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The Board continues to strive to maintain a solid and transparent framework of corporate governance and accordingly adopted sound corporate governance principles and various practices, of which the Board committed to continuously improving.
The Company has complied with the provisions of the code on corporate governance practices (the "Code") as set out in Appendix 14 of the Listing Rules throughout the year ended 31 December 2008.
Directors' Securities Transactions
The Board has adopted the model code for securities transactions by Directors (the "Model Code") with terms no less exacting than the required standard as set out in Appendix 10 of the Listing Rules. Having made specific enquiry of all Directors, all Directors confirmed that they have complied with the required standard of dealings as set out in the Model Code throughout the year ended 31 December 2008.
Board Of Directors Board Of Directors
As at 31 December 2008, the Board comprised twelve Directors, including seven executive Directors, namely Mr. Zhu Gong Shan (Chairman), Mr. Sha Hong Qiu (Chief Executive Officer), Mr. Ji Jun, Mr. Shu Hua, Mr. Yu Bao Dong, Ms. Sun Wei and Mr. Tong Yee Ming; one non-executive Director, namely Mr. Tam Chor Kiu; and four independent non-executive Directors, namely Mr. Heng Kwoo Seng, Mr. Qian Zhi Xin, Ir Dr. Raymond Ho Chung Tai and Mr. Xue Zhong Su. Biographical details of the Directors are set out under the section headed "Biographical details of the Directors" of this report on pages 12 to 13.
To the best knowledge of the Company, there is no financial, business, family or other material or relevant relationships among members of the Board or between the Chairman and the Chief Executive Officer.
The Directors acknowledge their responsibility for preparing the financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and of the profits and cash flows of the Group in accordance with the International Financial Reporting Standards, disclosure requirements of the Hong Kong Companies Ordinance and the Listing Rules. In preparing the financial statements for the year ended 31 December 2008, the Directors have selected suitable accounting policies and applied them consistently; made judgments and estimates which are reasonable and have prepared the financial statements on a going concern basis. The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position, results of operations, cash flows and changes in equity of the Group. The Independent Auditor's Report relating to their reporting responsibilities on the financial statements of the Company is set out on pages 68 and 69 of this annual report.
The Board delegates certain responsibilities to various committees including the Strategic Planning Committee, Audit Committee and Remuneration Committee, which was discussed below. Each of these committees has its respective terms of reference, the major terms of which are published on the Group's website (www.gcl-poly.com.hk).
The Board confines itself to setting strategic directions and exercising a number of reserved powers to oversee the operations and monitor the financial performance of the Group.
The independent non-executive Directors and non-executive Director are appointed for a specific term of office for three years. All Directors, including the independent non-executive Directors and non-executive Director are subject to retirement by rotation and re-election at annual general meetings in accordance with the Company's Articles of Association, provided that every Director shall be retired at least once every three years.
Mr. Zhu Gong Shan is the Chairman and Mr. Sha Hong Qiu is the Chief Executive Officer of the Company.
The primary responsibilities of the Chairman are to provide leadership to the Board in setting corporate goals of the Company, overseeing the performance and effectiveness of the Board and taking a lead to ensure that the Board acts in the best interest of the Company and shareholders as a whole.
The primary responsibilities of the Chief Executive Officer of the Company are to provide leadership for the management of the Company, taking a lead to implement the Company's strategy and oversee the performance of the management in achieving corporate goals.
The independent non-executive Directors play an important role in corporate governance, they contributed to the Group by sharing their valuable expertise, in-depth knowledge and impartial judgement on issues discussed at the board and committee meetings which became more effective.
The Board has adopted the recommended practice under the Listing Rules to appoint one-third of its Directors as independent non-executive Directors. The Company has received an annual written confirmation from each of the independent non-executive Directors of his independence. The Board considers that all the independent nonexecutive Directors are independent in accordance with the guidelines set out under the Listing Rules.
All Directors have full and timely access to all relevant information, including reports from the Board Committees and briefing on significant legal, regulatory or accounting issues affecting the Group. A procedure has been approved by the Board to enable Directors to seek independent professional advice at the Company's expense in appropriate circumstances.
All Directors have been provided a kit of corporate information and an induction regarding the management, operations and governance practices of the Group and general compliance regulations under the Listing Rules has been provided to all Directors shortly upon their appointments as Directors of the Company. Update on the amendments of applicable rules and regulations were given to the Directors from time to time.
Where vacancies arise at the Board or whenever any member of the Board considers any qualified individual with relevant expertise and experience is likely to be invited to join the Board, the qualifications, experience and awards (if any) of the proposed candidate(s) will be put forward to the Board for its consideration and approval. During the year, the Board approved the appointments of an executive Director, namely Mr. Tong Yee Ming, on 31 July 2008 by Messrs. Zhu Gong Shan, Sha Hong Qiu, Ji Jun, Shu Hua, Yu Bao Dong, Heng Kwoo Seng, Ho Chung Tai, Raymond, Qian Zhi Xin, Xue Zhong Su and Law Wing Cheung, Ryan and Ms. Sun Wei, and a non-executive Director, namely Mr. Tam Chor Kiu, on 3 October 2008 by Messrs. Zhu Gong Shan, Sha Hong Qiu, Ji Jun, Shu Hua, Yu Bao Dong, Tong Yee Ming, Heng Kwoo Seng, Ho Chung Tai, Raymond, Qian Zhi Xin, Xue Zhong Su, Law Wing Cheung, Ryan and Ms. Sun Wei.
