The members of the Committee present their annual report together with the audited financial statements for the year ended 31 March 2011.
Establishment of the Investor Compensation Fund (the Fund)
Part XII of the Securities and Futures Ordinance (Chapter 571) established the Fund on 1 April 2003.
Financial statements
The surplus of the Fund for the financial year ended 31 March 2011 and the state of the Fund’s affairs as at that date are set out in the financial statements on pages 102 to 115.
Members of the Committee
The members of the Committee during the year ended 31 March 2011 and up to the date of this report were:
Mr Keith Lui (Chairman)
Mr Gerald Greiner (retired on 1 April 2010)
Mr Kenneth H W Kwok, BBS, SC (retired on 31 December 2010)
Mrs Alexa Lam
Mr Eric Yip (appointed on 1 April 2010 and retired on 31 March 2011)
Mr Chow Ka Ming, Anderson, SC (appointed on 15 February 2011)
Mr Tai Chi Kin (appointed on 1 April 2011)
Interests in contracts
No contract of significance to which the Fund was a party and in which a Committee member of the Fund had a material interest, subsisted at the end of the financial year or at any time during the financial year.
Auditors
KPMG retire and, being eligible, offer themselves for re-appointment. A resolution for the re-appointment of KPMG as auditors of the Fund is to be proposed at the forthcoming Investor Compensation Fund Committee meeting.
By order of the Committee
Keith Lui
Chairman
20 May 2011
Independent auditor’s report to the Securities & Futures Commission (the SFC)
We have audited the financial statements of Investor Compensation Fund (the Fund) established under Part XII of the Securities and Futures Ordinance set out on pages 102 to 115, which comprise the statement of financial position as at
31 March 2011 and the statement of comprehensive income, the statement of changes in equity and the statement of
cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
The SFC’s responsibility for the financial statements
The Securities and Futures Ordinance requires the directors of the SFC to prepare financial statements which give a true and fair view. The directors of the SFC are responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. This report is made solely to you and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the state of the Fund’s affairs as at 31 March 2011 and of
its surplus and cash flows for the year then ended in accordance with International Financial Reporting Standards.
KPMG
Certified Public Accountants
8th Floor, Prince’s Building
10 Chater Road
Central, Hong Kong
20 May 2011
Statement of comprehensive income
For the year ended 31 March 2011 (Expressed in Hong Kong dollars)
| |
Note |
2011
$’000 |
2010
$’000 |
| Income |
|
|
|
| Net investment income |
5 |
88,837 |
154,796 |
| Exchange difference |
|
1,695 |
1,733 |
| Recoveries |
|
4,569 |
1,345 |
| |
|
95,101 |
157,874 |
| Expenses |
|
|
|
| Investor Compensation Company expenses |
7 |
4,157 |
4,165 |
| Compensation (write-backs)/expenses |
8 |
(218) |
363 |
| Auditor’s remuneration |
|
95 |
86 |
| Bank charges |
|
770 |
755 |
| Professional fees |
|
3,239 |
2,975 |
| |
|
8,043 |
8,344 |
| Surplus and total comprehensive income for the year |
|
87,058 |
149,530 |
The notes on pages 106 to 115 form part of these financial statements.
Statement of financial position
At 31 March 2011 (Expressed in Hong Kong dollars)
| |
Note |
2011
$’000 |
2010
$’000 |
| Current assets |
|
|
|
Financial assets designated at fair value through profit or
loss |
|
|
|
| – Debt securities |
9 |
1,608,583 |
1,517,803 |
| – Pooled fund |
9 |
224,824 |
184,523 |
| Fair value adjustment on unsettled trades |
|
15 |
- |
| Interest receivable |
|
17,823 |
16,371 |
| Due from Investor Compensation Company |
|
128 |
261 |
| Fixed and call deposits with banks |
10 |
189,486 |
150,452 |
| Cash at bank |
10 |
12,467 |
102,283 |
| |
|
2,053,326 |
1,971,693 |
| Current liabilities |
|
|
|
| Provision for compensation |
8 |
150 |
5,656 |
| Creditors and accrued charges |
|
983 |
895 |
| Fair value adjustment on unsettled trades |
|
- |
7 |
| |
|
1,133 |
6,558 |
| Net current assets |
|
2,052,193 |
1,965,135 |
| Net assets |
|
2,052,193 |
1,965,135 |
| Representing: |
|
|
|
| Compensation fund |
|
|
|
| Contributions from Unified Exchange Compensation Fund |
11 |
994,718 |
994,718 |
| Contributions from Commodity Exchange Compensation Fund |
11 |
108,923 |
108,923 |
| Accumulated surplus |
|
948,552 |
861,494 |
| |
|
2,052,193 |
1,965,135 |
Approved and authorized for issue by the Securities and Futures Commission (the SFC) on 20 May 2011 and signed on its behalf by
| Eddy C Fong |
Martin Wheatley |
| Chairman of the SFC |
Chief Executive Officer of the SFC |
The notes on pages 106 to 115 form part of these financial statements.
Statement of changes in equity
For the year ended 31 March 2011 (Expressed in Hong Kong dollars)
| |
Contributions from
unified Exchange
Compensation Fund
$’000 |
Contributions from
Commodity Exchange
Compensation Fund
$’000 |
Accumulated
surplus
$’000 |
Total
$’000 |
| Balance at 1 April 2009 |
994,718 |
108,923 |
711,964 |
1,815,605 |
| Total comprehensive income for the year |
– |
- |
149,530 |
149,530 |
| Balance at 31 March 2010 and 1 April 2010 |
994,718 |
108,923 |
861,494 |
1,965,135 |
| Total comprehensive income for the year |
– |
- |
87,058 |
87,058 |
| Balance at 31 March 2011 |
994,718 |
108,923 |
948,552 |
2,052,193 |
The notes on pages 106 to 115 form part of these financial statements.
Statement of cash flows
For the year ended 31 March 2011 (Expressed in Hong Kong dollars)
| |
2011
$’000 |
2010
$’000 |
| Cash flows from operating activities |
|
|
| Surplus for the year |
87,058 |
149,530 |
| Net investment income |
(88,837) |
(154,796) |
| Exchange difference |
(1,695) |
(1,733) |
| Decrease in amount due from Investor Compensation Company |
133 |
216 |
| Decrease in provision for compensation |
(5,506) |
(2,376) |
| Increase in accounts payable and accrued charges |
88 |
94 |
| Net cash used in operating activities |
(8,759) |
(9,065) |
| Cash flows from investing activities |
|
|
| Purchase of debt securities |
(509,650) |
(1,158,241) |
| Sale or maturity of debt securities |
409,036 |
1,220,937 |
| Sale of equity securities |
968 |
733 |
| Interest received |
57,623 |
62,260 |
| Net cash (used in)/generated from investing activities |
(42,023) |
125,689 |
| Net (decrease)/increase in cash and cash equivalents |
(50,782) |
116,624 |
| Cash and cash equivalents at beginning of the year |
252,735 |
136,111 |
| Cash and cash equivalents at end of the year |
201,953 |
252,735 |
Analysis of the balance of cash and cash equivalents:
| |
2011
$’000 |
2010
$’000 |
| Fixed and call deposits with banks |
189,486 |
150,452 |
| Cash at bank |
12,467 |
102,283 |
|
201,953 |
252,735 |
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