors has any conflict of interest with the Company.

6. Attendance at Board Meetings The details of the Directors' attendance at Board Meetings are set out on page 31 of this Annual Report.

Ang Yee Hooi, Malaysian, aged 33, was appointed as our Independent Non-Executive Director on 10 February 2014. He is a member of Remuneration Committee.

Mr Ang holds a Bachelor of Homeopathy Medicine and Science (B.H.M.S) and also a Diploma in Information Technology. Mr Ang joined PenEventsSdnBhd as a Marketing & Events Executive in 2006. In July 2007, he joined Han Chiang College, Penang, Malaysia as a Marketing Executive of Continuing Learning Department. His job scope includes organising marketing and handling corporate training services such as Mandarin language programme and Korea language programme. He was promoted to Assistant Head of Continuing Education Centre in the college since November 2011. In January 2015, he moved to International College of Automotive, Pahang, Malaysia as a Senior Marketing Executive. The following year in January 2016, he joined Cosmopoint College in Penang, Malaysia as Head of Sales.


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Chairman’s Statement


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On behalf of the Board of Directors of China Ouhua Winery Holdings Limited (”China Ouhua”), I am pleased to present the Annual Report together with the Audited Financial Statements of the Company for the financial year ended 31 December 2015.

IntroductionDear shareholders,First and foremost thank you very much for your kind concern and liking interest for China Ouhua and I am grateful to report to you the performance and business operations of China Ouhua in 2015. For the past 12 months, the Company was affected by major economic turbulence, at the same time facing increasing intense competition of China wine market, exacerbated by the flooding of massive imported wine sales from overseas, causing the reduction of prices of wine, the implementation of government policies like anti-graft and austerity drive practice by government servants and together with other unfavourable factors like escalating labour cost and related management fees have affected the company’s sales and profits badly thus no obvious change for betterment.

For financial year of 2015, the revenue grew from RMB 11.04 million a year ago to RMB 12.96 million which depicts a growth of 17.39%. The net loss for the year was RMB 26.60 million, mainly because of increasing competition of China wine market, coupled with increasing imported wine flooding into China market which caused unfavourable impact on domestic wine brand names and resulted mostly domestic brand wine sales to plummet generally. The prices of imported wine also dropped quite significantly, caused increasing negative impact on domestic wine, resulted domestic products became less competitive and affected slower incremental sales revenue.

Honours & AwardsThe Company has the following honours & awards:•“Excellence in International Trade and Commerce”by Yantai Wolong Industrial Park Administrative Committee. •“Customer Satisfaction Awards” by China Customers' Association (CCA)•“AAA Rating in trustworthiness” by Yantai Enterprise Credit Association•“2nd Tier in Production Safety Standards ” by Yantai Bureau of Production Safety

Prospects China’s economy grows annually at certain fast pace, albeit each and every industries growth are imbalance and those industries which are overcapacity have been gradually closed down. Take wine industry as an example, in view of the relatively shorter historical development of winery in China, in the past 10 years it had witnessed rapid development, the number of local wine manufacturers have increased by leap and bounds to hit approximately 400. Obviously, the competition in wine industry has increased greatly, China’s winery market is as similar as the country’s economic development thus is still in the growing stage, the level of consumer

Chairman’s Statement(cont’d)

Prospects (cont’d)

Thank you very much.Wang ChaoExecutive Chairman&CEO29 April 2016

awareness on winery knowledge is also growing higher, as a result of imported bottle wine grew rapidly, the sales revenue of all domestic produced wine products have generally declined across the board. In view of the increasing numbers of imported wine flooding the market, the prices of imported wine also dropped as compared previously and subsequently captured the market shares of domestic produced wine thus causing overall dropped in sale revenue of domestic wine enterprises, domestic brand names competition has transformed into price war and the market becomes chaotic.

The conclusion made for 2015 market competitiveness and development, the Company realised whole industry is currently facing a very big challenge. According to a relevant survey report, in 2015 there were approximately 40 wine manufacturers being closed down. Several big and reputable wine enterprises’ sales revenue had plummeted significantly, one of the top 3 wine brand company was reported suffering losses, the Company believes the entire wine industry is currently experiencing market adjustment period, in the long run it may not be necessarily a bad thing, after undergoing the market adjustment it will ultimately bring long term benefits to its industry development , as long as the company is able to maintain its market position steadily during the adjustment period and at the same time also proactively looking for any new development opportunities. The good news was in second half of 2015 sales revenue of wine in China had increased. According to a reputable research department analysis for 2016, the sales revenue of China’s liquor which includes wine and Chinese rice wine are expected to grow rapidly, the liquor market is heading towards the good direction for development, its pricing is getting more stable, the market environment is getting better each day.

The company is conscious of the importance of information and will not divulge any undisclosed material information to any single shareholder or individual and also recognise the importance of being accountable to its investors and as such has in place a communication policy that enables the Board and management to communicate effectively with its investors and the general public via structural approach on the communication of material information to investors and the general investing public.

I would like to express my sincere appreciation to all shareholders and thank you for the trust and support rendered all these while, which enables us to build good relationships with all parties. To our business associates, customers, suppliers, bankers, business analysts and fund managers, we would like to thank you for your contributions and initiatives. I would like to thank the management and staff of the Company who have played important roles in contributing to the continued growth of the Company.

Last but not least, I would like to express my gratitude to all who have supported China Ouhua in our business endeavours and moving forward we are confident we are able to bring the Company to a greater height, faster development. With the staunch support from shareholders coupled with our hardworking efforts, we are able to overcome the current challenges and find a new development direction.


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导言：

我荣幸的代表中国欧华葡萄酒国际控

股有限公司董事会，在此为大家呈现本公司的

常年报告书，以及截至2015年12月31日财政年

度公司的财务报表。

股东们大家好，感谢全体股东对欧华公司一直以来的关心和厚爱。在这里向诸位报告,欧华公司在过去的2015年间公司

的经营情况，2015年受大的经济形势的影响，同时受到了中国葡萄酒市场竞争加剧、进口葡萄酒销量增加，价格下降以

及国内限制公款消费等因素的不利影响,加上中国人力成本和管理费用也在上升，使公司销售收入及利润表现较差，没有

明显改变。

在2015年度内，公司的营业额从前一年同期的1,104万元人民币略增长到1,296万元人民币，增长了17.39%。公司的净

亏损为2,660万元人民币，主要因素还是中国葡萄酒市场竞争加大，国外进口葡萄酒市场占有率增大，冲击了国产品牌，

使得国产葡萄酒各大品牌业绩普遍下降。进口酒的价格也有较大下降，对国产葡萄酒的冲击加大，使得公司的产品竞争

力下降，销售收入提升较慢。


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公司的展望

：

投资者关系：

致谢：

谢谢大家！

董事局主席&CEO：王超

奖项与荣誉：

中国的经济每年都以一定的速度发展，但各行发展并不均衡，有些产能过高的行业正在逐步减产和关闭，就葡萄酒行业而

言，由于中国葡萄酒发展历史较短，但前十年间发展过快，生产厂家也是迅速增加，预计已有400多间。行业竞争明显加大，

中国的葡萄酒市场也像经济发展一样处于发展期，消费者对葡萄酒的认识水平越来越高，但由于进口原瓶葡萄酒增长较快，

使得国产葡萄酒销量全行业都普遍下降。进口葡萄酒价格较以前有所下降，进口数量较多，抢占了国产葡萄酒的市场，使国

内企业的销售普遍下降，国产品牌竞争变为价格竞争，市场较混乱。

但通过对2015年市场竞争和发展的总结，公司认识到全行业面临很大的挑战，据有关调查显示，中国国内葡萄酒生产企业

2015年停产了近40家。几个大的知名企业销售业绩也下降了很多，三大品牌之一的一家企业出现了亏损，所以公司认为现在

整个葡萄酒产业处在调整期，对长远看不一定是坏事，调整以后对行业长期发展有一定好处，所以公司要在调整期间站稳市

场，并寻求新的发展机会。可喜的是2015年下半年中国的葡萄酒销量有所上升，据权威部门分析2016年中国酒类销售，包括

葡萄酒和白酒等都会有一定速度的增长，酒类市场正在向好的方向发展，但价格较为稳定，市场环境将越来越好。

本公司意识到资讯的重要性，不会向任何股东或个人泄露任何机密资料。同时我们也了解对投资者负责的重要性，因此实

行了一个沟通政策，建立了一个结构性的沟通方式。把公司的重要信息一一传达给投资者和所有投资大众。除了作为与股东

主要沟通的常年股东大会之外。董事及高管人员也采取主动定期走访大股东和部分小股东，定期更新公司网站的讯息。安排

基金经理投资机构和分析员之间的对话及各项参访活动。让他们掌握公司营运财务状况，公司主要及未来发展计划的最新资

讯。

我衷心感谢所有股东一路来给予我们的信任和支持，让我们能与各方建立起良好的关系。对于我们的商业伙伴、客户、

供应商、银行家、财经分析员，以及基金经理，我们更加感谢大家的支持和贡献。同时我也要感谢公司的管理层和员工，因

为他们在促进公司的持续成长方面，扮演了重要的角色。

我要感谢所有为欧华公司发展给予支持的各界好友，我们有信心在未来的日子将公司推向更高、更快的发展空间，在各位

股东的支持下，经过我们的努力，使公司克服目前的困难，找到一个新的发展方向。


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公司拥有烟台市高新区卧龙管委颁发的外经贸工作先进企业称号，山东省消费者协