At least four regular Board meetings will be held each year, with additional meetings to be held as and when required. In respect of regular meetings, at least 14 days' notice was given to all Directors to allow them an opportunity to include matters in the agenda and the board papers were sent to all Directors at least 3 days before the meeting. For all other meetings, reasonable notice was given.
Six Board meetings were held during the year ended 31 December 2008 and the attendance is shown in the table below:
| Members of the Board | Number of meetings attended |
|---|---|
| Executive Directors | |
| Zhu Gong Shan (Chairman) | 5 |
| Sha Hong Qiu (CEO) | 5 |
| Ji Jun | 6 |
| Shu Hua | 6 |
| Yu Bao Dong | 6 |
| Sun Wei | 5 |
| Tong Yee Ming (appointed on 31 July 2008) | 4 |
| Lau Wai Yip (retired on 30 May 2008) | 2 |
| Non-Executive Directors | |
| Tam Chor Kiu (appointed on 3 October 2008) | 3 |
| Law Ryan Wing Cheung (resigned on 3 October 2008) | 2 |
| Independent Non-executive Directors | |
| Qian Zhi Xin | 4 |
| Heng Kwoo Seng | 6 |
| Raymond Ho Chung Tai | 5 |
| Xue Zhong Su | 6 |
Committee Under The Board
Audit Committee
The Audit Committee comprises three independent non-executive Directors, namely Mr. Heng Kwoo Seng, Mr. Qian Zhi Xin and Ir Dr. Raymond Ho Chung Tai. Mr. Heng Kwoo Seng, who is a fellow of the Institute of Chartered Accountants and possesses extensive accounting experience, serves as the Chairman of the Committee.
The terms of reference for the Audit Committee has been updated and revised by the Board at the meeting held on 16 February 2009 to incorporate the latest changes made under the Listing Rules.
he primary responsibilities of the Audit Committee include:
- monitoring integrity of the financial statements
- monitoring integrity of the financial statements
- monitoring and assessing the internal control system (including the adequacy of resources, qualifications and experience of accounting and financial reporting staff) and risk management system
- monitoring and assessing the performance of internal control function
- monitoring the independence of an external auditor; and
- monitoring and assessing the performance of external auditor, proposing to the board the appointment or removal of external auditor, and facilitating the communication between external auditor and internal audit function
Three Audit Committee meetings were held in 2008 and the attendance is set out in the following table:
| Members of Audit Committee | Number of meetings attended |
|---|---|
| Mr. Heng Kwoo Seng (Chairman) | 3 |
| Mr. Qian Zhi Xin | 2 |
| Ir Dr. Raymond Ho Chung Tai | 2 |
In addition to the aforesaid three meetings, the Audit Committee also held a meeting in March 2009, the following work was performed by the Audit Committee for and subsequent to the year ended 31 December 2008:
- reviewed and discussed solely with Deloitte Touche Tohmatsu, the Group's external auditors, on the audit scope , audit approach and audit areas of focus for the financial year ended 31 December 2008;
- reviewed and approved the audit fees;
- reviewed the 2008 audit report from Deloitte Touche Tohmatsu;
- reviewed the 2008 interim report and unaudited financial statements, 2008 annual report and audited financial statements and the annual and interim result announcements;
- reviewed the report on the continuing connected transactions for the financial year ended 31 December 2008;
- reviewed the corporate governance report prepared by Baker Tilly Hong Kong Business Services Ltd. and confirmed that the Group has an effective internal control; and
- reviewed various aspects of risk management.
For the year ended 31 December 2008, the total remuneration in respect of services provided by Deloitte Touche Tohmatsu is analysed as follows:
| Nature of service | Fees (HK$'000) |
|---|---|
| Audit services | |
| 2008 Annual audit | 3,650 |
| 2008 Interim review | 625 |
| 4,275 | |
| Non-audit services | |
| Taxation | 68 |
| 4,343 | |
Remuneration Committee
The Remuneration Committee comprises three independent non-executive Directors, namely Ir Dr. Raymond Ho Chung Tai, Mr. Heng Kwoo Seng and Mr. Qian Zhi Xin. Ir Dr. Raymond Ho Chung Tai is the chairman of the committee.
