Corporate Social Responsibility Programmer k e y • F r a n c e • I t a l y • ... s • I r e l...

to Make a Difference1 Ways

Corporate Social Responsibility Programme

The A.S. WatsonA.S. Watson is a major international retail and manufacturing group headquartered in Hong Kong, and is a member of the

Hutchison Whampoa Group.

Today, A.S. Watson operates more than 7,200 stores worldwide under 18 retail brands in 36 markets selling a wide spectrum

of goods, ranging from luxury perfumeries and cosmetics, health and beauty products to food, electronics and fine wine. We

are also a producer of beverages, including bottled water, fruit juices, soft drinks and tea. Our 90,000 staff throughout Asia

and Europe make up the A.S. Watson family, carrying on a proud tradition for service that dates back to 1828.

As our businesses continue to grow, we are guided by the principles of good corporate citizenship, and are determined to

make the world a better place not only through the services we provide, but also through socially focused actions.

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Corporate Social Responsiblilty02

This is A.S. Watson’s first brochure on Corporate Social Responsibility, and it features some of the programmes

we are involved in around the world. Our aim is to show you how we, as an international group, value and

provide opportunities to our staff, are helping to improve the communities we serve in more than 36 markets,

while at the same time seeking to mitigate the environmental impact of what we do.

About thisBrochure

Message from the

published in April 2006

Group Managing DirectorAs an international group with diverse operations, we recognise the responsibility we have,

not only to our customers, but also to our staff and the wider communities in which we have

a presence. Growing from this, our business goal is to grow the company in a socially, ethically

and environmentally responsible manner.

With this in mind, and as a reflection of the importance we place upon this responsibility within

the A.S. Watson Family, we have produced this brochure, which highlights some of the wide-

ranging activities under our Corporate Social Responsibility (CSR) Programme.

This brochure opens a new chapter in the Programme. Group Office sets the standards and

the overall focus, but the success of our CSR Programme counts on the support and leadership

of each individual CEO and Country Manager. For we need the concerted effort of every

member of the A.S. Watson Family to fulfil and enhance our role as a good corporate citizen.

All of us have a role in making Corporate Social Responsibility part of the culture within the

A.S. Watson Group. I urge and encourage you to play your part in making a difference in your

community as part of furthering this aim.

P. 13 - P. 22

Community P. 23 - P.32

EnvironmentP. 3 - P.12

Our staff

Ian F. WadeGroup Managing DirectorA.S. Watson Group

At A.S. Watson, we understand that great products are not great brands without great people.

From humble beginnings in 1828, A.S. Watson today comprises a large family of 90,000

people that continues to grow. We fully recognise that our staff are a major factor in our

success as an international group in an ever challenging global environment.

Given this, we adopt a partnership approach and have an ongoing commitment to provide

our staff with opportunities to improve themselves both professionally and personally. This

commitment takes many forms, and ranges from tailor-made training and development

programmes to recreational activities, because we believe investment in our people is an

investment in our Group’s future.

We also believe that a balance between a fulfilling life at work and life outside is one of the

best ways to develop well-rounded individuals who can help us to grow and create a better

society. To this end, we encourage staff to participate in supporting our business — by

contributing ideas and upgrading their service skills and knowledge — and to be caring, informed

members of their community — by taking part in voluntary work and community activities.

Makinga Difference for our Staff


An Active

A Par t i c ipa tor y L i fe s ty le1.Culture,

The enrichment of everyday life is a bold goal, but that is the aim of the

A.S. Watson Lifestyle Club, the official staff recreation club of the Group that

counts all 90,000 colleagues worldwide as its members.

The development of the Club is an important priority for the Group, which

has Group Managing Director Ian Wade as its Patron. Divisional CEOs are

engaged as Vice-Patrons and together with teams from Human Resources they

form an advisory committee.

Underpinning the Club’s aim to create fun for staff and help enrich their lives,

is the desire to develop an active, participatory culture within the Group.