会颁发的消费者满意单位称号，烟台市工商管理局、烟台市企业信用协会颁发的守合

同重信用企业称号，烟台市安全生产管理局颁发的安全生产标准化二级企业称号。

Corporate Social Responsibility

Ouhua and the Community 欧华与社会

欧华企业要成为一家对社会和环境负责任的公司，这是我们的重要承诺，也是我们企业价值观的一个重要原则。所以

我们与所有员工和合作伙伴都有着良好的合作和友好关系，并共同营造美好的工作和生产环境。尽量减少对环境的影响，

并关心社会的弱势群体。组织员工多次进行捐款捐物和进行走访，推动社会公益慈善事业的发展，并获得爱心企业称号。

公司董事长现任烟台市芝罘区慈善总会副会长。

Our commitment is to be a socially responsible company which contributes consistently to our communities in a positive manner. We work together on a daily basis with staff, suppliers, business partners and others to help create a more sustainable approach in our business operations, to help build stronger local communities and to create a better workplace. In 2010, the Company received an award for being a ”Charitable Enterprise” . The CEO of the Company, Mr. Wang Chao, is the Vice-Chair of the General Charity Association in Yantai.

China Ouhua have actively undertaken corporate social responsibility activities or practices in financial year 2015. China Ouhua organized staff to attend Study of Civilized Etiquette responding to the call in respect to Being civilized citizens; Constructing a civilized city proposed by Chinese government. China Ouhua participated in the community promotion activities for public service and helped difficult community people for many times. China Ouhua also actively participated in the afforestation activities launched by YanTai Government which reconstructed the environment around the Company.

China Ouhua puts a high value on the diversity of workplace. Now the male staff is 30% and female staff is 70%. The age of the staff ranges from 30 to 50 years old and the staff are all Chinese.

2015年中国欧华响应中国政府关于建设文明城市做文明市民的号召，组织员工进行文明礼仪学习和教育，参加社区的公益

宣传活动，并多次帮助社区困难市民。同时参加了政府组织的义务植树活动，对厂区周围进行了环境改造和卫生管理。

公司员工性别信息为男员工占总数的30% 女员工占总数的70%。年龄在30岁-55岁之间，种族为汉族。


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Corporate Social Responsibility (cont’d)

Staff Health & Welfare 员工福利与安全

Training & Development 员工培训

The Company hosts various cultural events and seminars promoting wine culture on a regular basis in order to foster effective communications between the consumers and the Company. The Company is also active in hosting events with product giveaways to improve our brand recognition and brand image.

公司经常性的举行葡萄酒文化宣传和对消费者进行讲座和感恩回报活动。增加经销商、消费者与企业的联系和交流。

同时举行文艺活动和赠送产品活动，加强了我们与社会各界的双向关系。

For staff welfare, the Company reviews HR policies and employee benefits on a regular basis to ensure our philosophies of ”Sense of Belonging”, teamwork and equal opportunity are observed. The employees also enjoy benefits such as medicare and social securities insurance coverage.

The Company puts high regards on employees' safety. The Company runs health checks annually to ensure our employees' health. Further, the Company is dedicated to improve our production process to protect our employees from occupational injuries.

对员工的健康与安全方面，公司每年都接派员工进行体检，保证员工健康。同时改进工艺流程，减少员工劳动强度，

加强安全保证和措施，连续多年没有员工工伤事件，被授予安全生产先进企业。

Employees are recognised as a key source of competitive advantage at Ouhua, and every effort is made

to harness the competency of the human capital. The employees are trained annually with latest technical and

social skills that are essential to the Company's long-term success.

对员工的培训与发展，公司给予了重视。公司每年都要对员工进行各项专业和文化培训，提高员工素质，增加企业的

竞争力。

Marketing Activities 市场活动

对于公司员工的福利，公司给予了较高的重视。给公司所有员工缴纳了五险，保证了员工的权利，使员工对企业有

“归宿感”和团队精神。


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Audit Committee Report

Name Chairman / Member DirectorshipSun Huifeng ChairmanZhang Fuwei Member


Member

Independent Non Executive DirectorIndependent Non Executive Director

Independent Non Executive Director

Terms of Reference

A. Purpose

The purpose of the establishment of Audit Committee is to assist the Board of Directors in discharging its responsibilities to safeguard the Company's assets, maintain adequate accounting records, develop and maintain effective systems of internal control, with the overall objective of ensuring that Management creates and maintains an effective control environment in the Group. The Audit Committee also provides a channel of communicationbetween the Board of Directors, Management, External Auditors and Internal Auditors.

B. Composition of Audit Committee

(1) The Audit Committee shall be appointed by the Board from amongst the Directors of the Company which fulfills the following requirements:- (a) the Audit Committee must be composed of not fewer than three (3) members; (b) all the Audit Committee members must be Non-Executive Directors, with a majority of them being Independent Directors; (c) at least one (1) member of the Audit Committee:- (i) must be a member of the Malaysian Institute of Accountants; or (ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years' working experience and:- (aa) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or (bb) he must be a member of one of the association of accountants specified in Part II of 1st Schedule of the Accountants Act 1967; or (iii) fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (”Bursa Malaysia”). (d) no alternate director shall be appointed as an Audit Committee member;(2) In the event of any vacancy in an Audit Committee resulting in the non-compliance of the above, the Company must fill the vacancy within three (3) months.(3) All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company.(4) The Board must review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether the Audit Committee and members have carried out their duties in accordance with its terms of reference.

C. Chairman

The member of the Audit Committee shall elect a Chairman among themselves who shall be an Independent Director.

In the absence of the Chairman of the Audit Committee in a Meeting, the members present shall elect one of their numbers to be Chairman of the Meeting.

The Chairman of the Audit Committee should engage on a continuous basis with senior management, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company.

---


17

Audit Committee Report (cont’d)

D. Secretary of the Audit Committee

The Company Secretary shall be the Secretary of the Audit Committee or in his absence, the Chairman of the Committee or Chairman of the Meeting shall choose another person as the secretary of the Meeting.

E. Duties and Responsibilities of Audit Committee

The Terms of Reference of Audit Committee should be assessed, reviewed and updated at least annually by the Audit Committee or as and when there are changes to the Company's circumstances, Malaysian Code on Corporate Governance, Main Market Listing Requirement of Bursa Malaysia Securities Berhad or any new regulations that may have an effect on the Audit Committee's responsibilities. The Audit Committee should recommend any change to the Terms of Reference to the Board of Directors for approval.

The main duties and responsibilities of the Audit Committee shall be:-

(1) To assess the risks and control environment;

(2) To oversee financial reporting, review the quarterly results and year end financial statements, before submission to the ----Board of Directors for approval, focusing particularly on:- a) changes in or implementation of major accounting policies and practices; b) major risks areas; c) significant and unusual events; d) significant adjustments resulting from the audit; and e) compliance with accounting standards, Main Market Listing Requirement of Bursa Malaysia Securities Berhad (”LR”)

(3) To evaluate the internal audit process and review the following with the Internal Auditors and report the same to the Board of Directors: - a) the adequacy of the scope, functions, competency and resource of the internal audit functions and that it has the necessary authority to carry out its work; b) the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; c) review any appraisal or assessment of the performance of members of the internal audit function; d) approve any appointment or termination of senior staff members of the internal audit function; and e) take cognisance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.