The primary responsibilities of the Remuneration Committee include:
- reviewing and approving performance based remuneration evaluation system
- determining and recommending the remuneration package of Directors and senior management to the board for approval
- reviewing, approving and advising the compensation arrangement to Directors and senior management
Two meetings were held by the Remuneration Committee for the year ended 31 December 2008 and the attendance of the meetings is set out in the following table:
| Members of Remuneration Committee | Number of meetings attended |
|---|---|
| Ir Dr. Raymond Ho Chung Tai (Chairman) | 2 |
| Mr. Heng Kwoo Seng | 2 |
| Mr. Qian Zhi Xin | 1 |
During the year, the Remuneration Committee had reviewed and considered the remuneration package and incentive scheme of the Directors and approved the amount of incentives paid to the Directors as well as the senior executives of the Group. During the review process, no individual Director is involved in decisions relating to his own remuneration. Details of remuneration payable to each Director of the Company have been set out in note 14 to the consolidated financial statements.
Strategic Planning Committee
The Strategic Planning Committee comprises six members, three independent non-executive Directors and three executive Directors. The independent non-executive Directors include Ir Dr. Raymond Ho Chung Tai (who is also the chairman of the committee), Mr. Qian Zhi Xin and Mr. Xue Zhong Su. The executive Directors who are also the committee members are Messrs. Zhu Gong Shan, Sha Hong Qiu and Ji Jun.
The primary responsibilities of the Strategic Planning Committee include:
- reviewing long-term strategic development plans
- reviewing the annual performance of the Company and assessing implementation and progress of the long term strategic development plans
- reviewing and recommending to the Board for opportunities of upgrading the facilities, expansion, mergers and acquisitions
- reviewing and advising the regulations on electricity and power industry in the PRC
- reviewing and recommending to the Board with regard to the political, social and economic development in the PRC affecting or potentially affecting the business activities of the Group
- reviewing and monitoring the relationship of the Company with its key strategic joint-venture partners or the relationship building with these partners
Two meetings were held during the year and the attendance of the meetings is set out in the following table:
| Members of Strategic Planning Committee | Number of meetings attended |
|---|---|
| Ir Dr. Raymond Ho Chung Tai (Chairman) | 1 |
| Mr. Zhu Gong Shan | 2 |
| Mr. Sha Hong Qiu | 2 |
| Mr. Xue Zhong Su | 2 |
| Mr. Qian Zhi Xin | 2 |
| Mr. Ji Jun | 2 |
During the two meetings, the Strategic Planning Committee had reviewed the market analysis, competitiveness of the Group and the five years' plan of the Group.
Internal Controls
The Directors are responsible for maintaining and reviewing the effectiveness of the Group's internal controls. Appropriate policies and control procedures have been designed and established to ensure that assets are safeguarded against improper use or disposal; relevant rules and regulations are adhered to and complied with; reliable financial and accounting records are maintained in accordance with relevant accounting standards and regulatory reporting requirements; and key risks that may impact on the Group's performance are appropriately identified and managed. Such procedures are designed to manage, rather than eliminate, the risk of failure to achieve business objectives. These procedures can only provide reasonable, and not absolute, assurance against material errors, losses and fraud. The Directors, through the Company's Audit Committee are kept regularly appraised of significant risks that may impact on the Group's performance.
In addition to the Internal Control Function established internally by the Group, an external independent audit firm, RSM Nelson Wheeler Consulting Limited, was engaged by the Company to review the internal control system of the Group. Subsequently, Baker Tilly Hong Kong Business Services Ltd. was appointed to appraise the internal control system of the Group in November 2008. The internal control plan of the Group covers major activities and processes of the Group's business and service units.
During the year ended 31 December 2008, RSM Nelson Wheeler Consulting Limited provided drafts of certain rules and principles on risk management, operations and conflict of interests for the Group, which were modified and adopted by the Group. Baker Tilly Hong Kong Business Services Ltd. had conducted site visits, walk through tests on various operation cycles and discussed directly with the executives of certain power plants for the purpose of assessing the effectiveness of the internal control system of the Group. A report on result of assessment and recommendations from Baker Tilly Hong Kong Business Services Ltd. was provided to the Audit Committee in March 2009. Based on the review carried out by Baker Tilly Hong Kong Business Services Ltd. and the audit report from Deloitte Touche Tohmatsu, the Audit Committee and the Board concluded that there is no areas of concern that would have significant adverse impact on the Company's financial position or results of operations and considered that the internal control systems are adequate and effective.
Investor Relations And Communication With Shareholders
The Board values every opportunity to communicate with the shareholders, analysts and institutional shareholders. The Directors together with the Investor Relations Manager from time to time held meetings, presentations and conference with the analysts, fund managers, institutional shareholders and media. Details of investor relations activities were further described under the section headed "Major Investor Relations Activities" of this report. From time to time, the Company updates the shareholders and the public by means of announcement. Full information contained in the circulars, interim report and annual report (which were available on the Company's website: www.gcl-poly.com.hk) were also sent to the shareholders to ensure they have sufficient information and understanding of the business as well as the performance of the Group. A total of four shareholders' meeting in addition to the annual general meeting were held during the year of 2008.
