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					ANNUAL REPORT 2010
                        Preface to the Annual Report of the
                   Pneumoconiosis Compensation Fund Board
                                     on its 30th Anniversary


             The Honourable Matthew CHEUNG Kin-chung, GBS, JP
                                      Secretary for Labour and Welfare



I offer my warmest congratulations to the Pneumoconiosis                                                    (
Compensation Fund Board (the Board) on the occasion of                        )
its 30th anniversary. Over the past three decades, past and
present Board members as well as other stakeholders have all
contributed significantly to the success of the Pneumoconiosis
Compensation Scheme. My special thanks go to every one of
them for their whole-hearted commitment and dedicated efforts.

For several decades before the 1980s, nearly half of our
workforce were engaged in industrial production. With a
burgeoning construction and mining sector, the workforce
helped establish an unshakable foundation for the later take-off
in the infrastructural and economic development of Hong Kong.
However, owing to the then weak sense of occupational safety
and health in the industrial sector, some workers fell sick or
were forced off their work fields because of lethal exposure to
silica dusts.

History was made on 1 January 1981 when the former                 1981   1       1                     (       )
Pneumoconiosis (Compensation) Ordinance, which has been
re-titled as the Pneumoconiosis and Mesothelioma                   1980
(Compensation) Ordinance effective from 18 April 2008, came                                1981     1   1
into full operation. The Board was also established in late
1980 by the enactment of the Ordinance. A Pneumoconiosis              2008        4   18
Compensation Scheme was put in place for persons diagnosed
to have contracted pneumoconiosis on or after 1 January 1981
and persons diagnosed to have contracted mesothelioma
on or after 18 April 2008.

The Scheme proved a milestone in the development of
employees’ compensation to benefit persons with occupational
diseases of pneumoconiosis and/or mesothelioma. Throughout
these years, the Board has left no stone unturned in fostering
continuous improvements to the Scheme. The Scheme has                                      4,630
so far paid out compensation to benefit 4,630 persons who
have contracted pneumoconiosis and/or mesothelioma and                                                      1       4,500
their family members. For the past three years, the average                       2011     4 30
annual compensation payout amounted to $145 million. As at                                  1,775
30 April 2011, there are 1,775 persons on the live register
receiving compensation under the Scheme.

Looking ahead, with the unswerving vision and dedication of
the Board, I am confident that the Scheme will go from strength
to strength in providing better redress to needy workers in the
years to come.
Contents




    Preface by the Secretary for Labour & Welfare

2   Chairman’s Message

3   30th Anniversary Review
    30
5   Board Members

6   Board Information




COMMITTEE REPORTS                                      18 Independent Auditor’s Report

9   Committee on Finance & Administration              19 Balance Sheet

    Ir Thomas Ho, JP                                   20 Statement of Income and Expenditure

11 Committee on Levy & Compensation                    21 Statement of Comprehensive Income

    Ir Thomas Ho, JP                                   22 Statement of Changes in Funds

12 Committee on Research, Education, Publicity         24 Cash Flow Statement
   & Rehabilitation
                                                       24 Notes to the Financial Statements
    Mr P H Ho




                                              42 APPENDIX I
                                                 Number of Assessed New Cases in the Last Ten Years

                                              43 APPENDIX II
                                                 Analysis of Pneumoconiosis and Mesothelioma Cases Newly
                                                 Assessed in 2010

                                              45 APPENDIX III
                                                 Analysis of Payments Made Under The Pneumoconiosis and
                                                 Mesothelioma (Compensation) Ordinance
                                                                          (     )
                                              47 APPENDIX IV
                                                 Profile of all Cases Receiving Compensation as at
                                                 31 December 2010

                                              48 APPENDIX V
                                                 Five-Year Financial Summary
                                                                                                                       2




                                                                    Chairman’s Message


                                                                             Ir Thomas Ho, JP



It’s my pleasure to write this opening message. Let me share                         30
with you some significant events happened during these years.

The Industry
Looking back thirty years ago, the construction industry
practitioners, no matter the employers or the employees, knew
very little about Pneumoconiosis, not to mention taken any                 30
effective preventive measures on sites. We got an average of
213 new cases annually from 1981-1990 but it dropped to                                         1981-1990
91 annually during the last decade. Employers and employees                                    213
all become more aware of the disease, and they are taking                                            91
more effective preventive measures on sites in recent years.
Because of the changes in levy rate and the ups and downs
of the industry, our levy income has changed substantially. We
received only about $3.21 million in 1981, it increased to the
peak of $287.19 million in 1999 and we got $236.87 million in
                                                                                                1981
2010. Although our income had met some fluctuations, I am                                              1999
happy to say that the Board has successfully maintained a
healthy financial status throughout these years, thanks to the       2010
contributions of all ex-Chairmen and Board Members.

Compensation system and expenditure
Several changes were introduced during these years. Behind
all these changes we had only one mission, that was to provide
a more comprehensive compensation system to our patients.
Instead of just receiving a lump-sum amount from 1981 to 1993,
the patients now receive a life-long compensation of a minimum
$3,180 per month up to $24,900 including the “Compensation
                                                                                                              1981 –
for constant attention”, and they could also enjoy other benefits    93
like reimbursement of fees related to medical expenses,                                                       $3,180
medical appliances covering wheelchair, oxygen concentrator                        $24,900
and etc. Total compensation payment increased 20 times to
$145.90 million in 2010 when compared with the amount that                                                    2010
we paid in 1981.                                                                                              1981
                                                                                          20
The work of the Board and the secretariat
When the Board set up in 1980, its main function was just to
pay compensation and collect levy, but now our functions have
been expanded rapidly to cover a wide spectrum of works.
                                                                          1980
The secretariat is expected to expand in future years in order
to provide even better services, and hence we will move to a
larger office in 2011.
Needless to say, the achievements that the Board has made            2011
during these years were contributed by the concerted effort
of all having been involved in our works. I would like to take
this special chance to send my heartfelt gratitude to all
ex-Chairmen, past and present Board Members, officials
from Government Bureaus and Departments as well as those
dedicated staff of our secretariat and the other partnering
organizations. Let’s work together to bring an even better future
to the Board, the industries and the patients.
3


                                                   A collective liability compensation scheme was set up specifically for the Pneumoconiosis
                                                   patients.


                                                   The Pneumoconiosis Compensation Fund Board (the Board) was established on 7 November.
                                                                                              11 7




                                                                                                                   The threshold of
                                                                                                                   construction works subject
                                                                                                                   to levy was raised from
                                                                                                                   $250,000 to $1,000,000
                                                                                                                   from 1 June.
    The Pneumoconiosis compensation scheme came into operation on                                                     6 1
    1 January.                                                                                                                        $250,000
               1 1                                                                                                         $1,000,000

    A levy, initially fixed at the rate of 0.2%, was imposed on all construction
    works undertaken in Hong Kong with value exceeding $250,000 and on
    quarry products produced since 4 January 1981.                                                                 The functions of the Board were
                         0.2%                            $250,000                                                  extended to include conducting
                1 4                                                                                                and financing research,
                                                                                                                   education and publicity
    Total compensation payment of around $7.2 million was paid out to                                              programmes related to the
    135 claimants in the first year of operation.                                                                  prevention of Pneumoconiosis.
                    135




                                                                                       The Commissioner for Labour appointed a special
                                                                                       working group to review the scheme.




                                                       The Board decided to provide extra funding to the
                                                       two NGOs for running a separate rehabilitation             The ordinance was amended to
                                                       programme targeted specifically at those caregivers        start imposing levy on Electrical
                                                       of the pneumoconiotics.                                    & Mechanical works.




               At the end of the year, a total                The ordinance was amended to add Mesothelioma as a compensable
               of 4,630 new cases have                        disease, and renamed as Pneumoconiosis and Mesothelioma (Compensation)
               been recorded since the                        Ordinance.
               implementation of the scheme.

                         4,630                                In September, the ordinance was further amended to allow patients to seek
               A larger office in Sheung Wan                  treatment related to Pneumoconiosis / Mesothelioma from registered Chinese
               was purchased.                                 medical practitioners and claim reimbursement of the medical expenses and
                                                              cost of medicines (subject to a maximum of $200 per day) from the Board.

                                                                                                                                   $200
                           30th Anniversary Review                                                                         4




                                                                     三十週年回顧
The Pneumoconiosis (Compensation) (Amendment)
Ordinance 1993 took effect on 9 July. The new
compensation scheme provided patients with monthly
payments of compensation instead of the previous lump
sum payments.
 1993                                     7 9                         The Pneumoconiosis (Compensation)
                                                                      (Amendment) Ordinance 1996 came effective
                                                                      on 1 April. Under the revised compensation
                                                                      scheme, all patients, including those who have
The Board started to act also as the paying agent for the             or have not received a lump sum payment
Government’s Pneumoconiosis Ex Gratia Fund.                           before 1993, could be entitled to receive the full
                                                                      amount under “Compensation for pain, suffering
                                                                      and loss of amenities” irrespective of their
                                                                      degree of incapacity being assessed.
                                                                       1996                                        4
                                                                      1
                                                                                       1993




                                                                      The functions of the Board were extended to
                                                                      include financing and conducting rehabilitation
                                                                      programmes for the pneumoconiotics.




  The Board bought an office
  premise and moved to this new
  office located in Sheung Wan.
                                                                      The rehabilitation network formally started
                                                                      operating in January.
                                                                                   1

                                                                      The homepage of the Board at www.pcfb.org.hk
                                                                      was officially posted in November.
                                                                                          www.pcfb.org.hk 11




                                                                      The current levy rate 0.25% was made
      The Board and the Construction Industry Training                effective from 18 June.
      Authority* jointly issued a set of “Construction                             0.25% 6 18
      Industry Levy Assessment Guidelines” to clarify
      obligations of contractors and authorised persons in
      respect of levy assessment.
                                    *


       * Now Construction Industry Council                             A “Sponsorship Programme” was launched
                                                                       to encourage non-profit making organisations
                                                                       to arrange promotional activities related to the
                                                                       “Pneumoconiosis prevention” theme.




