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ESG Report

 

 

 

 

 

 

 
The Company strives to maintain a high standard of corporate governance practices and procedures to safeguard the interests of its shareholders. The corporate governance level is constantly improved and enhanced by establishing an internal control system and enhancing accountability and transparency.

CORPORATE GOVERNANCE PRACTICE

The Directors have adopted various policies to ensure compliance with the code provisions of the Corporate Governance Code (the “Code”) under Appendix 14 to the Listing Rules. The Board considers that the Company has complied with all applicable Code during the year except with the deviation as disclosed in this report. In the future, the Company will also adopt more Recommended Best Practices as set out in the Code according to actual needs, so as to further enhance the level of corporate governance.

DIRECTORS’ AND EMPLOYEES’ SECURITIES TRANSACTIONS

The Company has adopted a model code of conduct no less than that required by the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules as its code of conduct of directors conducting securities transactions. All Directors have confirmed, following specific enquiry of all Directors by the Company, that they have complied with the required standards set out in the Model Code in relation to such transactions during the year.

The Company has also formulated written guidelines regarding the securities transactions by the employees of the Company who may be exposed to inside information. The requirements of the written guidelines are no less exacting than those set out in the Model Code. The Company recorded no non-compliance events during the year.

THE BOARD OF DIRECTORS

The Board is responsible for formulating the overall development strategy, operation and financial reporting of the Company, internal control and risk management, major acquisitions, substantial connected transactions, annual and interim results, proposed interim and final dividends, proposed appointment or re-election of directors, appointment of auditor, share issue and repurchase and other operational and financial matters relating to the Company.

Composition of the Board

As at 31st December 2016, the Board consisted of seven members, namely three executive Directors (Mr. Xiong Gebing, Mr. Zeng He and Mr. Cheng Jie), one non-executive Director (Mr. Zhang Lei) and three independent non-executive Directors (Mr. Chan Kay-cheung, Ms. Yau Lai Man and Mr. Chow Bing Sing). The Company forms its Board based on the characteristics and uniqueness of its operations to ensure that each Director possesses the required industrial experience and managerial expertise. The personal biographies of the Directors are set out in pages 50 to 51 of the annual report. The Directors clearly understand that they should fulfill their duties diligently in the best interest of the Company and its shareholders.

The Company has signed appointment letters with all Directors for a fixed term of three years, unless terminated by either party giving to the other not less than 1 month’s prior notice in writing, but the Directors are subject to retirement by rotation and re-election according to the Articles of Association of the Company.

The Board delegated its authorities and obligations in management of daily operations, business strategies and the Group’s business to the executive Directors and senior management, and delegated certain specific responsibilities to the committees under the Board.

Relationship between Board Members

To the best knowledge of the Company, there is no financial, business, family or other material/relevant relationship between the Board members.

Responsibilities of the Chairman and Managing Director

It is the consistent policy of the Company to appoint different individuals to act as chairman and managing director so as to ensure the accountability and independence of the policy making process of the Company. The chairman of the Group is responsible for leading the Board. The chairman should ensure that the Board works effectively and discharges its responsibilities, and be responsible for building the management of the Company, organising the formulation of the development strategies and etc. The managing director is responsible for managing the daily business operations of the Company, implementing the development strategies formulated by the Board, expediting the development of high-end integrated logistics business, driving the development of the passenger transportation business etc. and strengthening the internal management.

According to the provision of Code A.2.1, the roles of chairman and chief executive should be separated and should not be performed by the same individual. The roles of chairman and managing director were acted by Mr. Liu Weiqing and Mr. Xiong Gebing respectively. After the resignation of Mr. Liu Weiqing on 3rd May 2015, as more time is needed to arrange the appointment of a suitable candidate as the chairman of the Board or managing Director, the Board has unanimously resolved to appoint Mr. Xiong Gebing, the managing Director, as the chairman of the Board (and the chairman of the Executive Committee and the Nomination Committee) temporarily with effect from 3rd May 2015. Announcement in respect of the related appointment of the chairman of the Board or managing Director will be made by the Company when such appointment is confirmed.

