Operations and Mission

Richina Pacific Limited is registered in Bermuda as an overseas company under the Bermuda Companies Act 1981, and is subject to the laws of Bermuda.

Richina Pacific is also a publicly listed Company, registered on the New Zealand Stock Exchange, and subject to the Listing Rules of the New Zealand Exchange [NZX].

Until September 2004 it had controlling investments in three separate portfolios, namely,

•  Mainzeal, a 100% owned construction and property development business, which operated throughout New Zealand.

•  Blue Zoo Beijing, a Chinese Co-operative Joint Venture, which owns and operates a saltwater walk/ride through Aquarium located in central Beijing, China.

•  Richina Leather and subsidiaries, which included a 95% interest in Shanghai Richina Leather, a manufacturer of a range of finished leathers for the global footwear, garment, upholstery and automotive industries. These operations are principally located in Shanghai, China.

Richina Pacific also wholly owned a Chinese Holding Company, named Richina Pacific [ China ] Investment Limited. This Holding Company which provided certain enhanced operational rights for Richina Pacific when investing and operating in China, was being developed to be the holding company for all China based investments to maximize use of those rights.

On September 28, 2004, Richina Pacific, through its Chinese Holding Company secured a controlling interest in a former Chinese State-Owned-Enterprise, Shanghai Leather Co. Ltd, and on December 28, 2004 completed the purchase of a full 90% interest in Shanghai Leather Co., Ltd.

This acquisition significantly increased the company's investments in China , bringing with it 43 new subsidiaries, 7 associates, some US$100 million of assets and some 7000 new employees. The balance sheet effectively doubled in size, and employee number grew some 280%, to approximately 9,500.

The increase in the dimension and scope of the Company's business required the establishment of more extensive governance structures, to ensure effective and efficient management of the enlarged activities. This process has begun, and some key decisions have been made to operate for the future, under four broad industry groupings. The total business will operate under the control of an enhanced corporate office. Support services will be provided from offices in Singapore, New Zealand, and particularly in Shanghai, where most of the recently acquired activities are located.

Separate operational boards are established, or are to be established, and chaired by a Richina Pacific main Board Director for the focused control and guidance of each of the newly structured grouping of:

•  Richina Financial

•  Richina Land

•  Richina Industries

At the time of this annual report, many aspects of governance are in transition, as established procedures are being upgraded and focused to meet the high standard the company sets for itself.

The Richina Pacific Board oversees all governance matters, and is ultimately responsible for the 9,500 management and staff in its global businesses. These employees, together with Joint Venture partners, customers, clients, suppliers, bankers, and the geographically spread communities in which these diverse businesses operate, and our more than 3,400 shareholders, are all considered to be stakeholders in the Company.

In exercising its authority, the Board adopts best practice principles, and in operational matters this may involve the establishment of a Charter under which each of the sectors' operational boards, which they appoint, will operate.

The Board, which continually monitors and measures its own policies and performance, and those of sector boards, has as its main objective the continuous adherence to best practice principles across the consolidated Group.

The long-term optimization of the value of each of the Company's operational sectors, and hence the Company, is our mission.

Duties of the Board

In optimizing the value of the Company, the Board is responsible for the following principal activities.

•  Establishing overall corporate strategy, goals and performance targets.

•  Securing of equity and the allocation of that equity to existing and/or new investments.

•  Identifying and making new acquisitions, and liquidating non-performing investments (if any).

•  Appointing sector boards and establishing their Charters, and the delegation to them of certain authorities and powers to ensure the dedicated and effective guidance, monitoring, control and management of each of its sector businesses, while also ensuring that they operate with integrity and in an honest, open and ethical manner to best practice standards.

•  Monitoring the performance of sector boards.

•  Identifying the major risks inherent in the Company's businesses and ensuring appropriate plans and controls are in place for managing such risks including planning for management succession, insurance coverage, occupational health, and staff well being, while ensuring compliance with all health and safety, environmental and applicable regulatory requirements.

•  Appointing a Managing Director (MD) and/or Chief Executive Officer (CEO) of the parent Company and monitoring the conduct and performance of these appointees.

•  Approving the recommendation of sector boards on the appointment of CEOs and CFOs of each sector.

•  Regularly and accurately reporting to shareholders and other stakeholders in the Company.

