Last year, the global economic growth slowed down generally and the European debt crisis became the must have reason or excuse for every market fluctuation. The market remained generally conservative on the economic outlook. Stepping into 2012, apart from a change of the economic environment, countries are also facing a significant change in the political climate. This is a year of global elections. Subsequent to the Taiwan presidential election early this year, new presidents will be elected in European countries such as Russia and France and the United States ("U.S."). China, which is closely related to the Hong Kong people, and Hong Kong are also undergoing changes in leadership. Other than the economic factor, the global political landscape, which is going to change more or less, will be another uncertain factor to the changes in global financial market in the future.

During several media interviews early this year, I was asked to predict the economic atmosphere this year. My conclusion was: "Prudent but not optimistic." As an operator of a company, I should have avoided being pessimistic and sending out warning signals, especially when the market confidence has recovered slightly during the small rebound of the overall economy, stock market and property market in the first quarter. However, after experiencing the drastic changes and the widespread financial market turmoil in recent years, I realise that the gap between "not happening" and "not yet happen" may be very narrow. Moreover, taking precautionary measures and risk management is the essence of our industry. We are just being responsible to remain vigilant and prudent.

Exploring Overseas Market Progressively
While being prudent, Convoy is not self-complacent. During the previous year, we closely monitored market developments and made quick responses. Following the regional expansion strategy formulated last year, the Group has commenced operations in Beijing, Shenzhen and Macau and set up the first wealth management centre in Beijing. However, this is still at the investment stage. We will work hard in our overseas operations and expect to reap the fruits in a few years. Meanwhile, the Group is also exploring opportunities to expand its operations into the other parts of Asia. During the reporting period, the Group filed an application and obtained approval in respect of the listing of depositary receipts in Taiwan. However, management finally decided to terminate the listing in light of the uncertain market conditions for the benefit of the shareholders. We also entered into a conditional offer with IPP, the largest IFA company in Singapore. However, as it was expected that the conditions precedent to the completion of the sale and purchase agreement would not be fulfilled by the deadline, the sale and purchase agreement is expected to be terminated. In spite of that, the Group is still determined in pursuing its regional expansion plan. This will continue to be one of the major development directions of the Group in the future. We will pay attention to the circumstances and take appropriate action in due course.

Exploring Overseas Market Progressively
In terms of local market development, the Group is facing two huge opportunities and challenges this year. The MPF Portability Scheme, which will be launched in November 2012, is definitely a piece of good news to the more than 2.5 million employees in Hong Kong. Employees will be able to choose the MPF schemes which suit their needs for their own contributions. This will help to increase market competition. In anticipation of this, many MPF providers have reacted in advance by lowering their administrative charges, thus proving the saying that "whoever can choose is the boss". In fact, the introduction of the competition law, the regulation of the sales of first-hand properties and even the promotion of universal election to protect the basic rights of citizens are all built on the same foundation.

Views still vary on the details on how the new MPF measure should be implemented. I hope that the Government and regulators can communicate with the industry proactively and listen to their views in order to avoid the disadvantages of staying behind closed doors. The Group also understands that customers will surely have a lot of queries and concerns over the new measure. We will facilitate customers' understanding of the new measure through communication between our consultant team and customers and organising talks or workshops. Meanwhile, we will also strengthen our internal training to fully equip all levels of our staff for this new market opportunity.

Supporting the Enhancement of the Regulation of the Industry
The success of an enterprise lies in the confidence and satisfaction of its customers. Therefore, the Group has always taken the initiative to provide protective terms to our customers for the benefit of our customers in compliance with the regulations. With the increasing demand of citizens towards the professional level of insurance and investment advisory and the establishment of the Insurance Authority in full speed, the Group sincerely hopes that the future regulation can enhance the overall level of the industry, increase transparency by formulating a set of uniform practising standards for the industry, optimise the current business environment and increase the confidence of customers in the industry. Besides, with the much divided views in the industry on the implementation of the commission disclosure proposal, we hope that the Hong Kong Commissioner of Insurance can lead the industry to reach a consensus on this measure as soon as possible. We would like to reiterate that, as long as the regulator can finalise on a uniform disclosure mechanism, we will definitely support and comply with the system. After all, the Hong Kong people have already been tired of the differential treatment between close and distant relationships and bullying and unfair practices.