      A new concept on rehabilitation was developed, expanding the
      scope from ‘hospital-based’ to ‘community-based’.
5                         Pneumoconiosis Compensation Fund Board 2010 Annual Report


    Board Members



    As at 31 December 2010
      2010 12 31




                                         Ir Thomas Ho, JP (Chairman)
                                                               (    )




            Ir Ringo Yu                        Mr Joseph Chee                     Prof Ignatius Yu




             Mr P H Ho                          Ms Karen Hui                          Mr L K Chow




          Mr Donald Choi                       Mr Charlix Wong                    Ms Teresa Fong
                                                                         6


Board Information


BOARD MEMBERS
Ir Thomas Ho, JP (Chairman)                                      (   )
Nominated by The Hong Kong Construction Association

Ir Ringo Yu
Nominated by The Hong Kong Construction Association

Mr Joseph Chee
Nominated by the Hong Kong Contract Quarry Association

Prof Ignatius Yu
Nominated by the Hong Kong Medical Association

Mr Donald Choi
Architect

Mr P H Ho
Nominated by the HK Federation of Electrical &
Mechanical Contractors

Mr L K Chow
Representing employees

Ms Karen Hui
Representing employees

Mr Charlix Wong
The Assistant Director of Accounting Services,           (   )
(Provident Funds), Treasury

Ms Teresa Fong
The Senior Labour Officer, Labour Department,
responsible for Pneumoconiosis and
Mesothelioma Compensation

Mr Ricky Law
Secretary General
7                            Pneumoconiosis Compensation Fund Board 2010 Annual Report


    Board Information



    COMMITTEES & SUBCOMMITTEES
    COMMITTEE ON FINANCE & ADMINISTRATION
    Ir Thomas Ho, JP (Chairman)                                                              (   )
    Mr Joseph Chee
    Mr Charlix Wong

    COMMITTEE ON LEVY & COMPENSATION
    Ir Thomas Ho, JP (Chairman)                                                              (   )
    Prof Ignatius Yu
    Mr P H Ho
    Mr L K Chow
    Ms Teresa Fong

    COMMITTEE ON OBJECTIONS
    Ir Ringo Yu (Chairman)                                                   (       )
    Mr Joseph Chee
    Mr Donald Choi
    Ms Karen Hui
    Mr Charlix Wong

    COMMITTEE ON RESEARCH, EDUCATION,
    PUBLICITY & REHABILITATION
    Mr P H Ho (Chairman)                                                 (       )
    Prof Ignatius Yu
    Mr Donald Choi
    Mr L K Chow
    Ms Karen Hui

    RESEARCH SUBCOMMITTEE
    Prof Ignatius Yu (Chairman)                                          (       )
    Prof Moira Chan (Honorary Adviser)                                   (               )
    Ir Ringo Yu
    Mr Joseph Chee
    Mr Donald Choi
    Mr H C Cheung
    Prof David Hui
    Dr Henry Kwok
    Mr S K Lam
    Dr C C Leung
    Mr T W Tsin
                                                                                                 8


Board Information



EDUCATION AND PUBLICITY SUBCOMMITTEE
Ir Ringo Yu (Chairman)                                             (         )
Prof Ignatius Yu
Mr Donald Choi
Mr L K Chow
Ms Karen Hui
Mr C Tang (to August 2010)                                 (       2010          8       )
Mr S Y Kong (from September 2010)                              (       2010          9       )
Dr Anthony Fung
Dr Raymond Leung
Dr Louisa Wong

REHABILITATION SUBCOMMITTEE
Prof Ignatius Yu (Chairman)                                    (         )
Mr L K Chow
Ms Karen Hui
Ms Teresa Fong
Dr H S Chan
Mr K H Chan
Dr K L Choo
Dr K S Chan
Dr W S Chau
Dr Andy Cheng
Mr S Y Kong
Dr C W Lam (to November 2010)                                          2010          11
Dr K S Lau (from December 2010)                                        2010          12

OTHER INFORMATION
PRINCIPAL BANKERS
China Construction Bank (Asia) Corporation Limited                 (         )
The Hong Kong and Shanghai Banking Corporation Limited

AUDITOR
KPMG

SOLICITORS
Gallant Y T Ho & Co

PCFB OFFICE
7/F Hing Yip Commercial Centre
272-284 Des Voeux Road Central, Hong Kong
Tel : 2541 0032
                                                         2541 0032
Fax : 2541 0211
                                                         2541 0211
E-mail : contact@pcfb.org.hk
                                                               contact@pcfb.org.hk
Website : http://www.pcfb.org.hk
                                                         http://www.pcfb.org.hk
9                             Pneumoconiosis Compensation Fund Board 2010 Annual Report


    Committee Reports



    COMMITTEE ON FINANCE &
    ADMINISTRATION
    Ir Thomas Ho, JP

    The 2010 was a fruitful year for the Board and I am most             2010
    honoured to report the works of the Committee.


    Due to the large investment by the Government on the
    public works, total value of new works commenced and levy
    income in the public sector increased substantially. Total levy
    income continued the upward trend by increasing 20.88% to            20.88%
    $236.87 million. Levies from the public sector increased by
    42.97% to $112.14 million. Levies from the private sector              42.97%                            6.47%
    increased by 6.47% to $124.49 million. Levies from the quarry
    industry dropped by 60% to $0.24 million. In prior years, the          60%
    levy income, penalty on late payments of levies and ex-gratia
    fund administration charge were recognised as revenue when
    the Board became entitled to them and it was probable that                                         (
    they will be received, which was generally upon receipt of cash.       )                    2010
    In 2010, having considered a low default risk in collecting the
    levies from contractors in the past, the Board reassessed the
    probability of receiving the income and concluded that it should
    be recognised when the Board has the entitlement with no                                               2010
    uncertainty involved. Accordingly, this led to an increase in levy
    income for 2010 and the billings not yet paid by the contractors
    amounted to $20.51 million were recognised as accounts                        2010   12    31
    receivable as at 31 December 2010.


    Since the interest rates offered in the market persisted at the
    low level, interest income decreased by 10.72% or $4.68                                                10.72%
    million to $38.94 million. Dividend income was $6.18 million.
    Other income was $1.1 million. As a whole, total income was
    $283.09 million, showing an increase of $32.86 million or
    13.13% from 2009.                                                    2009                              13.13%

    On the other hand, total operating expenditure decreased by
    1.98% this year to $170.21 million. $145.85 million or 85.69%        1.98%
    of the total operating expenditure were paid as compensation.
    Total compensation showed a decrease of $3.96 million or                                                 85.69%
    2.65% from 2009, mainly due to the drop in the monthly                                    2.65%
    compensation.
                                                                                                                 10


Committee Reports



Furthermore, a total of $10.47 million was spent for research,
education, publicity and rehabilitation, which was $1.48 million or
16.52% more than 2009. This was due to the commitment of the                                           16.52%
Board to utilize more resources on the preventive measures of
the construction industry. The surplus of income over expenditure
for the year was $112.88 million, which was $36.3 million or
47.4% higher than the previous year. In addition, total of the                       47.4%
accumulated fund and the general reserve was $1,230.87 million.


Regarding the investment of reserves, about 85% of the surplus                               85%
funds were placed on certificate of deposits and bonds at short
to long-term fixed rates from 2% to 6.7% in order to ensure a                                      2%     6.7%
relatively stable interest income. The certificate of deposits and
bonds will be held to maturity, while the remaining 15% of the         15%
surplus funds were invested in listed shares and the Tracker
Fund for dividend income and long-term investment purposes.
As the global financial market and outlook were volatile, the
Committee will closely monitor the investment portfolio and the
stock market.


Due to the inadequate space of the office in the Hing Yip
Commercial Center, the Board had purchased a larger office                                         6
of 4,928 sq. ft. in Nam Wo Hong Building in Sheung Wan in
June 2010 at a consideration of $22.67 million. This would            4,928
help provide better services to the patients and the industry
practitioners in the years to come.


In June 2010, the Board submitted its annual report for                       2010    6
2009 for tabling in the Legislative Council. The Estimates of                                 12
Income and Expenditure together with the Yearly Program
for 2011 were also submitted in December 2010 for approval
by the Government in accordance with the provisions of the
Ordinance.


As the authorized paying agent of the Pneumoconiosis
Ex-gratia Fund (“the Fund”), the Board presented the Fund’s
interim and final reports together with the financial statements
for the year ended 31 March 2010 which were audited by the
Director of Audit and approved by the Government.


Lastly, I sincerely take this opportunity to thank the members of
this Committee having contributed their valuable advices and
efforts in directing the finance and administration affairs of the
Board.
11                             Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Committee Reports



     COMMITTEE ON LEVY &
     COMPENSATION
     Ir Thomas Ho, JP

     The levy income from the private sector showed an increase of                                          2010
     6.47% to $124.49 million in 2010 whereas the levy income from                                             6.47%
     public sector showed a significant growth of 42.97% to $112.14
     million. Since the proportion of the levy income from both the       42.97%
     private and public sectors are around 52.56% and 47.34% of                                                 52.56%
     the total levy income, these two sectors have contributed the          47.34%
     major source of levy income for the Board.

     The levy income from the commencement of the construction
     of the railway lines of the Express Rail Link, West Island Line
     and the Shatin/Central Link also contributed some new portion                                              2010
     of the levy income for the public works. These three projects
     together with other MTR projects contributed the levy income of      2011
     $12.60 million in 2010. It is anticipated that these projects will
     contribute more levy income in 2011. The levy income from the          60%
     quarry industry was $0.24 million, a decrease of 60% compared
     with last year.

     In order to enhance the efficiency of the collection of levy
     income, a new levy assessment and collection system has been
     redeveloped and the live run would be fixed in May of 2011.          2011     5

     The total amount of pneumoconiosis compensation paid out in
     the year was reduced from $149.81 million to $145.85 million,
     showing a decrease of 2.65% or $3.96 million compared with                              2.65%
     last year.

     The number of new cases recorded in the year was 74 inclusive                     74              12
     of 12 cases of Mesothelioma. There is a significant decrease                                106
     of new cases from its previous year’s figure of 106 to 74. The
     Compensation for Incapacity and Compensation for Pain,
     Suffering and Loss of Amenities were reduced by $4.38 million
     compared with last year. The Compensation for Incapacity Prior
     to Date of Diagnosis also reduced to $1.46 million, a decrease       32.62%
     of 32.62% compared with last year. The other significant                                               17.32%
     increase was the item of Funeral Expenses, which amounted to
     $2.83 million, an increase of 17.32% compared with last year.                      15.32%
     And the Medical Expenses also increased from $1.62 million to
     $1.87 million, an increase of 15.32% compared with last year.

     In view of the contemporary needs, the Board has approved to
     upgrade the patients’ database system. Furthermore, the annual
     interviews with patients have been implemented smoothly, and
     their updated information was taken into the database.
                                                                                          12


Committee Reports



COMMITTEE ON RESEARCH,
EDUCATION, PUBLICITY &
REHABILITATION
Mr P H Ho


Research
Although the subcommittee has not approved any funding            2010
application during the year, 2010 was indeed a very busy year
for members, as we have received a total of seven applications.               7
While we have declined a few, mainly because those proposed
projects had not focused enough on our priority areas, three             /
‘research and development’ projects were still under serious
consideration. We anticipated that funding for some of these      2011
projects would be granted in 2011.


In 2008, the ordinance was amended to include Mesothelioma        2008
as a compensable disease. Moreover, it also began to allow
patients to seek treatments from Chinese medicine practitioners
and claim reimbursement of the related expenses. Not only
have these changes affected our compensation system, they                             7
have also widened the scope of our research applications.
Among the seven applications that we mentioned earlier, two
were related to traditional Chinese medicine and another two
aimed for the development of novel vaccine for the prevention
and treatment of Mesothelioma.


Pneumoconiosis has long been an incurable disease, and
there’s no significant breakthrough in treatment during the
last decade. Treatment of Mesothelioma is also disappointing,
and the mortality and morbidity rates remain to be extremely
high. Although we understand that a new treatment method                 10
or a novel vaccine could take a long time, say at least 10
years, to develop before that treatment or vaccine could be
made clinically applicable, and the probability of success is
also unknown at the early stage, we are still open to consider                    /
funding such projects. Eventually, we hope our contributions
could help bring a breakthrough in treatment and ultimately
provide a hope to our patients. We have sent some of these
proposals to overseas experts for reviews, and if all the
technical issues could be solved, we would allot our funding
early next year.
13                                  Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Committee Reports



     By the end of the year, we had 3 on-going projects, and since                          2010                   3
     the establishment of our Research Fund in 1987, the Board has                        1987
     supported a total of 18 projects.                                                      18




     The Chairman, Ir Thomas Ho, JP, presented prizes to the "Prevention of Pneumoconiosis Best Practice Award 2010" winning companies' representatives




     Education and Publicity
     The subcommittee this year was chaired by a new Board
     member, Ir Ringo Yu. With Mr Yu’s wide-ranging experience
     of the construction industry, he has from the industry’s
     perspective offered a lot of insightful advice, and this helped the
     subcommittee bring two new programmes targeted specifically
     at the construction personnel.


