Hutchison Port Holdings Trust - Annual Report 2015 - page 57

Business plans and budgets are prepared annually by management of individual businesses and subject to review and approval
by both the executive management teams and the Executive Director as part of the Group’s five-year corporate planning cycle.
Reforecasts for the current year are prepared on a quarterly basis, reviewed for variances to the budget and for approval. When setting
budgets and reforecasts, management identifies, evaluates and reports on the likelihood and potential financial impact of significant
business risks.
The Executive Director reviews monthly management reports on the financial results and key operating statistics of each business and
holds monthly meetings with the executive management team and senior management of business operations to review these reports,
business performance against budgets, forecasts, significant business risk sensitivities and strategies. In addition, finance directors and
financial controllers of each of the major businesses attend monthly meetings with the CFO to review monthly performance against
budget and forecast, and to address accounting and finance related matters.
The Group maintains a centralised cash management system for its subsidiary operations and the Group’s Finance Department
oversees the Group’s investment and lending activities. Treasury reports on the Group’s cash and liquid investments, borrowings and
movements thereof are distributed weekly.
The CFO has established guidelines and procedures for the approval and control of expenditures. Operating expenditures are subject
to overall budget control and are controlled within each business with approval levels set by reference to the level of responsibility
of each executive and o¢cer. Capital expenditures are subject to overall control within the annual budget review and approval
process, and more specific control and approval prior to commitment by the Executive Director, the CEO or the CFO are required for
unbudgeted expenditures and material expenditures within the approved budget. Quarterly reports of actual versus budgeted and
approved expenditures are also reviewed.
HPH Trust is committed to high standards of business integrity. The Group has in place an internal policy on competition law
compliance, set out guidelines and conducts trainings for employees to ensure compliance with competition law in all its business
dealings and conduct.
Review of Risk Management and Internal Controls Systems
The Trustee-Manager regularly reviews the business and operational activities of HPH Trust to identify areas of significant business risk
as well as take appropriate measures to control and mitigate these risks. The Trustee-Manager reviews all significant control policies
and procedures and highlights all significant matters to the Audit Committee and the Board.
The Board has received assurance from the CEO and the CFO that (i) the Group’s financial records have been properly maintained
and the financial statements give a true and fair view of HPH Trust’s operations and finance and (ii) the risk management and internal
control systems in place within the Group are adequate and e…ective in addressing the material risks in the Group in its current business
environment including material financial, operational, compliance and information technology risks.
The Board, through the Audit Committee, has conducted a review of the adequacy and e…ectiveness of the Group’s internal controls
systems for the financial year ended 31 December 2015 covering all financial, operational, compliance and information technology
controls as well as risk management functions. Based on such reviews and the work performed by the internal and external auditors,
the Board, with the concurrence of the Audit Committee is of the opinion that the Group’s internal control and risk management
systems addressing material financial, operational, compliance and information technology risks is adequate and e…ective to meet
the needs of the Group in its current business environment as at 31 December 2015. Such review covered reviews on the Group’s
compliance with terms provided for in the right of first refusal agreement (“ROFR Agreement”) and the non-compete agreement
(“Non-Compete Agreement“), both dated 28 February 2011 and amended by the respective amendment agreement dated
22 December 2015, entered into between Hutchison Port Holdings Limited (“HPH”) and the Trustee-Manager, in its capacity as the
trustee-manager of HPH Trust. Details of the ROFR Agreement and Non-Compete Agreement are set out in the “Statement of Policies
and Practices” section on pages 59 and 60 of the Annual Report. In addition, it has also reviewed and is satisfied with the adequacy
of resources, qualifications and experience of the sta… of the Group’s accounting and financial reporting function, and their training
programmes and budget. The Board notes that the system of risk management and internal controls established by Management
provides reasonable assurance that the Group, as it strives to achieve its business objectives, will not be significantly a…ected by any
event that can be reasonably foreseen or anticipated. However, the Board also notes that no system of risk management and internal
controls can provide absolute assurance in this regard, or absolute assurance against poor judgement in decision-making, human
error, losses, fraud or other irregularities.
Corporate
Governance Report
055
ANNUAL REPORT 2015
HUTCHISON PORT HOLDINGS TRUST
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