To achieve this, a host of activities are organised for staff, including interest

courses such as cake-making, outings to movie days, and fitness courses

covering Thai boxing, yoga, and even belly dancing. Annually, the Group

organises an international Singing Contest as well as the hugely popular

global Sports and Fun Day, which attracts thousands of participants

and spectators, including staff family members.


2.2Voluntary service can be rewarding not only to society as a whole and to the recipients; it also

benefits those who give up their leisure time to make that difference. To promote the rewards

of serving the community in this manner, the A.S. Watson Volunteer Team was established in July

2005 as an extension of the Volunteer Programme of our parent company Hutchison Whampoa.

Since its inception, the Team has put in over 2,000 hours of voluntary work within seven months.

To make the programme even more meaningful, staff are encouraged to invite their family members

and friends to participate so that the experience can be enjoyed together.

The benefits have already been many-fold. On the receiving end of the volunteer service has

been new immigrants to Hong Kong from the mainland, elderly people who live on their own,

the mentally handicapped, and the disabled.

Visiting the elderly helped change the perspective of many of the participants. "I used to dislike

talking with my mother," said Wan, who works for PARKnSHOP. "But after helping elderly

people as part of the company’s Volunteer Team, I feel I now have a better understanding of

their needs. It has made me appreciate and love my mother much more, and I will definitely try

to spend more time with her."

For another volunteer, a meeting with disabled people showed her how small things can make

the biggest difference. "At first I was very apprehensive about meeting with the disabled, because

I didn’t feel I had any particular skills to offer in that area," explained Arre, who works for Watsons.

"But what it made me realise was that even just by smiling you can make someone very happy.

So I plan to keep on smiling!"

Bringing out the

Bestin People


The staff who make up the A.S. Watson worldwide family are driven by passion in their work.

This trait finds another strong outlet at the Group’s annual international Sports and Fun Day.

Held since 2003, in 2005 it drew 1,200 participants from 15 countries to Hong Kong. They took

part in seven sports — badminton, football, table tennis, basketball, tenpin bowling, athletics, and

indoor rowing — over a period of one week, attracting 3,000 local spectators.

Madara Juska of Drogas was equally inspired. "Standing at the starting line with colleagues from

around the world was amazing," she said. "The Sports and Fun Day is a reminder of how important

team spirit is to our jobs. I felt proud to be part of the A.S. Watson Group."

A similar feeling was evoked for Mili Kim of Watsons Korea. "I was absolutely stunned by the

huge size of this ceremony. I have learned what makes

A.S. Watson so powerful is the strong bonds and the synergy among staff. I felt so proud to be

one of them."

Clearly, the day has a deeper meaning for most of those who participate. "The activities and games

demonstrated the importance of unity and harmony among employees in the company, and also

reflected the potential and growth of the businesses [in the Group]," said Woottichai Santita of

Watsons Thailand.

For Joanne Coleman of Superdrug, it was an event to savour and treasure. "The sports day surpassed

all my expectations," she said. "It was an electric day filled with excitement and an incredibly fun

atmosphere . . . Hong Kong and especially A.S. Watson staff are very friendly, professional and fun;

all the things that make the company a success. On top of everything, I’ve made some friendships

with people from countries I may not otherwise have. That’s something that I have taken away

with me."

While our staff take to the football pitch or the track at the Sports and Fun Day, they are cheered

on by their family members as well as their colleagues. When the action stops on the playing field,

it continues for these important supporters on the sidelines, with fun games for kids organised

and a chance to chat over the food on offer.

Staff family members are also welcomed at the annual Hutchison Whampoa Sports & Family Day,

where there is an opportunity for them to learn more about the Group as a whole in a fun and

relaxed atmosphere.


3.A Family at

PLAY

for SuccessEquipped4.

Educational training benefits the customer, the individual staff member,

and therefore the Group as a whole. The courses available to staff

throughout our international network cover a wide range of subjects

and specialist areas.

The Netherlands, for example, is home to the A.S. Watson School

for Continental Europe. It is here that staff from Kruidvat and

Trekpleister come to gain formal qualifications in retailing. From sales

staff to store managers, they commit to take a two-year course

that covers cash point operations, store space allocation and customer

service. On successful completion, graduates receive the Dutch BBL

qualification, which is recognised throughout the industry.