     We understand that the most effective method for
     Pneumoconiosis prevention is to minimise the dust level
     generated at sources. After doing some researches on the                                                                        DustBubble TM
     dust control measures taken in other overseas countries, we                      (                                               )
     decided to buy a DustBubble           TM
                                                , mainly used for capturing
     dust generated during the drilling process, from UK and
     distributed it to contractors and workers. To follow-up, we have
     collected feedback from users, and, at the same time, invited
     Prof Shen of the PolyU to take samples on-site for evaluating
     the effectiveness of the tool. We should be able to get more
     data in the middle of next year, and will decide if we are going
     to expand the scale of this project.


     In addition to this, we have also discovered that in the market
     there are some cutting, grinding and sawing machines with
     add-on parts, some connected with external vacuum cleaner,
                                                                                                                              14


Committee Reports



for minimising the dust level generated during these ‘dusty
processes’. In order to encourage employers and workers
to use these machines, we have donated ten models to the
Hong Kong Construction Industry Employees General Union,
and the Union will launch a loan-scheme early next year mainly
targeted at those workers engaging in small-scale renovation
works. To maximise the publicity impact, we have arranged
a few seminars for this group of workers to increase their
awareness on Pneumoconiosis and the preventive measures.
Staff of the secretariat and other guest speakers from suppliers
of respirators and drilling machines all had fruitful exchange with
workers in the various sessions.


Besides the above programmes, we have also arranged
other training, advertising and publicity activities during the
year, for example, a “Pneumoconiosis and Mesothelioma
Quiz” was arranged in November. In the final round held on
28 November in the Dragon Centre, we were really amazed to
see the outstanding performance of the different teams, and
our staff members even made jokes among themselves that
“perhaps the participating team members get better knowledge
on Pneumoconiosis than some of us”. On the whole, I am
happy to say that most programmes arranged this year have
achieved satisfactory results.




Pneumoconiosis and Mesothelioma Quiz                                  The Chairman of the Education and Publicity
                                                                      Subcommittee, Ir Ringo Yu, presented the prize to the
                                                                      "Pneumoconiosis and Mesothelioma Quiz" winning
                                                                      team of the Enterprises Group
15                             Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Committee Reports



     Although our promotional messages are rather focused and
     the primary audiences also comparatively restricted, the
     subcommittee has been trying hard to bring innovative yet
     effective programmes in different years. With the concerted
     effort of members, I am anticipating that the subcommittee will
     bring us more ‘surprises’ in future years.


     Rehabilitation
     In addition to the ‘Core Programme’, the Board in 2009 started                                       2009
     to fund a new project targeted at carers. In this year’s report, I
     would like to tell you more about this programme.


     At the end of 2010, 44% of our patients were over 70 years              2010          44%                   70
     old. To take care of this group of patients with Pneumoconiosis,
     and perhaps also with a lot of other health problems, is by no
     means an easy task. Those carers usually have to shoulder
     a heavy burden, and this may cause some of them to have
     psychological problems themselves. One major part of our
     programme is to provide customised support to these cases.
     As staff members in-charge of the programme are experienced
     social workers, they will arrange a series of home visits for
     providing counseling services as well as teaching the targets
     appropriate techniques like coping skills, caring techniques and
     etc. We believe that if the carers’ psychological problems could        80
     be solved, they could provide better care to our patients, and
     this in turn could help improve patients’ quality of life. During
     these two years, the two NGOs have successfully arranged this
     service for 80 cases, most of which have achieved satisfactory
     results. Perhaps I could share a successful case with you in the
     following page.




     Rehabilitation Seminar                                               Rehabilitation Exercise Class
                                                                                  16


Committee Reports



   The patient’s health was deteriorating rapidly and he              (   )
   was solicitous about his after-death arrangements. He
   was anxious to discuss that with his wife (his only carer).
   However, the wife just could not accept this reality and
   felt apprehensive about the future. She had chosen to
   escape, and refused to talk with her husband. She just
   felt helpless and cried everyday.


   The patient was then admitted into the Intensive Care
   Unit of XXX Hospital, and he proactively contacted our
   staff for assistance. The social worker then consoled
   the wife with great patience and explained to her about
   her husband’s condition. After a few visits, the wife
   eventually accepted that life and death were part of
   human life. The social worker then gave her information
   about “advance directives” and helped the patient and
   his wife to fix the patient’s after-death arrangements.


   The patient eventually passed away and his wife
   arranged the funeral according to the husband’s wish.
   She found solace in accompanying her husband to walk
   the last part of his journey and the patient also left this
   world peacefully without having any worry left behind.


                       (translated from a report submitted by
 the Association for the Rights of Industrial Accident Victims)   (           )
17                             Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Committee Reports



     The above case shows how the programme has helped the
     carer and ultimately benefitted our patient, and we have more
     examples of these successful cases. At the end of this year, we                                   2011
     decided to provide extra funding to continue this programme in
     2011, and will also base on the demand of service to design the
     future plan.

     The other rehabilitation programmes were also progressing
     well, and certainly this was attributable to the hard work of the
     rehabilitation team members. Thanks all for your dedication.

     I would like to devote the ending section of this report to
     convey a sincere gratitude to Dr C W Lam who retired at the
     end of the year. Dr Lam is one of the founding members of the                                90
     Rehabilitation Subcommittee and has helped formulating and
     conducting different rehabilitation programmes right from the
     beginning back to late 90s. Dr Lam’s retirement is certainly a
     loss to this subcommittee, but I am sure his successor and the
     other rehabilitation team members will continue striving hard to
     keep on improving the programmes so as to meet the higher
     expectations of the Board as well as our patients.




     Promoting the prevention of Pneumoconiosis and Mesothelioma messages through various media
                                                                                                                     18


Independent Auditor’s Report

To the members of Pneumoconiosis Compensation Fund Board
(Operating in Hong Kong in accordance with the Pneumoconiosis and             [                    (   )        ]
Mesothelioma (Compensation) Ordinance)
We have audited the financial statements of Pneumoconiosis                        (            )           19   41
Compensation Fund Board (the “Board”) set out on pages 19 to 41,                           (                     )
which comprise the balance sheet as at 31 December 2010 and the
statement of income and expenditure, statement of comprehensive
income, statement of changes in funds and cash flow statement for the
year then ended and a summary of significant accounting policies and
other explanatory information.

Board members’ responsibility for the
financial statements
The Board members are responsible for the preparation and the true
and fair presentation of these financial statements in accordance with
Hong Kong Financial Reporting Standards issued by the Hong Kong
Institute of Certified Public Accountants and for such internal control as
the Board members determine is 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, as a body, in
accordance with our agreed terms of engagement 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 Board members,
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 affairs of the Board as at 31 December 2010 and of its surplus
and cash flows for the year then ended in accordance with Hong Kong
Financial Reporting Standards.

KPMG
Certified Public Accountants
8th Floor, Prince’s Building                                                          10
10 Chater Road                                                                    8
Central, Hong Kong

23 June 2011
                                                                              (            )
19                             Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Balance Sheet
     (at 31 December 2010) (     2010      12   31   )




                                                                                Note              2010              2009
                                                                                           (HK$       )      (HK$       )

     ASSETS
     Non-current assets
     Property, plant and equipment                                                  5     31,425,086         7,836,082
     Held-to-maturity financial assets                                              7    799,409,620       800,759,330
     Available-for-sale financial assets                                         6, 8    194,737,221       173,059,635
                                                                                        1,025,571,927      981,655,047
     Current assets
     Held-to-maturity financial assets                                              7    221,244,918       154,989,628
     Accounts receivable                                                         6, 9     20,341,268                 –
     Interest receivables                                                           6     11,484,322        10,923,613
     Deposits                                                                       6         77,932            27,680
     Advance payment for compensation                                                        301,700           319,700
     Cash and cash equivalents                                                  6, 10     71,985,227        68,443,971
                                                                                         325,435,367       234,704,592
     Total assets                                                                       1,351,007,294     1,216,359,639

     FUNDS
     Funds and reserves                                                           11
     Accumulated fund                                                                   1,130,870,638     1,042,211,095
     Research fund                                                                          5,696,141         4,654,521
     Education and publicity fund                                                          11,226,648        12,564,160
     Rehabilitation fund                                                                    5,263,875         4,470,226
     Computer systems fund                                                                  1,616,047         1,482,867
     General reserve                                                                      100,000,000       100,000,000
     Capital reserve                                                                       31,425,086         7,836,082
     Investment reserve                                                                    63,623,431        42,560,762
     Total funds                                                                        1,349,721,866     1,215,779,713

     LIABILITIES
     Non-current liabilities
     Provision for long service payment                                           12         165,000           165,000
     Current liabilities
     Trade and other payables                                                      6       1,120,428           414,926
     Total liabilities                                                                     1,285,428           579,926
     TOTAL FUNDS AND LIABILITIES                                                        1,351,007,294     1,216,359,639


     Approved and authorised for issue on 23 June 2011.




     Chairman                                                    Board Member


     The notes on pages 24 to 41 form part of these financial statements.
     24 41
                                                                                                                  20


Statement of Income and Expenditure
(for the year ended 31 December 2010) (    2010           12    31     )




                                                                           Note           2010            2009
                                                                                   (HK$       )    (HK$       )

Income

Levy income                                                                 13    236,873,327     195,963,320
Interest income on:
– bank deposits                               –                                       427,065         268,446
– held-to-maturity financial assets           –                                    38,515,046      43,350,399
Dividend income from listed securities                                              6,176,244       6,544,992
Ex-gratia fund administration                                                         310,782         316,041
   charge received
Gain on disposal of available-for-sale                                                       –      3,550,006
   financial assets
Penalty on late payments of levies                                                   341,706         225,712
Rental income                                                                        360,948               –
Sundry income                                                                         86,411          13,821
                                                                                  283,091,529     250,232,737
Expenditure
Operating expenditure
– Pneumoconiosis and                          –                                   145,851,208     149,814,866
    Mesothelioma compensations
– Projects expenses                           –                                    10,469,063       8,984,569
– Employee benefit expenses                   –                             14      6,040,438       5,343,503
– Administrative expenses                     –                             15      2,050,024       2,377,045
– Medical examination fees                    –                             16      5,039,590       6,410,920
– Depreciation                                –                              5        319,018         153,551
– Other expenditure                           –                                       442,704         568,861
                                                                                  170,212,045     173,653,315
Surplus for the year before transfer                                              112,879,484      76,579,422

Add: Transfer (to)/from:                              (        )/
    – Designated funds                            –                                  (630,937)    (11,409,131)
    – Capital reserve                             –                               (23,589,004)        153,551
Surplus for the year after transfer                                                88,659,543      65,323,842




The notes on pages 24 to 41 form part of these financial statements.
24 41
21                             Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Statement of Comprehensive Income
     (for the year ended 31 December 2010) (    2010    12   31             )




                                                                                           2010            2009
                                                                                   (HK$        )    (HK$       )


     Surplus for the year                                                         112,879,484       76,579,422

     Other comprehensive income for the year

     Fair value gain on available-for-sale                                         21,062,669       58,634,317
       financial assets

     Investment reserve transferred to statement of                                           –     (3,799,490)
       income and expenditure on disposal of
       available-for-sale financial assets

     Total comprehensive income for the year                                      133,942,153      131,414,249