According to the provisions of the Code, the chairman of the Group has held a meeting with the non-executive Directors without other executive Directors’ presence.

Independent Non-executive Directors

In order to ensure the independence of the policy making process of the Board and protect the interest of its shareholders, the Company appoints three qualified independent non-executive Directors, as such, the Company complies with Rule 3.10A of the Listing Rules of having at least one-third of the Board being represented by independent non-executive Directors. They are professionals experienced in banking, finance and logistics services. One of the independent non-executive Directors has the appropriate professional qualifications and accounting and related financial management expertise required under Rule 3.10(2). The Company undertakes to give them adequate access to the information of the Company and encourages them to thoroughly discuss and provide independent opinions on matters of the Company.

According to the provisions of the Code, a service term of over nine years is one of the key factors in determining the independence of an independent non-executive director. Mr. Chan Kay-cheung and Ms. Yau Lai Man have served as independent non-executive Directors for over nine years. During their years of service with the Company, Mr. Chan and Ms. Yau have contributed by providing independent viewpoints and advice to the Company in relation to its businesses, operations, future development and strategy. The Board considers that Mr. Chan and Ms. Yau have the character, integrity, ability and experience to continue to fulfill his/her role as required effectively. The Company believes that Mr. Chan and Ms. Yau can independently express opinions on matters of the Company and there is no evidence that his/her over nine years of service with the Company would have any impact on his/her independence and therefore his/her independence is confirmed. According to the provisions of Code A.4.3, if an independent non-executive director serves more than nine years, his/her further appointment should be subject to a separate resolution to be approved by shareholders. Mr. Chan and Ms. Yau retired on rotation at the annual general meeting held on 21st May 2015, and being eligible, offered themselves for re-election at the said meeting. Mr. Chan and Ms. Yau had already been re-appointed by separate resolutions of the then Shareholders at the said meeting.

The Company has received from each of the current independent non-executive Directors an annual confirmation of his/her independence in accordance with Rule 3.13 of the Listing Rules. The Company considers that all the independent non-executive Directors have maintained their respective independence in accordance with the Listing Rules.

Board Diversity Policy

Pursuant to the Code, the Board has adopted the Board Diversity Policy since 15th August 2013 which is posted on the Company’s website. To attain diversity of the Board, it is the Company’s policy to consider an array of factors including age, skills, knowledge, experience, cultural and educational background when appointing and re-appointing a member of the Board. All appointments of the Board members are based on merits, in the content of the talents, skills and experience the Board as a whole requires to be effective.

Directors’ Responsibilities for Financial Statements

During each financial period, the Directors are responsible for the preparation of the financial statements that give a true and fair view of the state of affairs of the Group and of its results and cash flows during the relevant period. In preparing the financial statements for the year, the Directors selected and applied consistently appropriate accounting policies, made careful and reasonable judgment and estimates, and prepared the financial statements on a going concern basis. The Directors are responsible for the filing of appropriate accounting records that reasonably and accurately disclose the financial position of the Company at any time. The Board is not aware so far of any significant uncertain events or circumstances which would affect the business of the Company or its ability to continue its operation. The responsibilities of the Company’s external auditor are set out in the Independent Auditor’s Report on pages 69 to 75 of the annual report.

Board Meeting Procedures

The Board held regular meetings during the year. The company secretary assists the chairman in establishing the meeting agenda, and each Director/committee member may request inclusion of items in the agenda. The time and agenda of the Board meeting will be available to the Directors at least 14 days in advance and related documents will be available to the Directors at least 7 days in advance to enable each Director to fully understand the matters to be discussed and make an informed opinion. Draft and final versions of the minutes of Board meetings and Board committee meetings prepared in sufficient details by the secretary of the meetings, were circulated to the Directors for their comment and record respectively. Originals of such minutes, being kept by the company secretary, are open for inspection at any reasonable time on reasonable notice by any Director. Each Director has the right to seek independent professional advice in furtherance of his/her duties at the expense of the Company. No Director has requested to seek professional advice as mentioned above during the year.

If a Director has a conflict of interest in a matter to be considered at the meetings of the Board and the committee which the Board has determined to be material, such Director may express his/her recommendations but shall not be counted in the quorum and shall abstain from voting on the relevant resolution.

