2011 - Li & Fung Limited

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REPORT OF THE DIRECTORS (CONTINUED) The Company’s auditor was engaged to report on the Group’s continuing connected transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” and with reference to Practice Note 740 “Auditor’s Letter on Continuing Connected Transactions under the Hong Kong Listing Rules” issued by the Hong Kong Institute of Certified Public Accountants. The auditor has issued his unqualified letter containing his findings and conclusions in respect of the continuing connected transactions in accordance with the Main Board Listing Rule 14A.38. A copy of the auditor’s letter has been provided by the Company to The Stock Exchange of Hong Kong Limited. PENSION SCHEME ARRANGEMENTS With effect from 1 December 2000, the mandatory provident fund (the “MPF Scheme”) was set up by the Mandatory Provident Fund Authority of Hong Kong. The MPF Scheme is a defined contribution retirement benefit scheme and administered by independent trustees. Both the employer and the employees have to contribute an amount equal to 5% of the relevant income of such employee to the MPF Scheme. Contributions from the employer are 100% vested in the employees as soon as they are paid to the MPF Scheme and subject to certain conditions being met, all benefits derived from the mandatory contributions must be preserved until the employee either reaches the normal retirement age of 65 or meets certain specified conditions whichever is earlier. 58 LI & FUNG LIMITED | ANNUAL REPORT 2011 In Taiwan, the Group operates a defined contribution provident scheme for its employees with the contributions set at 6% of the employees’ basic salaries. In addition, the Group also participates in a retirement benefit plan in accordance with local statutory requirements. Under this plan, the Group recognized pension cost monthly at 3% of the employees’ salaries, which is contributed monthly to an independent fund. In the United Kingdom, the Group participates in a defined benefit scheme for its employees. The Group and its employees make monthly contributions to the scheme based on 15.7% and 5% of the employees’ salary respectively. In Korea, the Group and each of its employees are required to contribute 4.5% of the employee’s monthly salary to a government established pension corporation pursuant to the statutory requirement. Upon retirement, an employee is entitled to receive a lump sum payment. In Indonesia and Thailand, the Group participates in a defined contribution provident scheme for its empolyees with the contribution set at 3.7% and 7% of the employees’ basic salaries respectively. In addition, the Group also participates in a defined benefit retirement scheme in accordance with local statutory requirement. The provident fund schemes for staff of the Group in other regions follow the local requirements. The Group’s pension scheme contributions charged/(credited) to the consolidated profit and loss account for the year are as follows: US$’000 Contributions to the MPF Scheme 4,870 Contributions forfeited by employees (1,142) Contributions to the defined contribution provident scheme and defined benefits plan in Taiwan 2,120 Contributions to the defined benefits scheme in the United Kingdom 178 Contributions pursuant to the statutory requirements in Korea 1,152 Contributions to the defined contribution provident scheme and defined benefits plan in Indonesia and Thailand 2,701 Contributions pursuant to local requirements in other overseas regions 40,304 50,183
DIRECTORS The directors during the year were: All directors of the Company, including independent non-executive directors, are subject to retirement by rotation at annual general meetings in accordance with bye-law 110(A) of the Company’s bye-laws. Mr Spencer Theodore Fung, Professor Franklin Warren McFarlan and Mr Martin Tang Yue Nien will retire by rotation at the forthcoming Annual General Meeting. They, being eligible, will offer themselves for re-election. In accordance with bye-law 101 of the Company’s bye-laws, Dr Fu Yuning who was appointed by the directors during the year, will retire and, being eligible, offer himself for re-election. The biographical details of the directors as at the date of this Report are set out in the Directors and Senior Management section on pages 46 to 51. REPORT OF THE DIRECTORS (CONTINUED) Non-Executive Directors: Executive Directors: Victor Fung Kwok King, Chairman William Fung Kwok Lun, Deputy Chairman Paul Edward Selway-Swift* Bruce Philip Rockowitz, Group President & Allan Wong Chi Yun* Chief Executive Officer Franklin Warren McFarlan* Spencer Theodore Fung Makoto Yasuda* (retired on 18 May 2011) Martin Tang Yue Nien* Benedict Chang Yew Teck (appointed on 1 February 2011) Fu Yuning* (appointed on 1 November 2011) * Independent Non-executive Directors DIRECTORS’ SERVICE CONTRACTS Under a service contract dated 2 June 1992 between the Company and Dr William Fung Kwok Lun