     The notes on pages 24 to 41 form part of these financial statements.
     24 41
                                            Accumulated      Research       Education     Rehabilitation      Computer        General      Capital     Investment              Total
                                                   fund          fund     and publicity            fund    systems fund       reserve      reserve         reserve
                                                                                 fund


                                              (HK$     )    (HK$     )     (HK$       )     (HK$       )     (HK$     )    (HK$     )   (HK$     )    (HK$       )      (HK$       )

At 1 January 2010             2010 1 1     1,042,211,095    4,654,521      12,564,160        4,470,226       1,482,867    100,000,000    7,836,082    42,560,762     1,215,779,713

Transfer from                                (35,008,022)   1,500,000       4,000,000        5,100,000         500,000              –   23,908,022              –                 –
  accumulated fund

Transfer to accumulated
  fund to compensate:
                                                                                                                                                                                       (for the year ended 31 December 2010) (




– Depreciation charge     –                     319,018              –               –                –              –              –     (319,018)             –                 –

– Project expenses        –                  10,469,063      (458,380)     (5,337,512)      (4,306,351)       (366,820)             –            –              –                 –
                                                                                                                                                                                       2010




Total comprehensive                         112,879,484              –               –                –              –              –            –    21,062,669      133,942,153
                                                                                                                                                                                       12




  income for the year
                                                                                                                                                                                       31




At 31 December 2010           2010 12 31   1,130,870,638    5,696,141      11,226,648        5,263,875       1,616,047    100,000,000   31,425,086    63,623,431     1,349,721,866
                                                                                                                                                                                                                                 Statement of Changes in Funds




At 1 January 2009             2009 1 1      976,887,253     4,391,686       3,818,856        3,552,101               –    100,000,000    7,989,633    (12,274,065) 1,084,365,464

Transfer from                                (20,393,700)   1,500,000      12,000,000        5,100,000       1,793,700              –            –              –                 –
                                                                                                                                                                                       )




  accumulated fund

Transfer to accumulated
  fund to compensate:

– Depreciation charge     –                     153,551              –               –                –              –              –     (153,551)             –                 –

– Project expenses        –                   8,984,569     (1,237,165)    (3,254,696)      (4,181,875)       (310,833)             –            –              –                 –

Total comprehensive                          76,579,422              –               –                –              –              –            –    54,834,827      131,414,249
  income for the year

At 31 December 2009           2009 12 31   1,042,211,095    4,654,521      12,564,160        4,470,226       1,482,867    100,000,000    7,836,082    42,560,762     1,215,779,713




The notes on pages 24 to 41 form part of these financial statements.
24 41
                                                                                                                                                                                                                                                                 22
23                            Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Cash Flow Statement
     (for the year ended 31 December 2010) (     2010   12    31                    )




                                                                                        Note            2010             2009
                                                                                                 (HK$       )     (HK$       )

     Cash flows from operating activities

     Surplus for the year                                                                      112,879,484       76,579,422

     Adjustments for:
       Depreciation                                                                       5        319,018           153,551
       Amortisation of premiums/(discounts)                                                         94,420          (531,210)
          of held-to-maturity financial assets               /(        )
       Impairment loss for accounts receivable                                                      262,232                –
       Interest income on bank deposits                                                            (427,065)        (268,446)
       Interest income on held-to-maturity                                                      (38,609,466)     (42,819,189)
          financial assets
       Dividend income                                                                           (6,176,244)      (6,544,992)
       Gain on disposal of available-for-sale                                                             –       (3,550,006)
          financial assets

     Changes in working capital:
       Increase in accounts receivable                                                          (20,603,500)               –
       Increase in deposits                                                                          (50,252)              –
       Decrease/(increase) in advance                                      /(   )                     18,000          (7,700)
         payment for compensation
       Increase in trade and other payables                                                        705,502             3,673
     Net cash generated from operating
      activities                                                                                48,412,129       23,015,103
     Cash flows from investing activities

     Payments for purchase of property,                                                         (23,908,022)                –
        plant and equipment
     Payments for purchase of held-to-maturity                                                 (220,000,000)    (240,079,100)
        securities
     Proceeds from redemption of                                                               155,000,000      133,500,000
        held-to-maturity securities
     Proceeds from disposal of available-for-sale                                                          –     41,758,533
        financial assets
     Payments for purchase of available-for-sale                                                           –      (9,911,273)
        financial assets
     Interest received                                                                          38,475,822       42,962,078
     Dividends received                                                                          5,561,327        6,544,992
     Net cash used in investing activities                                                      (44,870,873)     (25,224,770)

     Net increase/(decrease) in cash and                                                         3,541,256        (2,209,667)
      cash equivalents                                            /(       )

     Cash and cash equivalents at                                                               68,443,971       70,653,638
      beginning of the year
     Cash and cash equivalents at                                                        10     71,985,227       68,443,971
      end of the year




     The notes on pages 24 to 41 form part of these financial statements.
     24 41
                                                                                                                                                               24


Notes to the Financial Statements
(Expressed in Hong Kong dollars) (                       )




1 General information                                                             1
    The Pneumoconiosis Compensation Fund Board (the                                                                               (
    “Board”) is established with a role as a compensation body,                                )
    and to engage in the areas of rehabilitation, education and
    research in respect of pneumoconiosis. The address of its
    registered office is 7th Floor, Hing Yip Commercial Centre,                            272-284                           7
    No. 272-284 Des Voeux Road Central, Sheung Wan, Hong
    Kong.

    With the enactment of the Pneumoconiosis (Compensation)                                                              (       )(      )              1993
    (Amendment) Ordinance 1993 (the “Ordinance”) on                                        7   9                                             1981        1
    9 July 1993, all those pneumoconiotics who were                                   1        1993          7       8
    compensated by the Board between 1 January 1981 and
    8 July 1993 can make application to the Board to receive
    further compensation and other payments under the new
    compensation scheme. After re-assessment is made by the                                                                  1993        7     9
    Pneumoconiosis Medical Board and approval granted, the
    applicant will receive monthly payments of compensation in                                                                                     2010
    respect of the difference between the degree of incapacity                        12       31                1,541   (2009        1,541    )
    determined by the Pneumoconiosis Medical Board on the
    re-assessment and the degree of permanent incapacity
    previously determined by the Board under the Ordinance
    prior to its amendment. As at 31 December 2010, a total
    of 1,541 (2009: 1,541) pneumoconiotics have applied for
    re-assessment.

    The Board’s liability to compensation arises when an
    applicant is assessed by the Pneumoconiosis Medical
    Board to be suffering from Pneumoconiosis and a certificate
    is issued by the Commissioner for Labour of the applicant’s
    fulfilment of the residency requirement.

    On 18 April 2008, the Pneumoconiosis (Compensation)                               2008          4       18
    Ordinance was amended to include provisions to provide
    compensation to persons suffering from Mesothelioma.                                                                                            (      )
    A c c o r d i n g l y, t h e n a m e o f t h e P n e u m o c o n i o s i s
    (Compensation) Ordinance has been renamed as the
    Pneumoconiosis and Mesothelioma (Compensation)
    O rd i n a n c e . A p p l i c a n t s w h o a re a s s e s s e d b y t h e
    Pneumoconiosis Medical Board to the suffering from
    Mesothelioma are subject to the same eligibility criteria
    and payment of compensation which are consistent with
    applicants suffering from Pneumoconiosis.

    On 1 September 2008, the Pneumoconiosis and                                            2008         9        1
    Mesothelioma (Compensation) Ordinance was further
    amended to allow patients with pneumoconiosis or
    mesothelioma to seek treatment from registered Chinese
    medicine practitioners and claim reimbursement of
    the medical expenses and cost of medicines for the
    treatment of pneumoconiosis or mesothelioma, subject
    to the maximum amount of claims as prescribed in the
    Pneumoconiosis and Mesothelioma (Compensation)
    Ordinance.
25                               Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Notes to the Financial Statements
     (Expressed in Hong Kong dollars) (                 )




     2 Summary of significant accounting                                      2
       policies
         (a) Basis of preparation                                                 (a)
             These financial statements have been prepared in
             accordance with all applicable Hong Kong Financial
             Reporting Standards (“HKFRSs”), which collective
             term includes all applicable individual Hong Kong
             Financial Reporting Standards, Hong Kong Accounting
             Standards (“HKASs”) and Interpretations issued by the
             Hong Kong Institute of Certified Public Accountants
             (“HKICPA”) and accounting principles generally
             accepted in Hong Kong.

             A summary of the significant accounting policies
             adopted by the Board is set out below.

             The measurement basis used in the preparation of the
             financial statements is the historical basis except for
             the financial instruments classified as available-for-sale
             financial assets stated at their fair value as explained in
             the accounting policies set out below.

             The preparation of financial statements in conformity
             with HKFRSs requires management to make
             judgements, estimates and assumptions that affect
             the application of policies and reported amounts of
             assets, liabilities, income and expenses. The estimates
             and associated assumptions are based on historical
             experience and various other factors that are believed
             to be reasonable under the circumstances, the results
             of which form the basis of making the judgements
             about carrying values of assets and liabilities that are
             not readily apparent from other sources. Actual results
             may differ from these estimates.

             The estimates and underlying assumptions are
             reviewed on an ongoing basis. Revisions to accounting
             estimates are recognised in the period in which the
             estimate is revised if the revision affects only that
             period, or in the period of the revision and future
             periods if the revision affects both current and future
             periods.

             Judgements made by the Board in the application of
             HKFRSs that have significant effect on the financial
             statements and major sources of estimation uncertainty
             are discussed in note 4.                                                         4

             (i)   Changes in accounting policies                                       (i)
                   The HKICPA has issued two revised HKFRSs, a
                   number of amendments to HKFRSs and two new
                   Interpretations that are first effective for the current
                   accounting period of the Board. Of these, the
                   following development is relevant to the Board’s
                   financial statements:
                                                                                                                                26


Notes to the Financial Statements
(Expressed in Hong Kong dollars) (                   )




              -   Improvements to HKFRSs 2009                                             -

             As a result of an amendment to HKAS 17, Leases,
             arising from the “Improvements to HKFRSs (2009)”                                                              17
             omnibus standard, the Board has re-evaluated the
             classification of its interests in leasehold land as
             to whether, in the Board’s judgement, the lease                                               (
             transfers substantially all the risks and rewards of                                          )
             ownership of the land such that the Board is in a
             position economically similar to that of a purchaser.
             The Board has concluded that there is a change of
             classification of the Board’s leasehold land interests
             located in the Hong Kong Special Administrative
             Region. These leasehold interests will no longer be
             classified by the Board as operating leases as the
             Board considers that it is in a position economically
             similar to that of a purchaser. This change in
             accounting policy has no material impact on the
             current or previous periods as the lease premiums
             in respect of all such leases are fully paid and are
             being amortised over the remaining length of the
             lease term.
        (ii) P o s s i b l e i m p a c t o f a m e n d m e n t s , n e w           (ii)                2010    12     31
             standards and interpretations issued but not
             yet effective for the year ended 31 December
             2010
             Up to the date of issue of these financial
             statements, the HKICPA has issued a number of                                                     2010        12
             amendments, new standards and interpretations                                31
             which are not yet effective for the year ended
             31 December 2010 and which have not been
             adopted in these financial statements. These
             include the following which may be relevant to the
             Board:
                                                           Effective for
                                                   accounting periods
                                                 beginning on or after
             HKFRS 9, Financial instruments              1 January 2013                            9   –         2013 1 1
             Improvements to HKFRSs 2010                  1 July 2010 or                                       2010 7 1
                                                         1 January 2011                                          2011 1 1
             T h e B o a rd i s i n t h e p ro c e s s o f m a k i n g a n
             assessment of what the impact of these
             amendments is expected to be in the period of
             initial application. So far it has concluded that the
             adoption of them is unlikely to have a significant
             impact on the Board’s results of operations and
             financial position.
    (b) Foreign currency translation                                         (b)
        (i)  Functional and presentation currency                                  (i)
             Items included in the financial statements of the
             Board are measured using the currency of the                                                      (
             primary economic environment in which the entity                                  )
             operates (“the functional currency”). The financial
             statements are presented in Hong Kong dollars,
             which is the Board’s functional and presentation
             currency.
        (ii) Transactions and balances                                             (ii)
             Foreign currency transactions are translated
             into the functional currency using the exchange
             rates prevailing at the dates of the transactions.
             Foreign exchange gains and losses resulting from
             the settlement of such transactions and from the
             translation at year-end exchange rates of monetary
             assets and liabilities denomination in foreign
             currencies are recognised in the statement of
             income and expenditure.
27                                 Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Notes to the Financial Statements
     (Expressed in Hong Kong dollars) (                        )




         (c) Property, plant and equipment                                               (c)
             Property, plant and equipment is stated at historical
             cost less depreciation and impairment losses. Historical
             cost includes expenditure that is directly attributable to
             the acquisition of the property, plant and equipment.