All Directors have unrestricted access to the company secretary who is responsible for ensuring that the Board/committee procedures are complied with, and for advising the Board/committee(s) on compliance matters.

Attendance at Meetings and Time Commitment of Directors

During 2016, the attendance of the Board members at general meetings, the meetings of the Board and respective committees was as follows:

  Attendance in person/number of meetings held
General
Meeting
Board Executive
Committee
Audit
Committee
Remuneration
Committee
Nomination
Committee
Mr. Xiong Gebing (Chairman of the Board, Managing Director) 2/2 4/4 12/12 N/A 2/2 1/1
Mr. Zeng He (Executive Director) 2/2 4/4 12/12 N/A N/A N/A
Mr. Cheng Jie (Executive Director) 2/2 4/4 12/12 N/A N/A N/A
Mr. Zhang Lei (Non-executive Director) 1/2 4/4 N/A N/A N/A N/A
Mr. Chan Kay-cheung (Independent non-executive Director) 2/2 4/4 N/A 2/2 2/2 1/1
Ms. Yau Lai Man (Independent non-executive Director) 2/2 4/4 N/A 2/2 2/2 1/1
Mr. Chow Bing Sing (Independent non-executive Director) 2/2 4/4 N/A 2/2 2/2 1/1

Upon reviewing (i) the annual confirmation of the time commitment given by each Director; (ii) the directorships and major commitments of each Director; and (iii) the attendance rate of each Director on Board and their respective Board committee meetings, the Board is satisfied that all Directors have spent sufficient time in performing their responsibilities during the year.

Training for Directors and Company Secretary

All Directors have been given relevant guideline materials regarding the duties and responsibilities of being a Director, the relevant laws and regulations applicable to the Directors, duty of disclosure of interest in shares and business of the Group and such induction materials will also be provided to newly appointed Directors shortly upon their appointment as Directors. All Directors have also been updated on the latest development regarding the Listing Rules and other applicable regulatory requirements to ensure compliance with relevant regulations and enhance their awareness of good corporate governance practices. During the year, the Company organised seminars presented by professionals for Directors and executives to explain the latest amendments to the Listing Rules.

All Directors confirmed that they have complied with the provision of Code A.6.5 on directors’ training. During the year, all Directors have participated in continuous professional development by reading materials or attending seminars/briefing sessions to develop and refresh their knowledge and skills and provided records of training to the Company. Current Directors have participated training on the following topics during the year:

  Corporate governance/ updates on laws, rules and regulations Accounting/financial/ management or other expertise
Reading materials Attending seminars/ briefing sessions Reading materials Attending seminars/ briefing sessions
Mr. Xiong Gebing (Chairman/managing Director)
Mr. Zeng He (Executive Director)
Mr. Cheng Jie (Executive Director)
Mr. Zhang Lei (Non-executive Director)
Mr. Chan Kay-cheung (Independent non-executive Director)
Ms. Yau Lai Man (Independent non-executive Director)
Mr. Chow Bing Sing (Independent non-executive Director

To comply with Rule 3.29 of the Listing Rules, the company secretary has taken no less than 15 hours of relevant professional training during the year.

Changes in Information of Directors

Save as disclosed in this annual report, pursuant to Rule 13.51B(1) of the Listing Rules, following specific enquiry of all Directors by the Company, all Directors have confirmed that there is no any other changes in information of Directors of the Company during 2016 which needs to be disclosed.

Remuneration of Senior Management

Number of senior management according to the level of remuneration:

Level of remuneration Number of Senior Management
HK$’000 2016 2015
401-1,200 3 3
1,201-1,800 1 0

RISK MANAGEMENT AND INTERNAL CONTROL

The Group has established effective risk management and internal control systems to provide reasonable (though not absolute) assurance against material misstatement or loss and to manage (rather than eliminate) risks of failing to achieve business objectives. The Board shall be responsible for the risk management and internal control systems and shall review at least annually the effectiveness of such systems for that relevant financial year. Instead of establishing a separate Board committee to assist the Board on matters regarding risk management and internal control systems, the Audit Committee shall assist the Board in fulfilling its oversight and corporate governance roles in the Group’s financial, operational, compliance, risk management and internal control, and the resourcing of the finance and internal audit functions.