(4) To evaluate the external audit process and review the following with the External Auditors and report the same to the Board of Directors:- a) the audit plan; b) the audit report; c) evaluation of the system of internal controls; d) Management letter and Management response; and e) the assistance given by the employees to the External Auditors.

(5) To discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management where necessary);

(6) To consider and recommend the appointment or re-appointment of the Internal and External Auditors and matters relating to the resignation or dismissal of the Auditors;

(7) To review any resignation letter from the External Auditors;

(8) To review conflict of interest situations and related party transactions;

(9) To establish the procedures for receipt, retention and treatment of complaints received by the Company and the Group regarding , criminal offences involving the Company and the Group or its employees, questionable accounting, auditing, business, safety or other matters that impact negatively on the Company and the Group.

and other legal requirements.


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(10) To monitor, review and assess the utilization of proceeds are consistent with the intention presented to investors for any fund raising exercise;

(11) To consider the major findings of internal investigations and management's response;

(12) To undertake such other functions and duties as may be required by statute or the LR, or by such amendments as may be made thereto from time to time;

(13) To consider other topics as defined by the Board; and

(14) Where the Audit Committee is of the view that a matter reported by it to the Board of Directors of the Company has not been satisfactorily resolved resulting in a breach of the LR, the Audit Committee must promptly report such matter to the Bursa Malaysia.

F. Rights of the Audit CommitteeIn performing of its duties and responsibilities, the Audit Committee shall:-

(1) have the authority to investigate any matter within its terms of reference;

(2) have the resources which are required to perform its duties;

(3) have full and unrestricted access to any information pertaining to the Company;

(4) have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity;

(5) be able to obtain independent professional or other advice at the expense of the Company and to invite outsiders with relevant experience and expertise to attend the Audit Committee meetings (if required) and to brief the Audit Committee; and

(6) be able to convene meetings with the External Auditors, the Internal Auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary.

E. Duties and Responsibilities of Audit Committee (cont'd)

G. Procedure of Committee Meetings

(1) Frequency of Meetings

The Audit Committee will meet at least four (4) times in each financial year although additional meetings may be called at any time, at the discretion of the Chairman of the Audit Committee.

(2) Calling

Any member may at any time, and the Financial Controller and the Secretary shall on the requisition of any of the member or the External Auditors, summon a meeting.

The Audit Committee meeting may be held at two (2) or more venues within or outside Malaysia using any technology that enable the Audit Committee members as a whole participating in the meeting can hear each other and participate for the entire duration of the meeting. Such participation in a meeting shall constitute presence in person at such meeting.

All information and documents for the meeting must be made available to all members prior to or at the meeting.

A minute of the proceedings of such meeting is sufficient evidence of the proceedings to which it relates.

(3) Notice

Except in the case of an emergency, reasonable notice as the Committee Members deem fit of every meeting shall be given in writing and the notice of each meeting shall be served to the member either personally or by fax or by post or by courier or by e-mail to his registered address as appearing in the Register of Directors, as the case may be.


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(4) Quorum

The quorum shall consist of a majority of Independent Directors and shall not be less than two (2).

(5) Attendance

The Financial Director, the Head of Internal Audit and a representative of the External Auditors should normally attend the meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee.

The Committee should meet with the External Auditors and Internal Auditors or both without executive Board members present at least twice a year.

(6) Voting

A resolution put to the vote of the meeting shall be decided on a show of hands. In the case of an equality of votes, the Chairman shall be entitled to a second or casting vote.

(7) Keeping of MinutesMinutes of each meeting shall be signed by the Chairman of the meeting at which the proceedings were held and kept as part of the statutory record of the Company upon confirmation by the Board.The Minutes of each Meeting shall be made available to all members of the Board upon request.

(8) Custody, production and inspection of such minutesThe minutes shall be kept by the Company at the Registered Office of the Company, and shall be open to the inspection of any member of the committee without charge.

During the financial year ended 31 December 2015, the Audit Committee held four (4) meetings and the attendance record is as follows:-

Name of the Audit Committee Members Attendance %

Sun Huifeng 4/4 100

Bernard Tan Chin Teik 3/4 75

100Zhang Fuwei 4/4


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The following activities were carried out by the Audit Committee during the financial year under review:• Reviewed the audit plan with the External Auditors for the statutory audit of the Group's financial statements for the financial year ended 31 December 2015;• Reviewed any changes in major accounting policies;• Reviewed any significant or unusual events;• Reviewed and assessed scope of Auditors, internal audit findings and area for improvements and recommendations;• Reviewed the compliance with accounting standards and other legal requirements;• Reviewed the unaudited quarterly financial statements including the audited year end financial statements to ensure adequacy of the disclosure of information essential for a fair and true presentation of the financial affairs of the Group before recommending to the Board for approval;• Discussed and reviewed the Group's audited year end financial statements together with the report of the Audit Committee with the External Auditors in relation to the significant matters noted in the course of the audit of the Group's financial statements as well as new development on accounting standards and regulatory requirements on 23 April 2015; and• Considered the appointment of External Auditors and their remunerations.Audit Committee had conducted an

The Company's Internal Audit Division is established to assist the Audit Committee in the discharge of its duties and responsibilities. Its role is to undertake independent, regular and systematic reviews of the operation of the companies to ensure proper systems of internal controls are in place. It also evaluates the processes wheresignificant risks are identified, assessed and managed to ensure instituted controls are appropriate, effectively applied and achieve acceptable risk exposure consistent with the Company’s risk management policy.


21

Throughout the financial year, audit assignments such as sales management, trade receivables management, fund management, inventory management, human resources management, fixed assets management and inventory management were carried out on the Company. The resulting reports of the audit undertaken were presented to the Audit Committee and forwarded to the management concerned for their onward action.

During the financial year, there was no material internal control failure that was reported that would have resulted in any significant loss to the Company.

All the Internal Audit functions were conducted by the in-house audit team. There were no areas of the Internal Audit function which were outsourced. The total costs incurred for the Internal Audit function in respect of the financial year ended 31 December 2015 was RMB 108,000.

assessment and evaluation on the performance and independence in accordance with the terms of all relevant professional and regulatory requirements, i.e. adequacy of resources, experience of the firm and staff assigned, level of non-audit fees, rotation of partner, etc. of the external auditors, Messrs Helmi Talib & Co.

Corporate Governance Statement

PRINCIPLE 1 – ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

1.1 　Composition of the Board

1.2　　Clear Roles and Responsibilities of the Board

The Board of Directors of China Ouhua Winery Holdings Limited recognises the importance of the Malaysian Code on Corporate Governance 2012 (”the Code”), which sets out the principles and the best practices on corporate governance. In line with this, the Board is committed to ensuring that the principles of Corporate Governance and Best Practices are observed and practiced throughout the China Ouhua Winery Holdings Limited and its subsidiary (”the Group”) so that the operations of the Group are conducted with integrity and professionalism to safeguard shareholders' investment and enhance shareholders' value.

The Board currently consists of six (6) members, comprising two (2) Executive Directors and four (4) Independent Non-Executive Directors. Thus, this complies with Paragraph 15.02 of the Listing Requirements of Bursa Malaysia Securities Bhd (”Bursa Securities”) that one-third (1/3) of the Board are Independent Directors. All the Independent Directors are independent of management and are free from any business or other relationship that could materially interfere with the exercise of their independent judgment. The functions of Executive and Non-Executive Directors are separate and clearly defined. Generally, the Executive Directors are to manage the Group's daily operations and to implement the operational and corporate decisions. The Non-Executive Directors are to provide the Company with unbiased, independent views and decisions, after taking into consideration the interest of the shareholders, employees and business associates. The expertise of the Independent Non-Executive Directors complements the knowledge and experience of the Executive Directors in the formulation of the Company strategies and policies.

The Board's composition represents a mix of knowledge, skill and expertise relevant to the activities of the Group. A brief profile of each Director is presented on page 7 to page 10.

There is a balance of membership in the Board thus ensuring that no individual dominates the decision making process and the results thereof.

1.2.1 Determine and Review the Company’s Strategic Plan and Direction

To ensure the effective discharge of its function and responsibilities, the Board had delegated specific powers and responsibilities of the Board to the relevant Board Committees such as Audit Committee (”AC”), Nomination Committee (”NC”), and Remuneration Committee (”RC”) to act on behalf of the Board to oversee the Group's affair, which operates within the respective clearly defined terms of reference.