             S u b s e q u e n t c o s t s a re i n c l u d e d i n t h e a s s e t ’s
             carrying amount or recognised as a separate asset,
             as appropriate, only when it is probable that future
             economic benefits associated with the item will flow to
             the Board and the cost of the item can be measured
             reliably. The carrying amount of the replaced part is
             derecognised. All other repairs and maintenance are
             charged to the statement of income and expenditure
             during the financial period in which they are incurred.

             Depreciation is calculated to write off the cost of the
             property, plant and equipment, less its estimated
             residual value, if any, using the straight line method
             over its estimated useful life as follows.

             Buildings are depreciated over their estimated useful                                     50
             life of 50 years.

             Leasehold land is depreciated over the unexpired term
             of leases.

             The carrying amount of the property, plant and
             equipment is reviewed for indications of impairment
             at each balance sheet date. An impairment loss is
             recognised in statement of income and expenditure
             if the carrying amount of the property, plant and
             equipment exceeds its recoverable amount. The
             recoverable amount of the property, plant and
             equipment, is the greater of its fair value less costs
             to sell and value in use. In assessing value in use, the
             estimated future cash flows are discounted to their
             present value using a pre-tax discount rate that reflects
             current market assessments of the time value of money
             and the risk specific to the asset. An impairment loss is
             reversed if there has been a favourable change in the
             estimates used to determine the recoverable amount.

             Gains or losses arising from the retirement or disposal
             of a property, plant and equipment are determined
             as the difference between the estimated net disposal
             proceeds and the carrying amount of the asset and are
             recognised in the statement of income and expenditure
             on the date of retirement or disposal.

         (d) Impairment of non-financial assets                                          (d)
             Assets are reviewed for impairment whenever events
             or changes in circumstances indicate that the carrying
             amount may not be recoverable. An impairment loss
             is recognised for the amount by which the asset’s
             carrying amount exceeds its recoverable amount.
             The recoverable amount is the greater of an asset’s
             fair value less costs to sell and value in use. For the                           (   )
             purposes of assessing impairment, assets are grouped
             at the lowest levels for which there are separately
             identifiable cash flows (cash-generating units).
                                                                                                                 28


Notes to the Financial Statements
(Expressed in Hong Kong dollars) (                         )




    (e) Financial assets                                                              (e)
        The Board classifies its financial assets in the following
        categories: held-to-maturity financial assets and
        available-for-sale financial assets. The classification
        depends on the purposes for which the financial assets
        were acquired. The Board’s management determines
        the classification of its financial assets at initial
        recognition.

        (i)   Held-to-maturity financial assets                                             (i)
              Held-to-maturity financial assets are non-derivative
              financial assets with fixed or determinable
              payments and fixed maturities that the Board’s
              management has the positive intention and ability
              to hold to maturity. If the Board were to sell other
              than an insignificant amount of held-to-maturity
              financial assets, the whole category would be
              tainted and reclassified as available-for-sale.
              Held-to-maturity financial assets are initially
              recognised at fair value plus transaction costs and
              are subsequently carried at amortised cost using
              the effective interest method. Held-to-maturity                                      12
              financial assets are included in non-current
              assets, except for those with maturities less than
              12 months from the balance sheet date, which are
              classified as current assets.

        (ii) Available-for-sale financial assets                                            (ii)
             A v a i l a b l e - f o r- s a l e f i n a n c i a l a s s e t s a r e
             non-derivatives that are either designated in this
             category or not classified in any of the other                                             12
             categories. They are included in non-current assets
             unless management intends to dispose of the
             investment within 12 months of the balance sheet
             date.

              Regular purchases and sales of financial assets are                                            (
              recognised on the trade-date – the date on which                                           )
              the Board commits to purchase or sell the asset.
              Investments are initially recognised at fair value plus
              transaction costs and are subsequently carried
              at fair value. Financial assets are derecognised
              when the rights to receive cash flows from the
              investments have expired or have been transferred
              and the Board has transferred substantially all the
              risks and rewards of ownership.

              Unrealised gains and losses arising from changes
              in the fair value of available-for-sale financial assets
              are recognised in other comprehensive income and
              accumulated separately in the investment reserve.
              When securities classified as available-for-sale are
              sold or impaired, the accumulated fair value gain or
              loss is reclassified from funds to the statement of
              income and expenditure. The fair value of quoted
              investments are based on current bid price.
29                             Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Notes to the Financial Statements
     (Expressed in Hong Kong dollars) (              )




                 The Board assesses at each balance sheet date
                 whether there is objective evidence that a financial
                 asset or a group of financial assets is impaired. For
                 held-to-maturity financial assets, the impairment
                 loss is measured as the difference between the
                 asset’s carrying amount and the present value
                 of estimated future cash flows discounted at the
                 financial asset’s original effective interest rate.
                 The amount of the loss shall be recognised in
                 the statement of income and expenditure. In the
                 case of equity securities classified as available-for-                    (
                 sale, a significant or prolonged decline in the fair
                 value of the security below its cost is considered
                 as an indicator that the securities are impaired.                   )
                 If any such evidence exists for available-for-sale
                 financial assets, the cumulative loss – measured
                 as the difference between the acquisition cost
                 and the current fair value, less any impairment
                 loss on that financial asset previously recognised
                 in the statement of income and expenditure –
                 is removed from funds and recognised in the
                 statement of income and expenditure. Impairment
                 losses recognised in the statement of income and
                 expenditure on equity instruments are not reversed
                 through the statement of income and expenditure.

         (f) Receivables                                                   (f)
             Receivables are recognised initially at fair value and
             subsequently measured at amortised cost using the
             effective interest method, less provision for impairment.
             A provision for impairment of receivables is established
             when there is objective evidence that the Board will
             not be able to collect all amounts due according to
             the original terms of the receivables. The amount of
             the provision is the difference between the asset’s
             carrying amount and the present value of estimated
             future cash flows, discounted at the financial asset’s
             original effective interest rate. When a receivable is
             uncollectible, the amount of the loss is recognised in
             the statement of income and expenditure. Subsequent
             recoveries of amounts previously written off are
             credited in the statement of income and expenditure.

         (g) Cash and cash equivalents                                     (g)
             Cash and cash equivalents include cash in hand,
             deposits held at call with banks and other short-term
             highly liquid investments with original maturities of three
             months or less.

         (h) Designated funds and reserves                                 (h)
             Designated funds and reserves are set aside for
             specific purposes.

             The designated income and expenditure relating
             to these specific funds are directly dealt with in
             the statement of income and expenditure. Any net
             surpluses or deficits relating to these funds are
             transferred between the statement of income and
             expenditure and the respective specific funds.
                                                                                  30


Notes to the Financial Statements
(Expressed in Hong Kong dollars) (              )




    (i) Trade and other payables                                     (i)
        Trade and other payables are recognised initially at fair
        value and subsequently measured at amortised cost
        using the effective interest method.

    (j) Provisions and contingent liabilities                        (j)
        Provisions are recognised for liabilities of uncertain
        timing or amount when the Board has a legal or
        constructive obligation arising as a result of a past
        event, it is probable that an outflow of economic
        benefits will be required to settle the obligation and a
        reliable estimate can be made. Where the time value
        of money is material, provisions are stated at the
        present value of the expenditure expected to settle the
        obligation.

        Where it is not probable that an outflow of economic
        benefits will be required, or the amount cannot be
        estimated reliably, the obligation is disclosed as a
        contingent liability, unless the probability of outflow
        of economic benefits is remote. Possible obligations,
        whose existence will only be confirmed by the
        occurrence or non-occurrence of one or more future
        events are also disclosed as contingent liabilities unless
        the probability of outflow of economic benefits is
        remote.

    (k) Employee benefits                                            (k)
        (i)   Employee leave entitlements                                  (i)
              Employee entitlements to untaken annual leave
              are recognised when they accrue to employees.
              A provision is made for the estimated liability
              for untaken annual leave as a result of services
              rendered by employees up to the balance sheet
              date.

              Employee entitlements to sick leave and maternity
              or paternity leave are not recognised until the time
              of leave.

        (ii) Pension obligations                                           (ii)
             The Board operates a defined contribution plan
             and a mandatory provident fund scheme in Hong
             Kong. They are the pension plans under which the
             Board pays fixed contributions into the separate
             entities. The Board has no legal or constructive
             obligations to pay further contributions if the
             fund does not hold sufficient assets to pay all
             employees the benefits relating to employee
             service in the current and prior periods.

              The contributions are recognised as employee
              benefit expense when they are due and, for
              the defined contribution plan, are reduced by
              contributions forfeited by those employees
              who leave the plan prior to vesting fully in the
              contributions. Prepaid contributions are recognised
              as an asset to the extent that a cash refund or a
              reduction in the future payments is available.
31                                Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Notes to the Financial Statements
     (Expressed in Hong Kong dollars) (                      )




         (l) Revenue recognition                                                      (l)
             R e v e n u e i s m e a s u re d a t t h e f a i r v a l u e o f t h e
             consideration received or receivable. Levy income,
             penalty on late payments of levies and ex-gratia fund
             administration charge are recognised in the statement
             of income and expenditure when the Board becomes
             entitled to them and it is probable that they will be
             received.

             (i)    Interest income is recognised on a time-proportion                      (i)
                    basis using the effective interest method.

             (ii)   Dividend income from listed investments is                              (ii)
                    recognised when the share price of the investment
                    goes ex-dividend.

             (iii) Rental income receivable under operating leases is                       (iii)
                   recognised in statement of income and expenditure
                   in equal instalments over the periods covered by
                   the lease term, except where an alternative basis
                   is more representative of the pattern of benefits to
                   be derived from the use of the leased asset. Lease
                   incentives granted are recognised in statement
                   of income and expenditure as an integral part
                   of the aggregate net lease payments receivable.
                   Contingent rentals are recognised as income in the
                   accounting period in which they are earned.

             (iv) Other income is recognised on an accruals basis.                          (iv)

         (m) Compensation                                                             (m)
             Compensation payment is accounted for when it is
             incurred.