and a service contract dated 2 June 1992 between Li & Fung (B.V.I.) Limited and Dr William Fung Kwok Lun, Dr William Fung Kwok Lun has been appointed to act as Managing Director of the Company, Li & Fung (Trading) Limited, Li & Fung (Properties) Limited and Li & Fung (B.V.I.) Limited, in each case for an initial period of five years from 1 April 1992 and thereafter unless terminated by not less than 12 calendar months’ notice in writing expiring at the end of such initial period or any subsequent month. Apart from the above, none of the directors who are proposed for re-election at the forthcoming Annual General Meeting has a service contract with the Group which is not determinable within one year without payment of compensation other than statutory compensation. DIRECTORS’ INTERESTS IN CONTRACTS No contracts of significance in relation to the Group’s business to which the Company or its subsidiaries was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. LI & FUNG LIMITED | ANNUAL REPORT 2011 59
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LI & FUNG LIMITED (Incorporated in
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CORPORATE INFORMATION NON-EXECUTIVE
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THE AMERICAS Guatemala City Lima Ma
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CHAIRMAN’S STATEMENT Victor Fung
Page 10 and 11: CHAIRMAN’S STATEMENT (CONTINUED)
Page 12 and 13: CONSUMER NEEDS THE SUPPLY CHAIN CON
Page 14 and 15: MANAGEMENT DISCUSSION & ANALYSIS Wi
Page 16 and 17: MANAGEMENT DISCUSSION & ANALYSIS (C
Page 26 and 27: CORPORATE GOVERNANCE The Board of D
Page 28 and 29: CORPORATE GOVERNANCE (CONTINUED) In
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Page 42 and 43: SUSTAINABILITY OVERVIEW In 2011, we
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Page 46 and 47: SUSTAINABILITY (CONTINUED) WELL-BEI
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Page 55 and 56: REPORT OF THE DIRECTORS The directo
Page 57 and 58: Number of Share Options REPORT OF T
Page 59: SUBSIDIARIES Details of the Company
Page 63 and 64: REPORT OF THE DIRECTORS (CONTINUED)
Page 65 and 66: REPORT OF THE DIRECTORS (CONTINUED)
Page 67 and 68: OPINION INDEPENDENT AUDITOR’S REP
Page 69 and 70: CONSOLIDATED PROFIT AND LOSS ACCOUN
Page 71 and 72: CONSOLIDATED BALANCE SHEET As at 31
Page 73 and 74: BALANCE SHEET As at 31 December 201
Page 75 and 76: CONSOLIDATED STATEMENT OF CHANGES I
Page 77 and 78: NOTES TO THE ACCOUNTS 1 BASIS OF PR
Page 79 and 80: NOTES TO THE ACCOUNTS (CONTINUED) 1
Page 93 and 94: 2 CRITICAL ACCOUNTING ESTIMATES AND
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Page 99 and 100: 4 OPERATING PROFIT (CONTINUED) The
Page 101 and 102: 6 TAXATION (CONTINUED) NOTES TO THE
Page 103 and 104: 10 STAFF COSTS INCLUDING DIRECTORS
Page 105 and 106: 11 DIRECTORS’ AND SENIOR MANAGEME
Page 107 and 108: 12 INTANGIBLE ASSETS Brand Buying a
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13 PROPERTY, PLANT AND EQUIPMENT (C
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17 AVAILABLE-FOR-SALE FINANCIAL ASS
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19 DUE FROM/(TO) RELATED COMPANIES
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21 TRADE AND OTHER RECEIVABLES (CON
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22 CASH AND CASH EQUIVALENTS NOTES
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24 BANK BORROWINGS (CONTINUED) The
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NOTES TO THE ACCOUNTS (CONTINUED) 2
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26 RESERVES (a) THE GROUP NOTES TO
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26 RESERVES (CONTINUED) (b) THE COM
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27 LONG-TERM LIABILITIES NOTES TO T
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27 LONG-TERM LIABILITIES (CONTINUED
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28 POST-EMPLOYMENT BENEFIT OBLIGATI
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29 DEFERRED TAXATION (CONTINUED) NO
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30 NOTES TO THE CONSOLIDATED CASH F
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30 NOTES TO THE CONSOLIDATED CASH F
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31 BUSINESS COMBINATIONS (CONTINUED
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31 BUSINESS COMBINATIONS (CONTINUED
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36 FINANCIAL RISK MANAGEMENT NOTES
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36 FINANCIAL RISK MANAGEMENT (CONTI
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38 FAIR VALUE ESTIMATION NOTES TO T
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41 PRINCIPAL SUBSIDIARIES AND ASSOC
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LIFUNG TOWER 888 Cheung Sha Wan Roa
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2011 - Li & Fung Limited

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