22

The Board retains full and effective control of the Company. This includes the responsibility for determining, reviewing and monitoring the Company's overall strategic directions as well as development of the Group in an effective and responsible manner. Key matters reserved for the Board's approval include but not restricted to the following:-

approval of annual financial statements and quarterly result, including accounting policies of the Group;review and approval of annual financial budget and long term business plans; business acquisition and disposal;major capital expenditures;declaration of dividends;establishment of new businesses or entries into new business ventures; financing of the Group’s activities; any corporate restructuring not covered by the abovementioned paragraphs; and the change of name of any company within the Group and establishment of any new company.

-

--------

Corporate Governance Statement (cont’d)

1.3 Formalised Ethical Standards through Codes of Conduct and Ethics

1.2.2 Overseeing and evaluating the conduct of the Company’s business

The Board delegated the day-to-day management of the Company’s business to Management team led by Chief Executive Officer (”CEO”) with respect to both its regulatory and commercial functions. CEO and the team run the business operations, general activities and administration of financial matters of the Group in accordance with established delegated authority from the Board. The Board monitors the performance of the CEO and Management team against agreed performance indicators.

The Board also delegated some of its responsibilities to the Board Committees. The Board Committees have the authority to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. All deliberations and decisions taken by the Board Committees are documented and approved by the respective Chairman of the Board Committees. The report and recommendation of the Board Committees are included as agenda items for deliberation at the Board meetings. The ultimate responsibility for decision making lies with the Board.

1.2.4 Establishing a Succession PlanningThe Board worked with NC to ensure that a clear succession plan is established by Management. The Board understands the current performance, competencies and potential of those in key positions and had assessed and identified key officers as a suitable replacement to avoid disruption of the operations of the Group.

1.2.5 Ensuring the existence of a good investor relations programme and shareholder communication policyThe Board is responsible in ensuring good public relations between the Company and investors which include participate in the communication with public, project a strong and positive image of the Company, promote the vision of the Company and protect the interests of stakeholders.

1.2.6 Reviewing the adequacy of the internal control policy

The Board is responsible for the adequacy and integrity of the Company’s internal control system. Details pertaining to the Company’s internal control system and its effectiveness are available in the Statement on Risk Management and Internal Control of this Annual Report.

1.2.3 Identifying principal risks and ensuring the implementation of appropriate systems to manage them

The business departments and internal audit department review and highlight the key corporate risk to the Board for approval. The Board gathers advices from Audit Committee, Nomination Committee and Remuneration Committee and then makes decisions after a thorough discussion.

The Company has formalised an ethical standard in writing through a Code of Conduct and Ethics. The Code of Conduct and Ethics governs the standard of conduct, behaviour and responsibilities expected from all Company Directors and employees by setting out the principles, practices and standards of good personal and corporate behaviour as below:


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There is a division of functions between the Board and Management, whereby the former’s focus lie more on the Company’s governance; the latter is to carry out the duties and direction delegated by the Board in achieving the Group’s corporate objectives and long term strategic plans of the business. The Board ensures the Management is of the highest calibre and has in place programmes to train and develop the Management and also provide for the orderly succession of the Management.

The Board had on 26 February 2015 reviewed, discussed and approved the Business Plan and budget for the financial year ended 31 December 2015.


1.3 Formalised Ethical Standards through Codes of Conduct and Ethics (cont’d）

1.4 Strategies Promoting Sustainability

1.5 Access to Information and Advice

i. act in the Company’s best interest and value the Company’s reputation;ii. act with Honesty and Integrity;iii. treat others with respect and value difference and maintain a safe working environment;iv. identify conflicts of interest and manage them;v. respect and maintain privacy and confidentiality;vi. do not make or receive improper payments, benefits or gains;vii. compliance with the Code of Conduct and Ethics, legal and regulatory requirements and company

viii. immediately report any breaches of the Code of Conduct and Ethics, or the Company’s policies

The Code of Conduct and Ethics outlines the Group’s commitment to appropriate and ethical practices, establishes ethical standard to ensure that working environment and condition are safe and healthy, workers are treated with respect and dignity, and business operation are conducted ethically.

The Group Human Resource is responsible for on-going review and development of the Code of Conduct and Ethics.Failure to comply with the Code of Conduct and Ethics tantamount to a serious breach and investigation or disciplinary action will be taken by the Company for the non-compliance.

The Code of Conduct and Ethics is available on the company’s website at www.ohuawine.com.my

The Company has yet to formalise and established a Whistle-blowing policy. The Board recognise and understands the importance of Whistle-blowing policy in strengthen the overall business conduct, demonstrates accountability, enhance the integrity and ethical behaviour, facilitate the risk management and at the same time encourage sound corporate governance practices.

The Company targets to finalise and complete the whistle-blowing policy for adoption in the financial year 2016.

The Board promotes good Corporate Governance in the application of sustainability practices throughout the Company, the benefits of which are believed to translate into better corporate performance. A detailed report on sustainability activities, demonstrating the Company’s commitment to the communities, employees, and sustainability agenda, are in the Corporate Social Responsibility Statement of this Annual Report.

Prior to Board meetings, the Notice and agenda together with the other relevant papers covering quantitative and qualitative information (”Board Papers”) are distributed to all Directors not less than three days for their perusal before the meeting date to enable the Directors to review.

The Board Papers contain information pertinent to the matters to be deliberated at the coming meeting and any details or clarifications that the Directors may require on the agenda items would be furnished upon request. In a potential conflict of interest situation, the Director concerned would be required to declare his interest and abstain from decision making.

The Board has unrestricted access to all staff for any information pertaining to the Group's affairs. In addition, the Board has access to the advice and services of the Company Secretary who is responsible for ensuring that the Board meeting procedures are followed and that applicable rules and regulations are being complied with. The Board may also seek independent advice at the Company’s expenses whenever the need arises.


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policies; and

and procedures.


1.7 Board Charter

2.1 Nomination Committee

The Board Charter which has been formalised and adopted is posted on the Company’s website. The Board recognises the importance to set out the key values, principles and ethos of the Company, as policies and strategy development are based on these considerations. The Board Charter includes the division of responsibilities and powers between the Board and Management as well as the different committees established by the Board. The Board would periodically review and update the Board Charter.

PRINCIPLE 2 – STRENGTHEN COMPOSITION

The Board has delegated the Nomination Committee (”NC”) the responsibility for considering the appointment of Directors, identifying and selecting potential new directors and proposing to the Board the appointment of new Directors. The NC comprised three Independent Non-Executive Directors as follow:

• Bernard Tan Chin Teik (Chairman)• Sun Huifeng (Member)• Zhang Fuwei (Member)

2.1.1 The main duties and responsibilities of the Nomination Committee

The Terms of Reference of the NC provides that the NC shall have specific responsibilities with respect to the nomination matters. The specific responsibilities of the NC include, amongst others:

To recommend to the Board of Directors, the candidates for all directorships to be filled by the shareholders or the Board of Directors. In making its recommendations, the Nomination Committee should consider the candidates.


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1.6 Qualified and competent Company Secretaries

The Board is supported by a suitably qualified and competent Company Secretary/Agent in Malaysia in discharging its role and responsibilities. The Board ensures that the Company Secretary appointed has the relevant experiences and skills. The appointment and removal of Company Secretary/ Agent in Malaysia of the Company shall be the prerogative of the Board as a whole.

The Company Secretary/ Agent in Malaysia plays an important advisory role and to provide guidance, information and advice to the Board and Board Committees on issues relating to corporate compliance with the relevant laws, rules, regulations and procedures affecting the Board and the Group, as well as best practices of governance. The Company Secretary/Agent in Malaysia constantly keep themselves abreast of the evolving capital market environment, regulatory changes and developments in CG and circulates relevant guidelines and updates on statutory and regulatory requirements from time to time for the Directors’ reference and knowledge.

The Company Secretary/ Agent in Malaysia attends Board and Board Committee meetings and ensures that all board papers are sent to the members on a timely basis, meetings are properly convened and appropriate records of the deliberations and proceedings are accurately recorded and duly signed by the Chairman of the meeting.

The Company Secretary/Agent in Malaysia works closely with the Management to ensure that there are timely information flows within and to the Board and Board Committees, and between the Non-Executive Directors and Management.

i.