         (n) Leases                                                                   (n)
             (i)    Classification of assets leased to the Board                            (i)
                    Assets that are held by Board under leases which
                    transfer to the Board substantially all the risks and
                    rewards of ownership are classified as being held
                    under finance leases. Leases which do not transfer
                    substantially all the risks and rewards of ownership
                    to the Board are classified as operating leases.

             (ii) Assets acquired under finance leases                                      (ii)
                  Where the Board acquires the use of assets
                  under finance leases, the amounts representing
                  the fair value of the leased asset, or, if lower, the
                  present value of the minimum lease payments, of
                  such assets are included in fixed assets and the
                  corresponding liabilities, net of finance charges,
                  are recorded as obligations under finance leases.
                  Depreciation is provided at rates which write off
                  the cost of the assets over the term of the relevant                              [       2(c)
                  lease or, where it is likely the Board will obtain                                    ]   2(c)
                  ownership of the asset, the life of the asset, as set
                  out in note 2(c). Impairment losses are accounted
                  for in accordance with the accounting policy as
                  set out in note 2(c). Finance charges implicit in
                  the lease payments are charged to statement of
                  income and expenditure over the period of the
                  leases so as to produce an approximately constant
                  periodic rate of charge on the remaining balance
                  of the obligations for each accounting period.
                  Contingent rentals are charged to statement of
                  income and expenditure in the accounting period
                  in which they are incurred.
                                                                                                      32


Notes to the Financial Statements
(Expressed in Hong Kong dollars) (                        )




        (iii) Operating lease charges                                                         (iii)
              Where the Board has the use of other assets
              held under operating leases, payments made
              under the leases are charged to the statement
              of income and expenditure in equal instalments
              over the accounting periods covered by the lease
              term, except where an alternative basis is more
              representative of the pattern of benefits to be
              derived from the leased asset. Lease incentives
              received are recognised in statement of income
              and expenditure as an integral part of the
              aggregate net lease payments made. Contingent
              rentals are charged to the statement of income
              and expenditure in the accounting period in which
              they are incurred.

3 Financial risk management and fair                                                3
  values
    (a) Financial risk factors                                                          (a)
        The Board’s activities expose it to a variety of financial
        risks: foreign exchange risk, credit risk, liquidity
        risk, price risk and interest rate risk. The Board’s
        overall risk management programme focuses on
        the unpredictability of financial markets and seeks
        to minimise potential adverse effects on the Board’s
        financial performance.

        (i)   Foreign exchange risk                                                           (i)
              F o re i g n e x c h a n g e r i s k a r i s e s w h e n f u t u re
              transactions, recognised assets and liabilities
              are denominated in a currency that is not the
              Board’s functional currency. Given that the Board’s
              operation in Hong Kong is conducted purely in
              Hong Kong dollars, the Board members are of the
              opinion that the Board activities are not exposed to
              significant foreign exchange risk and accordingly,
              no sensitivity analysis is performed.

        (ii) Credit risk                                                                      (ii)
             The Board’s credit risk mainly arises from levy
             income receivables, liquid funds and held-to-maturity
             investments.

              The Board has policies in place for the control and
              monitoring its credit risk arises from uncollected
              levy income. The credit risk on liquid funds and
              held-to-maturity investments is limited because
              the counterparties are bank and corporations
              respectively with high credit rating assigned by
              international credit-rating agencies. Accordingly,
              the Board members are of the opinion that the
              Board’s activities are not exposed to significant
              credit risk.

              The maximum exposure to credit risk is represented
              by the carrying amount of each financial asset in the
              balance sheet.
33                               Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Notes to the Financial Statements
     (Expressed in Hong Kong dollars) (              )




             (iii) Liquidity risk                                                (iii)
                   Prudent liquidity risk management implies
                   maintaining sufficient cash. The Board, through
                   its Committee on Finance and Administration,
                   has adopted a prudent investment and treasury
                   strategy so as to ensure that it maintains sufficient
                   cash to meet its liquidity requirements.

                 The below table analyses the Board’s financial
                 liabilities, which include trade and other payables,
                 into relevant maturity groupings based on the
                 remaining period at the balance sheet date to the
                 contractual maturity date. The amounts disclosed
                 in the table are the contractual undiscounted cash
                 flows.

                                                                                                                   2010           2009
                                                                                                            (HK$       )   (HK$       )

                  Less than one year                                                                        1,120,428       414,926



             (iv) Price risk                                                     (iv)
                  The Board is exposed to equity securities price
                  risk because of the listed investments held. The
                  investment portfolio is managed by the Committee
                  on Finance and Administration of the Board
                  and in accordance with the Board’s investment
                  guidelines.

                 The Board’s equity investments are listed on the
                 Stock Exchange of Hong Kong.

                 At 31 December 2010, it is estimated that a                               2010   12   31
                 general increase/decrease of 1% in the market                                                         /     1%
                 price of available-for-sale financial assets would                                             $1,947,372 (2009
                 result in a fair value gain/loss of $1,947,372 (2009:                   $1,730,596)        /
                 $1,730,596) that is accounted for in accordance                           2(e)(ii)
                 with 2(e)(ii) to the financial statements.

             (v) Cash flow interest rate risk                                    (v)
                 The Board’s interest rate risk mainly arises from the
                 bank balances and is managed by the Committee
                 on Finance and Administration of the Board.

                 At 31 December 2010, it is estimated that a                               2010 12 31                               /
                 general increase/decrease of 1% in interest rates                         1%                                 /
                 would result in an increase or decrease in the                              $719,852 (2009      $684,440)
                 Board’s surplus by approximately $719,852 (2009:
                 $684,440).

         (b) Capital risk management                                       (b)
             The capital of the Board comprises its funds and
             reserves. The Board’s objective when managing capital
             is to safeguard the Board’s ability to continue as a
             going concern. The Board’s overall strategy remains
             unchanged from prior year.
                                                                                                                                               34


Notes to the Financial Statements
(Expressed in Hong Kong dollars) (               )




    (c) Fair value estimation                                              (c)
        (i)   Financial instruments carried at fair value                        (i)
              The financial instruments measured at fair value
              at the balance sheet date across the three levels                                                                 –
              of the fair value hierarchy defined in HKFRS 7,
              Financial Instruments: Disclosures, with the fair
              value of each financial instruments is categorised
              in its entirety based on the lowest level of input
              that is significant to that fair value measurement.
              The levels are defined as follows:

              –   Level 1 (highest level): fair values measured                         –                     (         )
                  using quoted prices (unadjusted) in active                                                                        (
                  markets for identical financial instruments                                        )

              –   Level 2: fair values measured using quoted                            –
                  prices in active markets for similar financial                                                                        (
                  instruments, or using valuation techniques
                  in which all significant inputs are directly or                                                               )
                  indirectly based on observable market data

              –   Level 3 (lowest level): fair values measured                          –                     (         )
                  using valuation techniques in which any                                       (
                  significant input is not based on observable                                                              )
                  market data

              At 31 December 2010, the only financial                                               2010      12   31
              instruments of the Board carried at fair value
              were available-for-sale equity securities of                                                         $194,737,221 2009
              $194,737,221 (2009: $173,059,635) listed on                               $173,059,635
              the Stock Exchange of Hong Kong (see note 8).                             (      8)
              These instruments fall into Level 1 of the fair value
              hierarchy described above.

              During the year, there were no significant transfers
              between instruments in Level 1 and Level 2.

        (ii) Fair value of financial instruments carried at                      (ii)
             other than fair value
             All financial instruments, except the held-to-
             maturity financial assets, are carried at amounts                                                              2010        2009
             not materially different from their fair values as at                          12           31
             31 December 2010 and 2009. The fair value of the
             held-to-maturity financial assets is set out in note 7.                        7

4 Critical accounting estimates and                                    4
  judgements
    Estimates and judgements are continually evaluated and
    are based on historical experience and other factors,
    including expectations of future events that are believed to
    be reasonable under the circumstances.

    The Board makes estimates and assumptions concerning
    the future. The resulting accounting estimates will, by
    definition, seldom equal the related actual results. The
    estimates and assumptions that have a significant risk of
    causing a material adjustment to the carrying amounts
    of assets and liabilities within the next financial year are
    discussed below.
35                                Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Notes to the Financial Statements
     (Expressed in Hong Kong dollars) (             )




         (a) Held-to-maturity investments                                             (a)
             The Board follows the guidance of HKAS 39, Financial                                                               39      –
             Instruments: Recognition and Measurement on
             classifying non-derivative financial assets with fixed
             or determinable payments and fixed maturity as
             held-to-maturity. This classification requires significant
             judgement. In making this judgement, the Board
             evaluates its intention and ability to hold such
             investments to maturity.

             If the Board fails to keep these investments to maturity
             other than for specific circumstances explained in                                                            39
             HKAS 39, it will be required to reclassify the whole
             class as available-for-sale financial assets. The
             investments would therefore be measured at fair value
             instead of amortised cost.

         (b) Impairment of held-to-maturity financial                                 (b)
             assets and available-for-sale financial assets
             The Board follows the guidance of HKAS 39 on                                                                       39
             determining when an investment is other-than-
             temporarily impaired. This determination requires
             significant judgment. In making this judgement, the
             Board evaluates, among other factors, the duration and
             extent to which the fair value of an investment is less
             than its cost; and the financial health of and near-term
             business outlook for the investee, including factors
             such as industry and sector performance, changes in
             technology and operational and financing cash flows.

     5 Property, plant and equipment                                              5
                                                                                             Properties   Leasehold land                Total

                                                                                            (HK$      )       (HK$     )         (HK$       )

         Cost :
         At 1 January 2010                         2010   1    1                             7,500,000        3,100,000         10,600,000
         Additions                                                                          17,052,690        6,855,332         23,908,022

         At 31 December 2010                       2010   12       31                       24,552,690        9,955,332         34,508,022

         Accumulated depreciation:
         At 1 January 2010                         2010   1    1                             2,700,000           63,918          2,763,918
         Charge for the year                                                                   311,688            7,330            319,018

         At 31 December 2010                       2010   12       31                        3,011,688           71,248          3,082,936

         Net book value:
         At 31 December 2010                       2010   12       31                       21,541,002        9,884,084         31,425,086

         Cost :
         At 1 January and 31 December 2009         2009   1    1        12   31              7,500,000        3,100,000         10,600,000

         Accumulated depreciation:
         At 1 January 2009                         2009   1    1                             2,550,000           60,367          2,610,367
         Charge for the year                                                                   150,000            3,551            153,551

         At 31 December 2009                       2009   12       31                        2,700,000           63,918          2,763,918

         Net book value:
         At 31 December 2009                       2009   12       31                        4,800,000        3,036,082          7,836,082



         The properties are situated in Hong Kong and are held
         under long term leases.
                                                                                                                                                                                 36


Notes to the Financial Statements
(Expressed in Hong Kong dollars) (                   )




6 Financial instruments by category                                                             6
    The Board’s financial instruments include the following:

                                                                                                    Receivables                 Held to-       Available-               Total
                                                                                                                                maturity         for-sale
                                                                                                                                financial       financial
                                                                                                                                  assets          assets


                                                                                                     (HK$        )           (HK$       )     (HK$       )       (HK$        )

    Assets as per balance sheet

    At 31 December 2010                            2010       12   31

    Held-to-maturity financial assets (note 7)                                  (          7)                 –           1,020,654,538               –       1,020,654,538
    Available-for-sale financial assets (note 8)                            (         8)                      –                       –     194,737,221         194,737,221
    Accounts receivable (note 9)                          (        9)                                20,341,268                       –               –          20,341,268
    Interest receivables                                                                             11,484,322                       –               –          11,484,322
    Deposits                                                                                             77,932                       –               –              77,932
    Cash and cash equivalents (note 10)                                 (           10)              71,985,227                       –               –          71,985,227

    Total                                                                                           103,888,749           1,020,654,538     194,737,221       1,319,280,508


    At 31 December 2009                            2009       12    31

    Held-to-maturity financial assets (note 7)                                  (          7)                 –            955,748,958                –        955,748,958
    Available-for-sale financial assets (note 8)                            (         8)                      –                      –      173,059,635        173,059,635
    Accounts receivable (note 9)                          (        9)                                         –                      –                –                  –
    Interest receivables                                                                             10,923,613                      –                –         10,923,613
    Deposits                                                                                             27,680                      –                –             27,680
    Cash and cash equivalents (note 10)                                 (           10)              68,443,971                      –                –         68,443,971

    Total                                                                                            79,395,264            955,748,958      173,059,635       1,208,203,857



    All of the receivables are expected to be recovered within
    one year.