Across the North Sea in the UK, better equipping staff for their

roles is at the heart of the Superdrug Retail Academy. This institution

aims to train Superdrug staff to be the best they can at their job

while delivering a fantastic shopping experience to customers. It

focuses on customer service, product knowledge, selling skills, store

standards and operations. There are three levels of training provided

by the Academy, each level building on the one before and going

into the course subject in more detail. Level three is for store

specialists, who include staff specialising in beauty, skin, fragrance and

health care. The skills and expertise they come away with equips

them for success in their chosen profession.


AcquiringExpertise

5.Educational themes of a different kind are emphasised at the Fresh Check Food Hygiene Academy

in Hong Kong. Established in 1999, its goal is to ensure the highest standards of food handling

and preparation at PARKnSHOP stores.

Staff who handle fresh food at the stores receive training in all areas of food safety, from regulations

to hygiene, and how to provide a clean and safe shopping environment for PARKnSHOP customers.

Meanwhile, selected staff from Watson’s Wine Cellar in Hong Kong get an enviable opportunity.

They have the chance to undertake a comprehensive three-level programme offered in conjunction

with the Wine & Spirit Education Trust, a UK-based charitable organisation. The knowledge and

skills they learn on the course can be used in their work, but also in a social setting, giving them

the best of both worlds.


Providing

MotivationProviding extra motivation for staff with an interest in health

is, meanwhile, one of the objectives of the Health & Fitness

Advisor Programme at Watsons Your Personal Store in Asia.

Suitably enthusiastic staff have the opportunity to attend a

comprehensive six-month training course on health, product

knowledge, customer service and sales skills. Graduates assume

the role of Health & Fitness Advisors in store. Besides getting

greater satisfaction in their professional role, they provide a

valuable bridge between professional pharmacists and customers.

Ensuring the development of leaders across the Group is a major

ongoing challenge and something that we are all very commited to.

A.S. Watson invests heavily in terms of resource and time to grow

our people. One of such commitments is our Management Trainee

Programme which develops and nurtures a pool of young, highly

talented individuals. It achieves this by identifying people, both internally

and externally, who display the skills, expertise and personal attributes

to be able to drive one of our businesses in the future.

In 2005, for example, following a highly in-depth screening process,

10 individuals from several hundred applicants were selected. They

then embarked on a 12-month program of on-and-off-the-job training,

learning about all the different facets of our business operation and

working with a variety of departments to give them the widest

possible exposure to our Group of brands.

M6.

Grooming

Future Leaders7.


Interaction at

Every LevelAs the Group expands into new markets there are new challenges to be met. Communication

at all levels is therefore key. Facilitating this is the Group’s bi-annual global Senior Management

Conference. First held in 2004, it brings together all the senior management executives from

around the world for a two-day business conference.

This forum provides an opportunity for participants to share their experiences on best practice

firsthand, to expand their thinking, and to make new personal contacts.

The 2004 conference was a tremendous success. Not only was there a lot of interaction between

the attendees, there were also quality presentations from the CEOs and guest appearances by

renowned UK broadcaster Jonathan Dimbleby and marketing expert Scott Bedbury designed

to inspire and motivate.

Communication is strongly encouraged throughout other levels of the Group. Store managers

have their own conference, with team-building exercises at subsidiary level to foster top-down,

store-office communication.

In addition, staff secondment and relocation to overseas offices are common, encouraging personal

and cultural exchanges as well as career development opportunities.

"My secondment to the International Buying in the Group’s head office was my first move away

from Superdrug’s Buying Department in the UK," said Martigne Gloster. "I have learned a lot

about how Chinese factories and suppliers operate, discovered many exciting and innovative

products and managed to deliver projects to tight deadlines. It has been a very rewarding and

enjoyable experience."

8.


RewardingExcellence9.9

Staff who perform well and display the passion for which the Group strives, want and justifiably deserve

recognition for their efforts. Staff recognition programmes are to be found in many forms throughout the

companies in the Group, encouraging and rewarding service or initiative that goes beyond the normal

call of duty.