2.1 Nomination Committee (cont’d)

2.1.2 Nomination Committee – Appointment and Re-election of Directors

To oversee appointment, management succession planning and performance evaluation of key senior officer, and recommending to the Board of Directors, the removal of key senior officer if they are ineffective, errant and negligent in discharging their responsibilities;

To assist the Board of Directors in an annual review of the required mix of skills and experience and other qualities, including core competencies which Non-Executive Directors should bring to the board;

To apply the process as determined by the Board of Directors, for assessing the effectiveness of the board as a whole, the committees of the board, and for assessing the contribution of each individual director, including independent Non-Executive Directors, as well as the Chief Executive Officer where all assessments and evaluations carried out by the Committee in the discharge of all its functions should be properly documented;

Each Committee Member should abstain from discussion or voting on any resolutions in respect of the assessment of his performance or re-nomination as Director;

In exercising objectivity in the assessment process, the Committee Members should not be influenced by major controlling Shareholders or the CEO or Executive Directors.

2.1.1 The main duties and responsibilities of the Nomination Committee (cont’d)

vi.

ii.

iii.

iv.

v.

vii.

viii.

ix.

x.

In accordance with the Company’s Articles of Association (”Articles”), those Directors who are appointed by the Board either to fill a casual vacancy or as an addition to the existing Board are subject to election by shareholders at the Annual General Meeting (”AGM”) following their appointments. The Articles also provide that one-third (1/3) of the Directors for the time being, or, if their number is not three or a multiple of three (3), then the number nearest to but not less than one-third (1/3) of the remaining Directors be subject to re-election by rotation at each AGM including the Chief Executive Officer (or person holding an equivalent position) provided always that all the Directors shall retire from their office at least once every three (3) years. All retiring Directors are eligible to offer themselves for re-election at the AGM.

The Directors standing for re-election at the forthcoming 2016 AGM are Mr Bernard Tan Chin Teik and Mr Sun Huifeng.

Directors of or over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 153 (6) of the Companies Act (Chapter 50) of Singapore. None of the Directors is aged seventy or more.


26

a. skills, knowledge, expertise and experience;b. professionalism;c. integrity; andd. in the case of candidates for the position of independent non-executive directors, the

To consider, in making its recommendations, candidates for directorships proposed by the Managing Director/Chief Executive Officer (”CEO”) and, within the bounds of practicability, by any other senior executive or any director or shareholder;

To recommend to the board, directors to fill the seats on board committees;

To assess annually the effectiveness of the board as a whole, the committees of the board and the contribution of each existing individual director, including Non-Executive Directors and CEO and thereafter, recommend its findings to the board;

To ensure that all directors undergo appropriate induction programs and receive continuous training;

nomination committee should also evaluate the candidate’s ability to discharge such responsibilities/functions as expected from independent non-executive directors.

Corporate Governance Statement (cont’d)2.1 Nomination Committee (cont’d)

2.1.3 Develop, maintain and review criteria for recruitment and annual assessment of Directors

Recruitment or Appointment of DirectorsThe NC is responsible to ensure that the procedure for appointing new Directors are focused on creating good mix of skills, knowledge, expertise, experience, professionalism and integrity to enable the Board to discharge its responsibilities effectively. Other factors considered include the candidates’ ability to commit sufficient time to the Company, their character and level of independence.

The Nomination and election process of new Directors are as follows:

Recommendations by the NC are reported at the meeting of the Board by the Chairman of the NC for the Board’s consideration and approval. The final decision as to who shall be appointed to the Board and various Board Committees shall be the responsibility of the full Board after considering the recommendation of the NC.

All NC meeting minutes, including meeting papers on matters deliberated and all assessments and evaluations carried out by the NC in discharging of its functions are properly documented.

The NC had on 26 February 2016 assessed those Directors who are eligible to stand for re-election/re-appointment before the names of these Directors are submitted and recommended by the Board to the shareholders for re-election into office.The recommendation is based on formal reviews of the performance of the Directors, taking into consideration their latest Board Effectiveness Evaluation, contribution to the Board through their skills, knowledge, experience, strengths and qualities, integrity, level of independence,the ability to act in the best interest of the Company in decision making, time commitment and contributions to the Board discussions. Directors seeking re-election, re-appointment and retention would abstain from all deliberations regarding his/her re-election, re-appointment and retention.

a.


27

2.1.2 Nomination Committee – Appointment and Re-election of Directors (cont’d)Recommendation 2.1 of the Code proposes that a Senior Independent Non-Executive Director should chair the NC. The Board noted the main role of the Senior Independent Director is to act as a sounding board for the Chairman. However, the Board is of the view that Mr Bernard Tan Chin Teik, the chairman of the NC is competent in carrying out the role and responsibilities as Chairman of the NC, and is able to give advice to the Board and to facilitate the Board as a whole. Hence, the Board has no immediate plans to appoint a Senior Independent Non-Executive Director as chairman of the NC.

The Code recommends that the tenure of an Independent Director should be limited to a cumulative term of nine years. Currently, none of the independent directors have served the Board for nine (9) years.

The Board noted the recommendations of the Code on the establishment of boardroom gender diversity. The Board will take into account diversity as one of the selection criteria of Board appointees and give priority consideration to female candidates to fill any casual vacancy. Nevertheless, the evaluation of the suitability of candidates as a new Board member is largely dependent on the candidates’ competency, skills, expertise, experience and commitment, regardless of gender.

i. Identification of skills and expertiseii. Selection of suitable candidatesiii. Assessment and evaluation based on established frameworkiv. NC’s deliberationv. Recommendations by the NC for the Board’s consideration and approval


2.3 Remuneration Policies

The Remuneration Committee (”RC”) was established to assist the Board in assessing the Directors’ fees and other benefits of the Board. The RC comprised all Independent Non-Executive Directors. The present members of the Remuneration Committee are as follows: -• Zhang Fuwei (Chairman)• Sun Hui Feng (Member)• Bernard Tan Chin Teik (Member)• Ang Yee Hooi (Member)The Board determines the level of remuneration of its Board Members after considering the recommendations of the RC.The level of remuneration is structured to attract, retain and motivate the Directors in order to run the Company successfully. The remuneration scheme is linked closely with the performance, service seniority, experience, and responsibilities.The Remuneration Committee met once during the financial year ended 31 December 2015 to discharge its responsibilities as spelt out in its Terms of Reference. More frequent meetings may be called as the need arises.


28

2.2 Attendances of Committees’ MeetingThe Nomination Committee met once during the financial year ended 31 December 2015. The commitment of members of the Nomination Committee in carrying out their duties and responsibilities is affirmed by their full attendance at the Nomination Committee Meeting held during the financial year, as reflected below :-

Following the evaluation process, the NC identifies areas for improving the effectiveness of the Board and actions to be taken based on such feedback.The NC had on 26 February 2016 reviewed and assessed the mix of skills, expertise, composition, size and experience of the Board, including core-competencies of the Directors, the contribution of each individual directors as well as their character, integrity and time commitment, independence of the Independent Directors, effectiveness of the Board as a whole, and the Board Committees; and also the retirement of Directors eligible for re-election.

2.1.3 Develop, maintain and review criteria for recruitment and annual assessment of Directors (cont’d)

2.3.1 The main duties and responsibilities of the Remuneration Committee

i.

ii.

Ensuring that all the Executive Directors, Chief Executive Officers (”CEO”) (where the CEO is not a Director of the Company) and Senior Management are fairly rewarded for their individual contributions to the Company's overall performance;Ensuring that the compensation and other benefits encourage Executive Directors to act in ways that enhance the Company's long term profitability and value;

b. Annual assessmentThe Board’s performance and effectiveness are assessed on annual basis. The Board’s performance evaluation is supported with assessment carried out on each individual Director’s performance and contribution in respect of their individual contribution, interaction and quality of input to the Board’s effectiveness.The Board Committees are also subjected to annual assessment and the evaluation processes take due consideration of each committee’s contribution and effectiveness in discharging its delegated duties and responsibilities in supporting the Board.The NC is tasked to carry out the evaluation of the effectiveness of the Board and individual Directors annually, including independent non-executive directors. All assessments and evaluations carried out by the NC in the discharge of all its functions shall be properly documented.