Composition of the Board

The Board presently comprises four members, but have agreed that seven persons is an appropriate number, and further appointments are proposed. Of the present Board:

•  Two represent the interests associated with the major shareholder, Richina Enterprise Holdings Limited (39.3%), and one of whom is the CEO and Managing Director; and the other an Executive Director.

•  Two, including the Chairman, who are independent of any shareholder groupings.

Each Director is entitled to nominate, subject to the majority of other Board members' approval, an Alternate Director to act specifically or generally in their absence, as they may nominate.

The two Directors representing major shareholder interests are based in Asia, and the independent Directors are located in New Zealand , and in the United States . It is proposed that any new appointees be independent Directors, and that at least one of whom is capable and qualified to chair the Audit and Governance Committee.

Directors may be appointed by the Board, until formally elected by shareholders, and one third must retire by rotation at the Annual Meeting, but are eligible for re-election.

The composition and operation of the Board is periodically reviewed to ensure that it is of an appropriate number, and the mix of skills and experience is appropriate for both the businesses and geographic locations in which the Company operates.

The appointment of the Chairman is an annual decision of the Board following the Annual Meeting and, except in the case of a casual vacancy, may be any member except a CEO/Managing Director. The preference and intention is to have an independent Chairman who is not also the CEO, and this is the present case.

The Chairman establishes Board agendas and the meeting style and schedule for the year. For operational and cost purposes, a number of meetings are tele-conferences. Physical Board meetings may be held in a number of locations, including the USA, Singapore , China and New Zealand , or elsewhere as appropriate for the purpose of location inspection visits and to take into account the business and travel requirements of the Directors.

Directors may obtain independent professional advice at the Company's expense for the purpose of properly exercising their duties. Directors are insured and indemnified by the Company in respect of their legal duties.

The Board is empowered to establish separate sector boards and/or committees to assist in the fulfillment of its responsibilities. These sector boards and committees may comprise both RPL Board members, executives, and independent persons, operate under a Board approved charter, and have wide powers and responsibilities for the implementation and effective operation of designated businesses in accordance with accepted strategies. Sector boards are required to refer certain major recommendations to the parent Board for approval.

Each Board committee is established under an agreed Board established charter, or with agreed specific objectives, for consideration of specific issues.

Share Trading/Insider Trading

The Company has a detailed policy/governing the sale and purchase of Richina Pacific Limited shares (and any related instruments, i.e. rights) by Directors and senior employees. The buying or selling of Richina Pacific shares while in possession of unpublished price sensitive information is expressly prohibited.

Directors and senior management are only permitted to buy or sell Richina Pacific shares during the “window” periods, as prescribed by Section 8 of the New Zealand Securities Amendment Act 1988, after making an application and declaration to the Company and obtaining the consent of the Company.

Health & Safety

The well being of its employees, and the promotion and maintenance of healthy and safe workplaces in all Company activities is a fundamental commitment of Richina Pacific and its subsidiary companies.

Employees are entitled to participate in the formulation and improvement of applicable policies and practices, and have a prime responsibility to ensure that all duties are carried out safety, without injury to themselves, fellow employees, employees of sub-contractors, or the community.

Individual subsidiaries have established policies appropriate for their activities, and health and safety in the workplace is subject to continuous management attention to ensure, as a minimum, compliance with all applicable legislation.

The New Zealand operations of Mainzeal have contracted out of the standard Accident Compensation Commission (ACC) coverage plan, and operate under a Fully Funded Partnership Plan with and under ACC supervision. Participation in this plan is subject to annual audit and the approval of ACC. Stop losses insurance coverage is in effect.

Compliance with policies requires the regular reporting of all accidents, near accidents and remedial steps and system improvements by all subsidiary operations to the Richina Pacific Board, to demonstrate the effectiveness of adopted policies and practices.

Environment

Richina Pacific considers the systematic management of environmental issues is not only part of its ongoing Corporate Mission, but also an essential element of good business strategy.

It has adopted as its Environmental Policy the following:

Richina Pacific policies require the continuous monitoring and review of all its operations, focusing on the achievement and ongoing compliance with all legislative requirements as a minimum.

Information & Company Facilities

It is recognized that to be effective the Board must receive or have full access to the Company, its information, its people and its facilities. This requirement is facilitated and managed pursuant to a Directors' Code of Conduct policy which details the appropriate methods of gaining this access or information, and the security and use of that information as appropriate.