At Nuance-Watson, the recognition focuses on the details of service, with colleagues and shoppers voting

for those who provide outstanding courtesy and welcoming smiles. Other member companies with the

Group, meanwhile, recognise the best performing staff and store on an annual basis.

Peer appreciation is encouraged at FORTRESS, where staff can send "thank you" cards through the Human

Resources Department to colleagues who have been particularly helpful. The programme also helps build

a respectful and harmonious work environment.

External recognition can be equally important, as it provides us with the chance to benchmark our services

against other retailers. For example, Watsons Your Personal Store, PARKnSHOP, Watson’s Wine Cellar,

TASTE, FORTRESS and Nuance-Watson have been recognised for service excellence in the Hong Kong

Retail Management Association’s Service & Courtesy Awards.


Thinking outo f t h e B o x

10.A change from the usual can help to spice up everyday

life, which is why Watsons Hong Kong is promoting a

"have fun at work" atmosphere among staff at its stores.

One element of this is the "I want to be a model"

Christmas programme, where store staff are encouraged

to dress up in a creative, festive style, wearing accessories

and cosmetics to create a warm, welcoming shopping

environment. It has proved enjoyable for staff and customers

alike.

A similar programme is operated by Watsons Taiwan,

where staff come up with ideas on how to dress for

holiday periods and festival days as a way of building team

spirit.

h B


DifferenceWe are active participants in initiatives to benefit the wider community in

countries and territories where we have a presence. The charity and community

initiatives in which we are involved address a range of social needs, from youth

education to health programmes, sporting events to providing assistance to those

less fortunate.

One priority in the criteria we apply to donation and sponsorship support to

community activities is that the project allows our staff to become personally

involved. This not only benefits the recipient cause, but it helps strengthen the

culture within the company.

We believe that by giving the companies within the A.S. Watson family the

freedom to choose which organisations and projects they support we can make

a bigger difference, as valuing local knowledge ensures greater effectiveness and

provides a closer sense of connection with a project. As a result, the impact of

the programmes the Group has supported over the years has been far-reaching.

Making a

in the C mmunityDifference


Making aMakMak

Caring StaffSupport

Social Programmes

1.For many years A.S. Watson has participated in activities organised by the Community Chest,

one of the major charity organisations in Hong Kong that aims to raise funds for more than

140 social welfare agencies through community-wide appeals. Our donation efforts have

won us many accreditations in the Chest’s Corporate and Employee Contribution Programme.

Two of the Chest activities that we encourage staff to participate in are the Skip Lunch Day,

where people are asked to donate their lunch money to benefit street sleepers, and the

Dress Casual Day, which sees staff make a donation in order to be able to dress casually at

work.The Group, together with its subsidiary companies PARKnSHOP, Fortress, Watsons

Your Personal Store, Great, Gourmet and Watson’s Wine Cellar, has also been named "Caring

Company" by the Hong Kong Council of Social Service, in recognition of contributions in

volunteering, employing the vulnerable, being family friendly, mentoring, partnering and giving.


Two of the Ches

where people a

Dress Casual Da

work.The Grou

Your Personal St

2 .Exercise is universally recognised as one of the foundations of a healthy lifestyle. In our home base of Hong Kong, our

efforts in this area are given energetic expression in the Watsons Athletic Club (WAC). Established in 1989, the Club

has nurtured many talented young people.

WAC currently has more than 600 members. The Club regularly organises training programmes for youngsters aged

9-18. Athletic demonstrations in schools and public promotional events are, meanwhile, organised with accomplished

athletes providing advice and sharing their experience firsthand.

"Hong Kong doesn’t have a strong culture yet for sports, so it’s difficult to compete and earn a living at the same time,"

said Henry Tang, Olympian and the Hong Kong men’s 110 hurdles and 400m hurdles record-holder and a staff member

of A.S. Watson Group. "Watsons Athletic Club’s sponsorship and support makes a difference in my sports career —

without it I would never have achieved as much as I have today."