Maintaining High Level of Corporate Governance
Maintaining a high level of corporate governance has always been an important part of our operations. Last year, the Board established a corporate governance committee (the "Corporate Governance Committee") in place of the original compliance committee, with effect from 1 January 2012. The Board has appointed Dr. Wu Ka Chee, Davy, an independent non-executive Director, as the chairman of the Corporate Governance Committee and Mrs. Fu Kwong Wing Ting, Francine, Ms. Fong Sut Sam and Mr. Mak Kwong Yiu as members of the Corporate Governance Committee. Dr. Wu Ka Chee, Davy, is currently a senior lecturer of the Department of Accountancy and Law at the Hong Kong Baptist University and is a co-author of the Guide to Corporate Governance for Subvented Organisations, which was published by the Hong Kong Government in May 2010. He is familiar with the provisions of corporate governance and is an expert in this field. The Corporate Governance Committee is established for the purpose of developing and reviewing the Group's policies and practices on corporate governance and making recommendations to the Board; and reviewing and monitoring the Company's policies and practices on compliance with legal and regulatory requirements to ensure good corporate governance and outstanding management of the Group. To be honest, the rule of governance is all about balance and legal backing. If there is only a set of so-called "self-binding" rules that cannot be examined by the external parties other than by the ruler himself, no matter how "compliant" the ruler has been, he cannot excuse himself from the accusation of "regulatory deficiency".

Market Outlook
Looking ahead, the management remains prudent and observant towards the economic development. With the European debt crisis being mitigated temporarily, the global economy may still be able to achieve a moderate growth. At the same time, in view of the improvement in the U.S. economy and the different measures adopted by different countries, particularly the further money-easing policy of the central banks in the U.S. and Eurozone, the excess capital will be able to create a seemingly good global economy. Nevertheless, under the surface, the deeprooted problems that have been nagging Hong Kong have not been solved. It is just that nobody wants to or dares to (because of political considerations) propose any strong measures to relieve the problem.

In respect of Mainland China and Hong Kong, despite the continuous slowdown in growth in China, the monetary base has been eased in recent months. It is expected that the decline in inflation will create more space for the PRC Government to further relax its monetary policy. But what concerns me more is the unprecedented tolerance of the internet network in China to certain sensitive terms recently. Allowing freedom while "maintaining stability" is a path that every country has to go through before achieving real prosperity and strength. Hence, the Group is very optimistic to the prospect of China in the long run and will actively expand its operations in important cities and develop new service types in response to market demand by following the strategic expansion strategy.

The political environment in Hong Kong has started a new page as the Fourth Term Chief Executive (CE) Election came to an end under controversy. The CE-elect reiterated that his vision for governance in the future is "prudent adjustments and change while preserving stability", which is also suitable to describe our operational strategies. Although the SAR Government is changing, Hong Kong's role as a major offshore Renminbi centre and regional financial hub will remain unchanged. Situated in a favourable location, Hong Kong can fully capitalise on the growth potential arising from the economic interaction between the emerging markets in Asia. In the long run, we are still confident in the Hong Kong economy and in the development prospect of the Group.

This is our second annual report subsequent to our Listing. As I said on the Listing Date, every task conducted and every decision made by the Group after Listing must be open to the public and our investors, employees and customers. I hope you can comment positively on this result announcement. But what's more important is your unfailing support and advice, which are essential for us to constantly improve ourselves and move forward.

Last but not least, on behalf of the Board, I would like to thank all of our business partners, customers and the public shareholders for their enduring support to Convoy and our colleagues for their dedication and contribution during the past year. Here and now, our Chief Executive Officer, Ms. Fong Sut Sam, will provide a detailed report on the business overview for the past year and the future development of the Company. A citizen measures the performance of the CE by "listening to what he says and observing what he does". Similarly, reading the report and providing opinion are also the best ways for stakeholders to supervise our performance. Therefore, I hope that you can read this report carefully.
 

Mr. Wong Lee Man, Quincy
Chairman
Hong Kong, 28 March 2012