                                                                                                                                                                      Other
                                                                                                                                                                   financial
                                                                                                                                                                   liabilities
    Liabilities payable within
    one year as per balance sheet
                                                                                                                                                                 (HK$        )

    At 31 December 2010                                                                                 2010         12    31

    Trade and other payables                                                                                                                                     1,120,428


    At 31 December 2009                                                                                 2009         12    31

    Trade and other payables                                                                                                                                       414,926




7 Held-to-maturity financial assets                                                             7
                                                                                                                                                      2010              2009
                                                                                                                                               (HK$       )      (HK$       )

    Certificates of deposits, at nominal value                                                                                              1,021,000,000      956,000,000
    Less: Unamortised discounts                                                                                                                  (345,462)        (251,042)

    At amortised cost                                                                                                                       1,020,654,538       955,748,958
    Less: To be matured within twelve months                                                                12                               (221,244,918)     (154,989,628)

    Matured after twelve months                                                                       12                                     799,409,620       800,759,330
37                                         Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Notes to the Financial Statements
     (Expressed in Hong Kong dollars) (                    )




         Certificates of deposits are with fixed interest rates ranging                                        2.0% 6.7% (2009 2.0%
         from 2.0% to 6.7% (2009: 2.0% to 8.0%) per annum and                       8.0%)                       2011 1     2021 3
         maturity dates between January 2011 to March 2021 (2009:                (2009 2010               1    2021 3 )
         January 2010 to March 2021).

         There is no provision for impairment of held-to-maturity                2010              2009
         financial assets in 2010 and 2009.

         There were no gains or losses realised on the disposals of
         held-to-maturity financial assets in 2010 and 2009, as all                       2010        2009
         financial assets were disposed of at their redemption date.

         At 31 December 2010, the fair value of held-to-maturity                     2010            12   31
         financial assets based on quoted market bid prices was
         $1,037,232,468 (2009: $977,453,551).                                    $1,037,232,468 (2009            $977,453,551)

         All held-to-maturity financial assets are denominated in
         Hong Kong dollars.

     8 Available-for-sale financial assets                                   8
                                                                                                                          2010            2009
                                                                                                                   (HK$       )    (HK$       )

         Listed securities at fair value
         – in Hong Kong                                                          –                               194,737,221      173,059,635



         All available-for-sale financial assets are denominated in
         Hong Kong dollars.

     9 Accounts receivable                                                   9
                                                                                                                          2010            2009
                                                                                                                   (HK$       )    (HK$       )

         Accounts receivable                                                                                      20,603,500                 –
         Less: allowance for doubtful debts                                                                         (262,232)                –

                                                                                                                  20,341,268                 –



         Impairment of accounts receivable
         The movement in the allowance for doubtful debts during
         the year, including both specific and collective loss
         components, is as follows:

                                                                                                                          2010            2009
                                                                                                                   (HK$       )    (HK$       )

         At 1 January                                                                1    1                               –                  –
         Impairment loss recognised                                                                                 262,232                  –

         At 31 December                                                              12       31                    262,232                  –
                                                                                                                                                38


Notes to the Financial Statements
(Expressed in Hong Kong dollars) (                )




    At 31 December 2010, the Board’s accounts receivable                    2010 12 31
    of $371,046 (2009: $Nil) were individually determined                 $371,046 (2009          )
    to be impaired. The individually impaired receivables
    related to contractors that were in financial difficulties
    and management assessed that only a portion of the                                       $262,232 (2009                  )
    receivables is expected to be recovered. Consequently,
    specific allowances for doubtful debts of $262,232 (2009:
    $Nil) were recognised. The Board does not hold any
    collateral over these balances.

    The ageing analysis of accounts receivable that are neither
    individually nor collectively considered to be impaired are as
    follows:

                                                                                                                2010                    2009
                                                                                                         (HK$       )            (HK$       )

    Neither past due nor impaired                                                                        19,705,103                        –

    Less than 1 month past due                                                       1                        121,995                      –
    1 to 3 months past due                                                   1    3                           245,093                      –
    4 to 12 months past due                                                  4    12                           70,406                      –
    More than 12 months past due                                                  12                           89,857                      –

                                                                                                              527,351                      –


                                                                                                         20,232,454                        –



    Receivables that were neither past due nor impaired relate
    to a wide range of contractors for whom there was no
    recent history of default.

    Receivables that were past due but not impaired relate to
    a number of independent contractors that have a good
    track record with the Board. Based on past experience,
    management believes that no impairment allowance is
    necessary in respect of these balances as there has not
    been a significant change in credit quality and the balances
    are still considered fully recoverable. The Board does not
    hold any collateral over these balances.

    The Board’s credit policy is set out in note 3(a)(ii).                                                        3(a)(ii)

10 Cash and cash equivalents                                         10
                                                                                                                2010                    2009
                                                                                                         (HK$       )            (HK$       )

    Cash at banks and in hand                                                                            20,933,937           8,442,840
    Short-term bank deposits                                                                             51,051,290          60,001,131

                                                                                                         71,985,227          68,443,971



    At 31 December 2010, the effective interest rate on                     2010       12 31
    short-term bank deposits was 0.8% (2009: 0.2%) and                               0.8% (2009       0.2%)              32
    these deposits had an average maturity of 32 days                     (2009     63 )
    (2009: 63 days).
39                                   Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Notes to the Financial Statements
     (Expressed in Hong Kong dollars) (                            )




     11 Funds and reserves                                                                      11
         Nature and purpose of funds and reserves

         (a) Research fund                                                                           (a)
             A research fund has been set aside to finance ongoing
             research projects.

         (b) Education and publicity fund                                                            (b)
             An education and publicity fund has been set aside
             to finance education and publicity programs aiming
             at reminding workers and their families on the
             occupational hazard, and to stress the importance of
             prevention.

         (c) Rehabilitation fund                                                                     (c)
             A rehabilitation fund has been set aside to finance
             re h a b i l i t a t i o n p ro g r a m s w h i c h p ro v i d e h o l i s t i c
             rehabilitation care to the patients.

         (d) Computer systems fund                                                                   (d)
             A computer systems fund has been set aside to
             finance the development of new systems.

         (e) General reserve                                                                         (e)
             A general reserve has been set aside for the common
             law claims to be borne by the Board.

         (f) Capital reserve                                                                         (f)
             A capital reserve has been set aside to finance the
             acquisition of the property, plant and equipment and
             depreciation charged is compensated by a transfer
             from this reserve each year.

         (g) Investment reserve                                                                      (g)
             Investment reserve represents the accumulated fair
             value gain or loss on available-for-sale financial assets.

     12 Provision for long service payment                                                      12
         Long service payment is provided basing on the number
         of employees who have completed the required number
         of years of service with the Board as at the balance sheet
         date under the Hong Kong Employment Ordinance and are
         eligible for long service payments upon termination of their
         employment pursuant to the regulations of the Ordinance.
                                                                                                                                              40


Notes to the Financial Statements
(Expressed in Hong Kong dollars) (              )




13 Levy income                                                   13
                                                                                                                   2010            2009
                                                                                                            (HK$       )    (HK$       )

    Private sector                                                                                     124,494,757         116,925,253
    Public works sector                                                                                 97,832,105          72,636,319
    Mass Transit Railway                                                                                12,596,542           2,172,963
    Quarry Industry                                                                                        241,973             604,290
    Port and Airport Development Scheme                                                                  1,707,950           3,624,495

                                                                                                       236,873,327         195,963,320



    In accordance with the provision of Section 35 in                                                                       (         )
    Part VII and schedule 5 of the amended Pneumoconiosis                 VII        35                 5
    and Mesothelioma (Compensation) Ordinance, the current
    levy rate is 0.25% (2009: 0.25%) on the value of (a) all          $1,000,000
    construction operations exceeding $1,000,000 undertaken                                            0.25% (2009          0.25%)
    in Hong Kong and the tender for which has been submitted                              2000     6     18
    on or after 18 June 2000 and (b) on all quarrying products
    produced in Hong Kong with effect from 18 June 2000.

14 Employee benefit expenses                                     14
                                                                                                                   2010            2009
                                                                                                            (HK$       )    (HK$       )

    Wages and salaries                                                                                      5,045,919        4,912,042
    Staff medical insurance                                                                                    72,837             (859)
    Staff compensation insurance                                                                                2,796            2,759
    Pension costs – defined contribution plan                                   –                             399,229          374,688

    Pension costs – mandatory provident fund                                    –                                59,657           54,873
    Provision for unutilised annual leave                                                                       460,000                –

                                                                                                            6,040,438        5,343,503



    None of the board members, who are considered as key
    management of the Board, received or will receive fees or
    other emoluments in respect of their services to the Board                             (2009            )
    during the year (2009: Nil).

15 Administrative expenses                                       15
    Expenses included in the administrative expenses are
    analysed as follows:

                                                                                                                   2010            2009
                                                                                                            (HK$       )    (HK$       )

    Impairment loss for accounts receivable                                                                     262,232                   –
    Auditor’s remuneration
    – current year                                                    –                                         148,838          141,750
    – under-provision in prior year                                   –                                           6,300           33,078
    Operating lease rentals – office premises                                        –                           87,000           84,000



16 Medical examination fees                                      16
    Medical examination fees represent fees paid and payable                                                                 (        )
    to the Government of the Hong Kong Special Administrative             23        23A
    Region in respect of medical examinations conducted by
    Pneumoconiosis Medical Board under Sections 23 and 23A
    of the Pneumoconiosis and Mesothelioma (Compensation)
    Ordinance.
41                                   Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Notes to the Financial Statements
     (Expressed in Hong Kong dollars) (              )




     17 Taxation                                                       17
         The Board is exempted from taxation under the provision of                                  88
         Section 88 of the Inland Revenue Ordinance.

     18 Contingent liabilities                                         18
         The Board is contingently liable for compensations payable                                  73       (2009    73         )
         on 73 (2009: 73) re-assessment applications under the
         Pneumoconiosis and Mesothelioma (Compensation)
         Ordinance which has not yet been determined by the
         Pneumoconiosis Medical Board.