Committee Members Designation

Attendance at Nomination Committee Meeting

Bernard Tan Chin Teik Independent Non-Executive Director 1/1

Sun Huifeng Independent Non-Executive Director 1/1

Zhang Fuwei Independent Non-Executive Director 1/1

（Chairman）

（Member）

（Member）


2.3 Remuneration Policies (cont’d)

2.3.1 The main duties and responsibilities of the Remuneration Committee (cont’d)

2.3.2 Attendances of Committees’ Meeting

2.3.3 The aggregate Directors’ remuneration paid or payable to all directors for the financial year ended 31 December 2015 are as follows :-

The Remuneration Committee met once during the financial year ended 31 December 2015. The commitment of members of the Remuneration Committee in carrying out their duties and responsibilities is affirmed by their full attendance at the Remuneration Committee Meeting held during the financial year, as reflected below :-

reviewing and recommending the granting of share options for the Executive Directors and Senior Management to the Board of Directors. If, however, the Company is absolutely intent on granting share options to its Non-Executive Directors, then it should seek shareholders' approval prior to going ahead with the plan.

The Board of Directors should determine who its Senior Management are and they may include the Chief Operating Officer, Director of subsidiaries within the Group, etc., as appropriate, in the opinion of the Board of Directors.

Each Committee Member should abstain from discussion or voting on any resolutions in respect of his own remuneration packages or that of employees related to him.

vii.

viii.

ix.

Committee Members Designation Attendance at

Remuneration Committee Meeting

Bernard Tan Chin Teik (Member) Independent Non-Executive Director 1/1

Sun Hui Feng Independent Non-Executive Director 1/1

Zhang Fuwei (Member) Independent Non-Executive Director 1/1

Ang Yee Hooi (Member) Independent Non-Executive Director 1/1

Directors Director Salaries and other Emoluments (RM)

Director Fee Director Allowance Total

Executive Directors 349,677 – – 349,677Non-Executive Directors – 120,000 8,500 128,500

Grand Total – – – 478,177

(RM) (RM) (RM)


29

Ensuring that the remuneration offered to the CEO (where the CEO is not a Director of the Company) and Senior Management commensurate with the level of executive responsibilities and is appropriate in light of the Company's performance;

Recommending to the Board of Directors a Remuneration Framework on the fee structure and level of remuneration for the Executive Directors, CEO (where the CEO is not a Director of the Company) and Senior Management;

Recommending to the Board of Directors the remuneration package for Non-Executive Directors and remuneration packages for each Executive Director, CEO (where the CEO is not a Director of the Company) and Senior Management;

Recommending to the Board of Directors the compensation commitments and severance payments for Executive Directors, CEO (where the CEO is not a Director of the Company) and Senior Management in the event of early termination of the employment service contract;

iii.

iv.

v.

vi.

（Chairman）


PRINCIPLE 3 – UPHOLD INTERGRITY IN FINANCIAL REPORTING

3.1 Annual Assessment of Independence

3.2 Tenure of Independent Director

The Board has delegated the responsibilities of assessing the effectiveness of the Board as a whole, which also includes the Independent Directors to NC.

All Independent Directors are required to assess their level of independence annually by completing the form of annual assessment of independence of independent directors for submission to the NC for review and assessment. The Chairman of the NC shall then report the findings and/or recommendations to the Board.

Based on the assessment conducted in the financial year 2015, each of the four (4) Independent Non-Executive Directors (”NEDs”) had provided an annual confirmation of their independence to the Board based on its policy on criteria of assessing independence in line with the definition of ”independence directors” prescribed by the Bursa Malaysia Securities Berhad (”Bursa Securities”) Main Market Listing Requirements (”MMLR”). The Board has on the recommendation of the NC, satisfied with the level of independence of the NEDs and their ability to act in the best interests of the Company.

The NC and the Board on 26 February 2016 undertaken an annual assessment on the independence of Mr Bernard Tan Chin Teik and Mr Sun Huifeng, who are seeking for re-election pursuant to Article 107 of the Articles of Association of the Company, at the forthcoming 2016 Annual General Meeting.

The Code recommends that the tenure of an Independent Director shall not exceed a cumulative term of nine (9) years. Upon completion of the nine (9) years, the Independent Director may continue to serve on the Board subject to the director’s re-designation as a Non-Independent Director. The Board would provide justification and seek shareholders’ approval in the event it retains as an independent director, a person who has served in that capacity for more than nine (9) years.

The tenure of all the Independent Directors of the Company does not exceed the cumulative term of nine (9) years and hence, they may continue to serve on the Board in accordance to the Code.

2.3.3 The aggregate Directors’ remuneration paid or payable to all directors for the financial year ended 31 December 2015 are as follows :- (cont’d)

Range of Remuneration Executive Directors Non-Executive Directors

RM 200,000-RM 400,000 RM 100,000-RM 200,000 2 RM 5,000-RM 35,000 4

The number of Directors whose income falls within the following bands is set out as follows:

Directors Directors Salariesand other Emoluments

(RM)Director Fee

(RM)Director Allowance

(RM)Total (RM)

Wang Chao 206,543 206,543

Wang Wei 143,134 143,134 Ang Yee Hooi 30,000 2,500 32,500

Bernard Tan Chin Teik 30,000 2,000 32,000Zhang Fuwei 30,000 2,000 32,000Sun Huifeng 30,000 2,000 32,000Grand Total 349,677 120,000 8,500 478,177

Remuneration of individual directors are as follows:


30


PRINCIPLE 4 – FOSTER COMMITMENT


31

4.1 Time Commitment The Board meets on a quarterly basis. Additional meetings may be convened to resolve any major and ad hoc matters requiring immediate attention. Meetings are scheduled ahead to facilitate Directors’ attendance. During the financial year ended 31 December 2015, the Board has convened four (4) meetings. Senior Management staff was invited to attend board meetings to provide the Board with necessary detailed explanations and clarifications. Relevant information and documents are provided to the Board members prior to the Board meetings to enable them to duly discharge their duties.The Board Members remain committed and dedicated in fulfilling their duties and responsibilities and this is reflected via their attendance at each Board of Directors’ Meeting (”BODM”) as listed below:

Ang Yee Hooi

Wang Wei

Wang Chao (Chairman) 　　　　　　　　　　　　 4/4

Sun Hui Feng


Zhang Fu Wei

Directors TOTAL

1/2015BODM

(26/02/2015)

2/2015BODM

(28/05/2015)

3/2015BODM

(27/08/2014)

4/2015BODM

(26/11/2015)

4/4

3/4

4/4

4/4

4/4

x

All Directors have complied with the minimum 50% attendance as stipulated by Paragraph 15.05(3)(c) of the MMLR.Effective from 1st June 2013, the maximum number of directorships of a director in Malaysian public listed companies is reduced from 10 to 5 under Paragraph 15.06 of the MMLR. The Board members is allowed to accept other board’s appointment only if the appointment is not in conflict with the business of the Group and it would not detrimentally affect his or her performance as a board member of the Group. Before accepting other board’s appointment, the Chairman of the Board and the Company Secretary/ Agent in Malaysia shall be notified on the same. The notification should include an indication of time that he/she will be spent on the new appointment of directorship in other companies. This is to ensure the Director have sufficient time to fulfil their roles and responsibilities in the Company effectively.None of the Directors of the Company holds more than 5 directorships in Malaysian public listed companies.

PRINCIPLE 3 – UPHOLD INTERGRITY IN FINANCIAL REPORTING3.3 Separation of positions of the Chairman and CEO

The Code recommends that, the role of the Chairman and CEO should be separated and should not be performed by the same individual. Mr Wang Chao holds the roles of Chairman and CEO in the best interest of the Group. The holding of two roles by Mr Wang Chao is due to his valuable technical and governance knowledge in the business operations coupled with his vast experience in winery industries. With his in-depth experience, Mr Wang Chao is able to provide different prospective, deep insight and guidance on strategic direction as well as an effective management of the Company. Despite the above, the Board is satisfied with the Board composition comprising a majority of Independent Directors to carry out the Board’s priorities objectively and impartially and to ensure the Company is fairly and effectively managed in thebest interest of stakeholders. The current Board is now comprised 67% Independent Non-Executive Directors.The Board continues to be mindful of the deviation from the recommendations of the Code and is of the view that there is a check and balance of role, responsibilities and accountability at the Board level.


PRINCIPLE 4 – FOSTER COMMITMENT

4.2 Directors’ Training

The Board acknowledged the importance of continuing education programmes or training for Directors and encourages the Directors to attend talks, seminars, workshops and conferences. Continual improvement allows the Directors of the Company to equip themselves with updated knowledge and skills which enable them to carry out their roles effectively as directors in discharging their responsibility towards corporate governance, operational and regulatory issues.