The Group has established an organisational structure with defined levels of responsibilities and reporting procedures:

  • the internal audit department of the Company has internal audit function, and shall assist the Board and/or the Audit Committee in the review of the effectiveness of the Group’s internal control and risk management systems on an ongoing basis. The head of the internal audit department of the Company shall report directly to the Audit Committee;
  • the Company has also established the Risk Management and Internal Control Committee (the “Risk Control Committee”) comprising Mr. Xiong Gebing, Mr. Zeng He, Mr. Li Zhijie and heads of all departments, which shall determine the members of the committee and their respective responsibilities, define the work division among all departments and the duties and responsibilities of each group, and give instructions in relation to the commencement of risk assessment and internal control assessment. The Risk Control Committee shall report directly to the Board about the significant risks that may affect the performance of the Group on a regular basis; and
  • the Company will set up task group(s) in light of the actual situation, which will hold meetings regularly to review the effectiveness of the relevant financial, operational and compliance control as well as risk management procedures and to review on how to make further improvement.

The Company has implemented the following procedures to identify, assess and manage significant risks:

  1. the Company has formulated the Guideline on Risk Management(《風險管理工作指引》), and required the Company and all subsidiaries to manage risks in accordance with the Guideline;
  2. all subsidiaries have set up their own risk management and internal control committees and identified their officer-in-charge for risk management. An annual inspection shall be carried out to identify their respective risks, assess all kinds of significant risks, formulate relevant control measures and make further improvement. An annual review shall be conducted in the year for self-inspection and self-reporting of risks/to check the implementation of such control measures, so as to ensure the feasibility and effectiveness of existing control measures;
  3. after collecting information on the risk profile of each subsidiary and the relevant control measures implemented by them, the Company would summarise a list of significant risks based on the major risk categories (including industry/market risks, investment risks, financial risks, information and communication risks, etc.). After ranking these significant risks by priority, the management of the Company would identify the most significant risks and request the relevant companies to focus on the supervision of such risks;
  4. the internal audit department of the Company would carry out the following tasks every year in accordance with its internal audit plan:
    • to examine if all companies have focused their supervision on the most significant risks;
    • to evaluate the report in relation to the most significant risks;
    • to assess and ensure the effectiveness of the risk management procedures; and
    • to ensure accurate assessment of each risk;
  5. the internal audit department of the Company would submit the internal audit report on risk management to the Audit Committee on a yearly basis.

The formulation and execution procedures of the internal audit plan of the Company are as follows: the internal audit department of the Company adopts a risk and control-based audit approach. An annual work plan will be formulated, covering the Group’s operation and businesses as well as all the major activities and processes of each subsidiary, and special review will be carried out on the demand of the management. The audit result shall be submitted to the Audit Committee promptly for review. Where any deficiency in the internal control is identified, the subsidiaries are required to make improvements promptly according to the recommendations. Audit issues are tracked and followed up by the internal audit department of the Company for proper implementation. The internal audit department of the Company shall report to the Audit Committee on a regular basis, while the Audit Committee shall report the audit findings and/or progress of the audit work to the Board after reviewing the relevant information.

The Company adopted the Inside Information Management Policy(《內幕消息管理制度》) (as revised in 2015) in 2013, which provides guideline on the handling and dissemination of the Group’s inside information by the Directors and employees who may have access to such information as well as the relevant internal control measures. The Board has authorised the establishment of the Inside Information Committee, a committee under the Executive Committee which comprises the executive Directors, the company secretary, the general manager of the capital operation department and the general manager of the legal department. The members of the Inside Information Committee shall take joint responsibility for the registration and management of the inside information and the insiders of the Group, which shall be organised and implemented by the company secretary and the capital operation department. The officer-in-charge of other departments, branch companies and subsidiaries of the Company as well as the invested companies over which the Company has significant influence shall be responsible for the confidentiality of such information arising within their management authority, and shall report and communicate such inside information that comes to their knowledge. After being aware of any event potentially involving inside information, the senior officers shall fill in and submit the Inside Information Reporting Form(《內幕消息呈報表格》) truthfully on the date such inside information comes to their knowledge. Upon receipt of such alert, the company secretary shall promptly convey such inside information to the members of the Inside Information Committee for assessment. In accordance with the relevant provisions of the information disclosure rules, members of the Inside Information Committee shall assess on the potential inside information, fill in the Inside Information Assessment Report(《內幕消息評估報告》) and decide whether a disclosure on such information is required. Where it is determined that a disclosure is required to be made, it shall be reported to the securities regulatory authority and make relevant disclosure within 3 working days or as required by the regulatory rules and regulations.