     19 Commitments                                                    19
         (a) Capital commitments outstanding at 31 December                 (a)   2010   12   31
             2010 not provided for in the financial statements were
             as follows:

                                                                                                           2010           2009
                                                                                                    (HK$       )   (HK$       )

              Contracted for                                                                                  –       505,000



         (b) As at 31 December 2010, the future aggregate                   (b)   2009   12   31
             minimum lease payments under non-cancellable
             operating leases in respect of office premises and the
             office copier, are as follows:

                                                                                                           2010           2009
                                                                                                    (HK$       )   (HK$       )

              Within one year                                                                         114,228         105,228
              After one year but within five years                                                    109,416         151,644

                                                                                                      223,644         256,872




     20 Comparative figures                                            20
         As a result of the application of the amendment to
         HKAS 17, Leases, certain comparative figures have been
         reclassified to conform to current year’s presentation.                                   2(a)(i)
         Further details of this development are disclosed in note
         2(a)(i).
                                                                                                                              42


Appendix I



Number of Assessed New Cases in the Last Ten Years



                                                                                                      Percentage of cases
                                                                                                       having employment
                                                                                                              record in the
                                                                                                      construction/quarry
                                                                                                                  industry
 Year                                                    Number of cases


 2001                                  122                                 9 131                                        89


 2002                                 110                           9 119                                               93


 2003                       74                 6 80                                                                     86


 2004                   69                   4 73                                                                       92


 2005                   68                  2 70                                                                        89
                                                                                    Total
 2006                             109                              7 116            909 (50) [28]                       90


 2007                  67                   2 69                                                                        94


 2008              65                       51 71                                                                       90

 2009                            86                      5 15     106                                                   80

 2010                   61             1 12 74                                                                          82

        0     20            40        60           80       100     120       140                   Average             88

     Silicosis cases                                    Asbestosis cases                     Mesothelioma cases




Note: Figure in parentheses ( ) represent numbers of Asbestosis cases and figures in brackets [ ] represent numbers of
      Mesothelioma case included in total.
      ()                                                    []
43                               Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Appendix II



     Analysis of Pneumoconiosis and Mesothelioma Cases Newly Assessed in 2010

     Table 1 Age/Average Degree of Incapacity Analysis
                /
     Age group      Number of case(s)        Average age        Average degree of
                                                                   incapacity (%)*

                                                                                 *
     30 – 39                 1      [1]                30                      10

     40 – 49                 3      [1]                47                      40

     50 – 59               21                          56                       8

     60 – 69               24       [1]                64                      12

     70 – 79               16 (1) [4]                  74                      19      30 – 39                              1
                                                                                       40 – 49                              3
                                                                                       50 – 59                             21
     80 and above            9      [5]                82                      23
                                                                                       60 – 69                             24
                                                                                       70 – 79                             16
                                                                                       80 and above                         9
     Total                 74* (1) [12]                65                      14


     * Total number has included 8 fatal cases, the degree of incapacity of whom
       has not been determined.
     *          8



     Table 2 Patients' Employment Status at Time of First Registration



      Category of occupation/occupation        Number of cases         Percentage
               /
      General work in construction site              12                     16.22

      Other non-dusty industries                       8     [1]            10.81

      Unemployed/retired                             54 (1) [11]            72.97
         /

      Total                                          74 (1) [12]              100

                                                                                       General work in construction site   12
     Note (Tables 1 & 2):
     Figures in parentheses ( ) represent numbers of Asbestosis cases and figures in   Other non-dusty industries           8
     brackets [ ] represent number of Mesothelioma cases included in the total.
                                                                                       Unemployed/retired                  54
        (             )
     ()                                                     []
                                                                                                                          44


Appendix II



Table 3 Employment History of Pneumoconiosis and Mesothelioma Cases Assessed in 2010



                                                             Length of employment


Industry                                             Below 10 years          10 years or above                 Total


Construction only
                                                              0                     16                   16
Construction & Quarry
                                                              0                      3                     3
Construction, Quarry and others
                                                              6 [3]                 36 (1) [2]           42 (1) [5]
Sub-total
                                                              6 [3]                 55 (1) [2]           61 (1) [5]


Other industries
Ship manufacturing / sailoring
        /                                                     0                      5     [5]             5        [5]
Jade / gem stone polishing
     /                                                        0                      3                     3
Electrical appliance manufacturing
                                                              0                      1                     1
Tombstone work
                                                              0                      1                     1
Others
                                                              1 [1]                  2     [1]             3        [2]
Sub-total
                                                              1 [1]                 12     [6]           13         [7]

Total
                                                              7 [4]                 67 (1) [8]           74 (1) [12]


Notes:
- Figures in parentheses ( ) represent number of Asbestosis cases and figures in brackets [ ] represent number of
  Mesothelioma cases included in the total.
- Among the 74 cases under study, 61 (82.4%) have worked in the construction and / or the quarry industries. Only
  13 (17.6%) have had employment connection with neither.

- ()                                                 []
-        74             61   (82.4%)           /                  13   (17.6%)

Data source: Report on a Survey of Employment History of Pneumoconiosis Cases Assessed in 2010 under the
             Pneumoconiosis and Mesotheloima (Compensation) Ordinance (2011), Labour Department, HKSAR.
45                              Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Appendix III



     Analysis of Payments Made Under the Pneumoconiosis and Mesothelioma
     (Compensation) Ordinance
                         (   )
     Table 1 Analysis of Latest Payments Made to the "Old Case"*
             Pneumoconiosis Patients
                            *


         Degree of incapacity   Number      Total amount of   Average compensation
         assessed in latest     of cases   monthly payment       payment per month
         assessment/                                                      per case
         re-assessment (%)


                                                HK$                     HK$
           5 – 20                   324          1,069,550                    3,301
         25 – 40                    116            576,290                    4,968
         45 – 60                     45            288,620                    6,414
         65 – 80                     20            191,400                    9,570
                                                                                       5   – 20    %    324
         85 – 100                     8            108,580                 13,573
                                                                                      25   – 40    %    116
                                                                                      45   – 60    %     45
         Total                                                                        65   – 80    %     20
                                    513          2,234,440                    4,356   85   – 100   %      8

     In addition, Compensation for Constant Attention is payable to 4 cases at
     $4,160 per month.
               4
     * “Old case” includes those patients who have received a lump-sum
       compensation before the ordinance amended in 1993.
     *           1993

     Table 2 Analysis of Latest Payments Made to the "New Case"
             Pneumoconiosis and Mesothelioma Patients
                            #


         Degree of incapacity   Number      Total amount of   Average compensation
         assessed in latest     of cases   monthly payment       payment per month
         assessment/                                                      per case
         re-assessment (%)


                                                HK$                     HK$
           5 – 20                 1,046          5,079,930                    4,857
         25 – 40                    150          1,307,700                    8,718
         45 – 60                     59            724,100                 12,273
         65 – 80                     21            332,800                 15,848
                                                                                       5   – 20    %   1,046
         85 – 100                     5            100,780                 20,156     25   – 40    %     150
                                                                                      45   – 60    %      59
         Total                                                                        65   – 80    %      21
                                  1,281          7,545,310                    5,890   85   – 100   %       5


     In addition, Compensation for Constant Attention is payable to 2 cases at
     $4,160 per case per month.
               2
     #
          “New case” includes those patients who have not received any lump-sum
          compensation before.
     #
                                                                                                         46


Appendix III



Table 3 Summary of Compensation Paid Out Under the Pneumoconiosis and Mesothelioma
        (Compensation) Ordinance
                         (    )

Compensation item                                  Expenses                 Expenses    Total expenses
                                               incurred from            incurred from    incurred from
                                      1 Jan to 31 Dec 2010     1 Jan to 31 Dec 2009      9 Jul 1993 to
                                                                                          31 Dec 2010



                                                 HK$                      HK$              HK$
Compensation for death                          18,086,402               17,546,741      325,746,095
resulting from Pneumoconiosis
or Mesothelioma (or both)


Compensation for bereavement                       991,667                  893,750         9,666,447

Monthly compensation                           119,503,600              123,888,404     2,072,712,592
for incapacity

Compensation for incapacity                      1,462,390                2,170,380        33,048,938
prior to date of diagnosis

Compensation for constant attention                259,628                  263,109        13,852,898

Funeral expenses                                 2,825,316                2,408,219        30,646,611

Medical expenses                                 1,870,469                1,622,033        19,014,833

Expenses for medical appliances                    851,736                1,022,230        14,271,195


Total                                          145,851,208              149,814,866     2,518,959,609
47                            Pneumoconiosis Compensation Fund Board 2010 Annual Report


     Appendix IV



     Profile of All Cases Receiving Compensation as at 31 December 2010


     Table 1 Profile of the "Old Case" Pneumoconiosis Patients



     Age group       Number of cases         Average age          Average degree
                                                                 of incapacity (%)


     50 – 59
                                   36                  57                      34
     60 – 69
                                 165                   65                      25
     70 – 79
                                 210                   74                      24
     80 and above
                                 102                   84                      18
                                                                                       50 – 59         36
                                                                                       60 – 69        165
     Total                                                                             70 – 79        210
                                 513                   72                      24      80 and above   102



     Table 2 Profile of the "New Case" Pneumoconiosis and
             Mesothelioma Patients



     Age group      Number of case(s)        Average age          Average degree
                                                                 of incapacity (%)


     30 – 39
                             1     [1]                 30                      10
     40 – 49
                             6                         47                      28
     50 – 59
                           384 (1) [1]                 55                      15
     60 – 69
                           411                         64                      16
     70 – 79
                           469 (2) [1]                 74                      16
     80 and above
                            10 (1) [2]                 84                      14      30 – 39          1
                                                                                       40 – 49          6
                                                                                       50 – 59        384
     Total                                                                             60 – 69        411
                         1,281 (4) [5]                 66                      15      70 – 79        469
                                                                                       80 and above    10
     Note:
     Figures in parentheses ( ) represent numbers of Asbestosis cases and figures in
     brackets represent number of Mesothelioma cases included in the total.

     ()                                                     []
                                                                                                                    48


Appendix V



Five-Year Financial Summary

                                           2010          2009            2008             2007            2006
                                                                                                      (HK$’000)

Income

Levies
                                        236,873       195,963         176,647          144,675         140,583
Interest
                                         38,942        43,619          47,603           46,679           42,258
Others
                                          7,276*       10,651            6,692          19,961            6,111
Total income
                                        283,091       250,233         230,942          211,315         188,952

Expenditure

Compensation
                                        145,851       149,815         139,866          148,749         157,944
Project expenses
                                         10,469         8,984            9,071           7,936            7,640
Staff, administrative
and other expenses
                                         13,130        14,700          13,259           11,755           12,298
Amortisation of prepaid
operating lease payments                      –-            4                4                4               4

Depreciation on property, plant
and equipment
                                            319           150             150              150              150
Other expenditure
                                            443             –                –                –               –
Total expenditure
                                        170,212       173,653         162,350          168,594         178,036

Surplus for the year
                                        112,879        76,580          68,592           42,721           10,916
Transfer (to) / from capital reserve
(     )            /                     (23,589)         154             154              154             (665)
Accumulated fund brought forward
                                       1,042,211      976,887         908,990          866,599         857,407
                                       1,131,501    1,053,621         977,736          909,474         867,658
Transfer to project funds
                                         (11,100)     (20,394)          (9,920)          (8,420)         (8,700)
Transfer from project funds
to offset project expenses
                                         10,469         8,984            9,071           7,936            7,641
Accumulated fund carried forward
                                       1,130,870    1,042,211         976,887          908,990         866,599


* Others include dividend income from listed securities $6,176,244, Ex-gratia fund administration charge received
  $310,782, penalty on late payments of levies $341,706, rental income $360,948 and sundry income $86,411.
*                                     $6,176,244                                  $310,782
      $341,706              $360,948              $86,411
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