In addition, the Directors were also briefed by the Company Secretary/Agent in Malaysia from time to time on updates and changes of statutory requirements such as amendments to Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

NC had on 26 February 2016 assessed and evaluated the trainings undertaken by all the Directors throughout the financial year 2015. NC ensures all Directors receive appropriate continuous training programsby recommending the types of training for all the Directors to attendin order to broaden their perspectives and to keep abreast with developments in the market place and with changes in new statutory and regulatory requirements.

The Board would evaluate the recommendations by NC and determines the training needs of the Directors.The Board members were invited to provide feedback on their training needs for the financial period under review. The Board then carried out an assessment on the training needs for each of the Board members.

Save for Mr Zhang FuWei who had been appointed to the Board on 15 January 2014 and were unable to attend the Mandatory Accreditation Programme (”MAP”) within four (4) months from the date of appointment, all the Directors of the Company had attended the MAP in accordance with the Listing Requirements of Bursa Malaysia Securities Berhad.Mr Zhang Fuwei was unable to attend the Mandatory Accreditation Programme (”MAP”) because there were no MAP courses conducted in Mandarin for the time being.

The details of trainings/seminars/conference attended by Directors during the financial year of 2015 are as below:

Directors Training Programmes/Seminars/Conferences attended

i.Food Corporate Executive Training Program held by China Food Quality Associationii.Corporate Development and Management Strategy under New Situation held by Shandong Municipal Commission of Economy and Information

Food Corporate Executive Training Program held by China Food Quality Association

International financial reporting standard update training

Vision, mission and values programme

Food Corporate Executive Training Program held by China Food Quality Association.

i. Technical briefing on computation of percentage ratios for company secretaries of listed issuers, date 9 April 2015;ii. Building trust with investors in a digital-social age, date 14 May 2015;iii. The board's response in light of rising shareholder engagements, date 4 August 2015.

Wang Chao

Wang Wei

Sun Huifeng

Ang Yee Hooi

Zhang Fuwei

Bernard TanChin Teik


32



33

PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING

5.1 Compliance with applicable financial reporting standards

5.2 Internal control

5.3 Assessment of suitability and independence of external auditors

The Board is committed to provide the highest level of disclosure possible to ensure integrity and consistency of the financial reports, and to ensure the accounting records are properly kept, the Company and Group’s financial statements are prepared in accordance with applicable Financial Reporting standards in Malaysia and the provisions of the Act. The Group publishes full financial statements annually and condensed financial statements quarterly as required by the Main Market Listing Requirements of Bursa Malaysia.

The Board, with the assistance of the AC, takes due care and reasonable steps to ensure that its quarterly and annual financial statements are presented with accuracy, adequacy and comply with the requirements of approved accounting standards before announcing to shareholders and the general public. The Chief Financial Officer (”CFO”) presented the condensed financial statements quarterly to the AC and further recommended to the Board for approval and release to the public.

The Board is satisfied that in preparing the financial statements of the Group for the year ended 31 December 2015,appropriate accounting policies have been adopted, consistently applied and supported by reasonable and prudent judgements and estimates. All financial results required for announcement to Bursa Securities by the Board are released within stipulated timeframe. The Board also consider that all the relevant approved accounting standards have been followed in the preparation of these statements.

The Board acknowledges that they are responsible for the Group's system of internal controls. The internal control system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable, and not absolute assurance against material misstatement or loss.

The AC was briefed on the internal audit findings, recommended corrective action plans and Management's response to ensure the weaknesses, where applicable, have been addressed and rectified on quarterly basis. The report is for further recommendation to the Board for notation.

The AC through the Internal Audit Division reviews the processes, risk exposures, and the effectiveness of the system of internal controls of the Group on quarterly basis which covered the areas of financial, operational and compliance controls as well as risk management. The AC also acts as a forum for discussion of internal control issues and contributes to the Board's review of the effectiveness of the Group's internal control and risk management systems. AC reviews the quality of the internal audit function in terms of its resources, scope of work, its independence, and that it has the necessary authority to carry out its work.

The areas audited and evaluated by the Internal Auditors during the financial year 2015 included sales management, trade receivables management and fund management, budget management, human resource management, Inventory Management, and financial report management.

The Statement on Risk Management and Internal Control as set out in this Annual Report provides an overview of the state of risk management and internal controls within the Group.

The Board is responsible for safeguarding the assets of the Group and of the Company and have taken reasonable steps in the prevention and detection of fraud and other irregularities. To this, the Board emphasised on the objectivity and independence of the external auditor, Messrs Helmi Talib & Co. (”Helmi Talib”) in providing transparent reports to the shareholders.

Through the AC, the Board has established transparent and appropriate relationship with the Company's External Auditors. The AC had conducted the External Auditor Performance and Independence Check on Helmi Talib on 26 February 2016. It was an assessment on the objectivity, suitability, independence, performance, experience, competency and quality of service delivered by the Group's external auditors.



34

PRINCIPLE6 – RECOGNISE AND MANAGE RISK

6.1 Sound Framework in Manage Risk

6.2 Internal Audit Function

The Board acknowledges that it is responsible for the Company’s system of internal controls covering financial, organisational, operational, and compliance controls as well as risk management in order to safeguard shareholders’ investment and the Group’s assets. The internal control system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable, and not absolute assurance against material misstatement or loss.

The Company has in place an on-going process for identifying, evaluating, monitoring and managing significant risks that may affect the achievement of business objectives throughout the year under review. This process is reviewed by the Directors with the assistance of the Company’s Internal Audit Division.

In establishing and reviewing the system of internal control, Internal Control Evaluation is adopted. Every department operates following the Internal Control Policy. All business units are required to document the controls and processes for managing the risks in their functional areas and to assess its effectiveness using the system.

The Statement on Risk Management and Internal Control set out on page 38 of this Annual Report provides an overview of the Group’s approach to ensuring the effectiveness of the risk management and internal processes within the Group.

The internal audit function is performed in-house by the Company’s Internal Audit Division. The division is established to assist the Audit Committee in the discharge of its duties and responsibilities.

The division evaluates the processes where significant risks are identified, assessed and managed to ensure instituted controls are appropriate, effectively applied to achieve an acceptable risk exposure consistent with the Company’s risk management policy.

Details of the internal audit function are set out in the AC Report on page 21 of this Annual Report.

Helmi Talib continues to provide the independent assurance to shareholders on the Company’s and the Group’s financial statements.

The AC considered the adequacy of experience and resources of the firm, the qualified staff assigned to the audit, analysed on any non-audit services rendered and fee paid (if any), tenure of services of the External Auditor (appointed since 16 January 2014) and the independence of the External Auditor. The AC is satisfied with the External Auditor's performance and recommended their re-appointment to the Board.

Based on advice from the AC and upon considering the assessment made by the AC, the Board is satisfied with the independence and suitability of the external auditor and approved the AC's recommendation for the re-appointment of the External Auditor, Helmi Talib, upon which the shareholders' approval will be sought at the forthcoming 2016 AGM.

The representatives of Helmi Talib were invited for AC meetings to provide disclosure of the annual audit findings for the respective reporting period specifically on financial matters and the integrity of systems that relate to financial aspects of the Company from time to time. The external auditor was at the Company’s 2015 AGM to provide its report to the shareholders and attend to any issues raised on the conduct of the statutory audit and the preparation and content of their audit report.

The annual audit fees paid to the External auditors for the financial year ended 31 December 2015 is RMB250,000.00.

5.3 Assessment of suitability and independence of external auditors (cont’d)



35

PRINCIPLE 8 – STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

8.1 Encourage Shareholders’ Participation at General Meeting

8.2 Encourage Poll Voting

7.2.2 Annual Report

The announcement of the quarterly financial results is also made via Bursa Link immediately after the Board’s approval. This is important in ensuring equal and fair access to information by the investing public.

The Annual Report is also one of the main channels of communication between the Company and its stakeholders. The Annual Report communicates comprehensive information of the financial results and activities by the Group. As a listed issuer, the contents and disclosure requirements of the annual report are also governed by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The Company dispatches its Annual Report to shareholders within the stipulated time. All information to shareholders are available electronically as soon as it is announced or published.

The Board recognises the importance of the right of shareholders, stakeholders and general public to be well informed on the activities and performance of the Group and to make their own evaluation and investment decision.

The Group maintained an active and constructive communication policy that enables the Board and Management to communicate effectively with its shareholders.