In respect of the review of the adequacy and effectiveness of the risk management and internal control systems, the internal audit department of the Company provides independent assurance regarding the adequacy and effectiveness of the Group’s risk management and internal control systems to the Board and the Audit Committee. The head of our internal audit department shall report directly to the Audit Committee. With the assistance of the internal audit department of the Company, the management of the Group shall be responsible for the design, implementation and monitoring of the risk management and internal control systems. The Annual Self-assessment Form of Internal Controls and Risk Management(《內部控制及風險管理年度自評表》) are despatched to all subsidiaries, which shall be collected and consolidated by the Company. Such results shall be assessed by the internal audit department of the Company and reported to the Audit Committee, which will then review such information and submit reports on the effectiveness of such systems to the Board on a regular basis. Where necessary, the task group(s) will hold meetings regularly to review the effectiveness of the relevant financial, operational as well as compliance control and risk management procedures and to make further improvement when necessary.

During the year, the Company has conducted the following major works relating to risk management and internal control:

  • formulated and implemented the Internal Audit Management Policy (《內部審計管理制度》)at the request of the Board and the Audit Committee in accordance with the requirements of the provision of Code C.2 “Risk Management and Internal Control” of the Code as contained in Appendix 14 to the Listing Rules and the relevant laws and regulations as well as according to the actual condition of the Group;
  • formulated the Annual Self-assessment Form of Internal Controls and Risk Management(《內部控制及風險管理年度自評表》), and required all subsidiaries to fill in the self-assessment forms according to the current condition of internal control and risk management. After consolidating all self-assessment forms, the Company made detailed report to the Board and the Audit Committee. Apart from carrying out internal audit on the subsidiaries pursuant to the annual internal audit plan, the internal audit department of the Company reviewed such self-assessment forms to make sure that the self-assessment result was consistent with the actual condition of the relevant company;
  • inspection on key processes and sampling test on the effectiveness of risk management were carried out on four companies, namely the Civet Port, the companies in Singapore and Malaysia, and Macau Cotai respectively, so as to verify and examine the risk points reported by these companies;
  • inspection on bill-of-lading management was carried out on CKTL and offices of the twelve terminals and freight forwarders to identify all kinds of shortcomings in the bill-of-lading management and put forward remedial measures for business units with deficiency in their business process;
  • during the year, a total of 19 internal financial audit reports were completed. In respect of the 52 audit comments and recommendations provided for the financial year of 2014, of which improvement works for 32 audit comments and recommendations were completed while the improvement works for the other 20 were still underway. 43 audit comments and recommendations were provided for the financial year of 2015, and all subsidiaries had been asked to make improvement according to such recommendations; and
  • reviewed the Inside Information Management Policy and the relevant internal control measures adopted by the Company, and considered if any update or improvement needs to be made.

In 2016, the Board had, through the Audit Committee, reviewed the adequacy and effectiveness of the risk management and internal control systems of the Group. The Annual Self-assessment Form of Internal Controls and Risk Management(《內部控制及風險管理年度自評表》) had been despatched to all subsidiaries, which had been collected and consolidated by the Company. Such results were assessed by the internal audit department of the Company and reported to the Audit Committee, which then reviewed and reported the same to the Board. The Audit Committee and the Board were not aware of any areas of concern that would have a material impact on the financial position or operating results of the Group and considered the risk management and internal control systems to be generally adequate and effective.

REMUNERATION OF AUDITOR

For the year ended 31st December 2016, the Company paid the auditor of the Company the following fees for audit and non-audit services.

2016
HK$’000
2015
HK$’000
(Restated)
Audit Services 3,035 3,379
Non-audit Services (including the review of the interim report, continuing connected transactions and annual results announcement) 770 1,044
3,805 4,423

COMMUNICATION WITH SHAREHOLDERS

During the year, the Board has established a shareholders’ communication policy and the procedures for shareholders to nominate a candidate for election as a Director. The policy and procedure are available on the website of the Company.

Set out below are procedures for shareholders of the Company to (1) convene a general meeting; (2) put forward proposals at a general meeting; and (3) put enquiries to the Board. These procedures are generally governed by the Articles of Association and applicable laws, rules and regulations, which prevail over the below information in case of any inconsistencies.

1. Procedures for shareholders of the Company to convene a general meeting

Pursuant to the Articles of Association and the Companies Ordinance of Hong Kong, registered shareholders holding not less than one-twentieth (5%) of the paid up capital of the Company (the “General Meeting Requisitionists”) can deposit a written request to convene a general meeting at the registered office of the Company (the “Registered Office”), which is presently situated at 22nd Floor, Chu Kong Shipping Tower, 143 Connaught Road Central, Hong Kong for the attention of the company secretary.

The General Meeting Requisitionists must state in their request(s) the objects of the general meeting and such request(s) must be signed by all the General Meeting Requisitionists and may consist of several documents in like form, each signed by one or more of the General Meeting Requisitionists.

The Company’s share registrars (the “Share Registrars”) will verify the General Meeting Requisitionists’ particulars in the General Meeting Requisitionists’ request. Promptly after confirmation from the Share Registrars that the General Meeting Requisitionists’ request is in order, the company secretary will arrange with the Board to convene a general meeting by serving sufficient notice to all the registered shareholders in accordance with all the relevant statutory and regulatory requirements. On the contrary, if the General Meeting Requisitionists’ request is verified to be not in order, the General Meeting Requisitionists will be advised of the outcome and accordingly, a general meeting will not be convened as requested.

The General Meeting Requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting if the Board had not arranged to duly convene a general meeting within 28 days upon serving a written notice in relation to the general meeting within 21 days of the deposit of the General Meeting Requisitionists’ request, provided that any general meeting so convened is held within three months from the date of the original General Meeting Requisitionists’ request. Any reasonable expenses incurred by the General Meeting Requisitionists by reason of the Board’s failure to duly convene a general meeting shall be repaid to the General Meeting Requisitionists by the Company.

2. Procedures for shareholders to put forward proposals at a general meeting

Shareholders may suggest proposals relating to the Company to be discussed at a general meeting by sending written requisition to the Board or the company secretary of the Company and following the procedures set out in the paragraph headed “Procedures for shareholders of the Company to convene a general meeting” above to convene a general meeting for any business specified in such written requisition.

3. Enquiries to the Board

Shareholders may at any time send their enquiries and concerns to the Board in writing through the company secretary whose contact details are as follows:

Address: 24th Floor, Chu Kong Shipping Tower, 143 Connaught Road Central, Hong Kong
Telephone: (852) 2859 1415
Facsimile: (852) 2186 7204
E-mail: maggie-cksd@cks.com.hk

The general meeting is an important occasion for direct dialogues between Directors, senior executives and shareholders, and the Company attaches great importance to any general meeting. All Directors (including independent non-executive Directors) and senior executives will try to attend the meetings, listen to shareholders’ proposals in person, and answer questions raised by shareholders concerning the development strategies and operations of the Company. The Company welcomes shareholders to attend general meetings in person and express their opinions and raised their enquiries to the Directors and management.

INVESTOR RELATIONS AND COMMUNICATIONS

The Company regards investor relations as utmost importance and discloses relevant information timely under the guidelines of the Listing Rules. The Company introduces the situation of the Company to institutional investors and analysts regularly. In the year, the Company frequently met with fund managers and investment bank analysts and responded swiftly to the queries of the small and medium investors.

During 2016, there was no amendment to the constitutional document of the Company.