The key element of the Company's dialogue with its shareholders is the opportunity to gather views and answer questions on all issues relevant to the Company at the AGM. The notice of the AGM and related papers are sent to shareholders with adequate time notice before the meeting. All shareholders are invited and encouraged to attend the Company's AGM and to participate in the proceedings and understand their right to appoint a proxy. At the AGM, the shareholders are encouraged to ask questions about the resolutions being proposed as well as to seek clarification on the Group's business and performance.

The shareholders are also encouraged to exercise their rights to demand a poll vote for substantive resolutions at the commencement of the general meeting. At the commencement of the AGM, the Chairman shall inform the shareholders the substantive resolutions put forth for shareholders’ approval and encourage the voting of all substantive resolutions by polling pursuant to the Code. To assist shareholders in exercising their rights, the Chairman shall read out the provisions of the Articles of Association on the shareholders' right to demand a poll .

PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

7.1 Corporate Disclosure Policies

7.2 Leverage on Information Technology for Effective Dissemination of Information

The Board does not have a Corporate Disclosure Policy. However, the Company ensures its disclosure is in compliance with the disclosure requirements as set out in Bursa Malaysia Securities Berhad’s Main Market Listing Requirements.

The Company has established a website at www.ohuawine.com.my to which the shareholders and members of public can access for corporate information.

The Company’s website incorporates an Investor Relations section which enhances the Investor Relations function by including analyst reports, prospectus, all announcements made by the Company, annual reports, news, stock price, as well as the corporate and governance structure of the Company.

7.2.1 Website


36


PRINCIPLE 8 – STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS (cont’d)

The Company's AGM provides an effective mean of face to face communication with the shareholders where they are encouraged to raise questions to the Board during and after the AGM. The External Auditors were to attend to respond to questions or clarify queries from shareholders.

A press conference is usually held immediately after the AGM or general meeting where questions on the Group's activities and performance from the press are answered by the Board. Board members are also available before and after these meetings for informal discussions.

8.3 Effective Communication and Proactive Engagement

DIRECTOR’S RESPONSIBILITY STATEMENT

The Directors are required by the Malaysian Companies Act, 1965 to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year.

The Directors consider that in preparing the financial statements, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all applicable accounting standards have been followed.

The Directors have responsibility for ensuring that the Company and the Group keep accounting records which disclose with reasonable accuracy the financial position of the Company and the Group and which enable them to ensure that the financial statements comply with the Malaysian Companies Act, 1965.

The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and the Group and to prevent and detect fraud and other irregularities.

This Statement was approved by the Board on 29 March 2016.

f. Non-audit Fees

g. Variation in Results

h. Profit Guarantee

i. Material Contract

j. Recurrent Related Party Transaction Statement

l. Statement Pertaining to the Allocation of Share Issuance Scheme

No profit guarantee was given by the Company in respect of the financial year.

There was no non-audit fees paid out during the financial year ended 31 December 2015.

There was no material variation between the results for the financial year and unaudited resultspreviously announced.

All Recurrent Related Party entered into by the Group during the financial year ended 31 December 2015 are disclosed in Note 4 of the financial statements in page 69 of this Annual Report.

There were no material contracts(not being contracts entered in the ordinary course of business) entered into by the Company and its subsidiaries, involving the directors' and major shareholders' interests during the financial year.

b. Share Buy BacksThe Company did not undertake any share buy-backs excercise for the financial year ended 31 December 2015.

c. Options, Warrants or Convertible SecuritiesThere were no options, warrants or convertible securities issued to any parties during the financial year.

d. Depository Receipt Programme The Company does not have any depository programme in place during the financial year ended 31 December 2015.

e. Sanctions and/or PenaltiesThere were no sanctions and/or penalties imposed on the Company and its subsidiary during the financial year.

a. Utilisation of ProceedsThere were no corporate proposals carried out during the financial year under review. The proceeds raised from the Initial Public Offering in conjunction with the Company's listing on the Main Market of Bursa Malaysia Securities Berhad had been fully utilised in 2012.

Additional Compliance Information

To date, the Company has not established any share issuance scheme for employees. In the event the Company establishes such share issuance scheme, the Audit Committee would carry the responsibility of reviewing all allocations granted to eligible employees to ensure compliance with the criteria as would have been spelt out in the Bye-laws of the Company's proposed share issuance scheme.

k. Corporate Social Responsibility Activities or PracticesPlease refer to pages 15 to 16 of the Annual Report.


37

Statement on Risk Management and Internal Control

Responsibility of the Board

Risk Management Framework


38

IntroductionThe Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders’ internal control to safeguard shareholders.

The Bursa Malaysia Securities Berhad’s (”Bursa Securities”) Main Market Listing Requirement require Directors of public listed companies to include a statement in their annual reports on the state of their internal controls. The Bursa Securities’ Statement on Internal Control: Guidance for Directors of Public Listed Companies ( ”Guidance”) provides guidance for compliance with these requirements.

The Board of Directors continues with its commitment to maintain a sound system of internal controls throughout the Group and is pleased to provide this Statement of Internal Control which outlines the nature and scope of internal control of the Company during the year under review pursuant to the Bursa Malaysia Securities Berhad Listing Requirements, which has been prepared in accordance with the Guidance.

The Board acknowledges that it is responsible for the Company’s system of internal controls covering financial, organisational, operational, and compliance controls as well as risk management. The internal control system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable, and not absolute assurance against material misstatement or loss.

The Company has in place an on-going process for identifying, evaluating, monitoring and managing significant risks that may affect the achievement of business objectives throughout the year under review. This process is reviewed by the Directors via the assistance of the Company’s Internal Audit Division.

In establishing and reviewing the system of internal control, Internal Control Evaluation is adopted. Every department operates following the Internal Control Policy. All business units are required to document the controls and processes for managing the risks in their functional areas and to assess its effectiveness using the system.

An on-going process for identifying, evaluating and managing significant risks faced by the Company; which has been in place for the year under review and reviewed by the Directors;

A regular review of the performance of the Company by the Directors at its meetings to ensure it is in line with the Company’s overall objectives;

A regular review of the high-risk area of business processes by the Company’s Internal Audit Division, which reports directly to the Audit Committee and submits the Internal Audit Report, to assess the effectiveness of internal controls and to highlight any significant risk that may adversely affect the Company. The Internal Audit Report should be submitted to the Board of Directors in their quarterly meetings for discussion.

Whenever necessary, the Audit Committee reviews and discusses with key management on the actions taken on issues brought up by the Company’s Internal Audit Division and the External Auditors.Review of the statement by External Auditor refer to last year annual report.

Key Elements of Internal Control

1)

2)

3)

4)

Key elements of the Company’s system of internal control include the following:


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The external auditors have reviewed this Statement on Risk Management and Internal Control for the inclusion in the Annual Report for the year ended 31 December 2015 and nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the effectiveness and efficiency of the risk management process as well as the adequacy and integrity of the system of internal controls.

Recommended Practice Guide 5, Guidance for Auditors on the Review of Directors’ Statement on Internal Controls (”RPG 5”) does not require the External Auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the effectiveness of the Group’s risk and control procedures.

The Board takes cognisance of the importance of the system of internal control and the Company will continuously monitor their business operation for compliance with the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad.

Statement on Risk Management and Internal Control

Review of the statement by External Auditor

Conclusion

- Intentionally left blank -


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China Ouhua Winery Holdings Limited and its subsidiary corporation Audited Financial Statements For the financial year ended 31 December 2015


Directors

Wang Chao Wang Wei Bernard Tan Chin Teik Sun Huifeng Zhang Fuwei Ang Yee Hooi

Company secretary Yang Bin

Registered offices

Singapore82 Lorong 23 Geylang, #06-09 Atrix, Singapore 388409

Malaysia

Unit 30-01, Level 30, Tower A, Vertical Business SuiteAvenue 3, Bangsar SouthNo. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia

Principal place of business

No. 3 North Wolong Road Yantai City Shandong Province The PRC

Bankers

China Construction Bank Bank of China China Merchants Bank Overseas Chinese Banking Corporation

Auditors

HELMI TALIB & CO133 Cecil Street, #15-02, Keck Seng Tower, Singapore 069535

China Ouhua Winery Holdings Limited and its subsidiary corporation General Information

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Documents

CHINA OUHUA - Vineyards - China Ouhua - Annual Report... · 2017. 2. 24. · Annual Report 2015 CHINA OUHUA WINERY HOLDINGS LIMITED Annual Report 2015 Unit 30-01, Level 30, Tower