Additional encouragement for sporting excellence is provided through the Group’s sponsorship of the Hong Kong

Sports Institute Outstanding Junior Athlete Awards, honours that we have supported since 2003, and the A.S. Watson

Group Hong Kong Student Sports Awards, which is backed by the government, school principal associations and other

associated authorities.

Providing further inspiration and excitement in the society is the Watsons Water Champions Challenge, which brings

some of the top names in international tennis to Hong Kong every January for a tournament that is the biggest of its

kind in the city. A.S. Watson has been sponsoring this exciting event at the start of each New Year for the last six years.


A Healthier Life

through Sport

3 . Aiding the Searchfor Medical Knowledge

Obesity has reached epidemic proportions in parts of the industrialised world. In the

Netherlands, one out of ten children is overweight, and the number is growing. Overweight

children are at high risk of developing diabetes and heart disease in later life. Bad eating

habits and a sedentary lifestyle are contributing factors, but even when two children

have similar eating and lifestyle patterns, one may become obese and the other not.

To find out why, Kruidvat is financing a large-scale study by the Groningen Expert Centre

for Kids with Obesity (GEC-KO), an initiative of the University Medical Centre Groningen.

A 2.25-million donation will fund ongoing research on the metabolic processes that can

lead to obesity in children, and ways to treat and prevent it.

An important part of the research is a study of about 5,500 babies to be born between

1April 2006 and 1 April 2007 in the Dutch province of Drenthe. The study aims to unravel

the biological, social and environmental risk factors for childhood obesity.

"Obesity threatens not only the health of many children, but also causes social problems:

children are being bullied, are having trouble doing sports or are unhappy with their appearance,"

says paediatrics Professor Dr. P.J.J. Sauer, who is heading the study. "Programmes to fight obesity,

such as sports and consuming less fat, don’t always seem to deliver the desired results. Science

grows wiser by the day, but we’re not there yet. Much more research is needed on metabolic

processes that lead to obesity, so that eventually we will be able to act in time and we will

be able to inform people in the best possible way. However, research is always very costly."


Cancer does not discriminate: it affects people of all ages and from all

walks of life. In the UK, more than one million people have cancer, and

four in ten people will be diagnosed with cancer during their lifetime.

Macmillan Cancer Relief helps people who are living with the disease,

providing emotional and practical care and support that can help people

put their lives back together again.

Superdrug in the UK chose Macmillan Cancer Relief as its charity partner,

and has so far raised more than £400,000 through a variety of initiatives,

including the sale of Macmillan Pin Badges at its 700-plus stores around

the country, an appeal among staff, and the Superdrug Corporate Ball.

Superdrug has also partnered with The Institute of Cancer Research,

Europe’s leading cancer research centre, on a campaign that aims to raise

awareness about skin safety. The initiative, SAFE@Superdrug, is being

endorsed and supported by Cindy Crawford, with the supermodel’s image

being used for promotional and in-store communication purposes to help

raise funds and awareness of the campaign.

17

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4 .Promoting Awareness of

17

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endorse

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raise fun

Health

Corporate Social Responsiblilty

A chance to celebrate our own good fortune is often seen as an opportunity

to help benefit others. This was the case with events to mark the 20th

anniversary of the leading perfumery chain in France, Marionnaud.

While celebrating its achievements over two decades, Marionnaud also

supported a programme under the United Nations Children’s Fund

(Unicef). By selling a Keep Lucky charm in its stores, it raised 48,000 for

a programme to help underprivileged children with AIDS.

At other times, our companies support special days that are being celebrated

by the wider community. PARKnSHOP in Hong Kong, for example, was

selected by senior citizens as an "elderly friendly" company for the Senior

Citizen’s Day 2005 organised by The Hong Kong Council of Social Service.

As part of activities to mark this, PARKnSHOP offered senior citizens a

10% discount on a range of basic food items, such as rice and oil, for a

period of one week.

Sharing our

GoodFortune


5 .

Despite the last few decades of economic growth, development across China

has been uneven. This, combined with highly entrenched traditional social and

cultural values, leads to boys in poor regions still being given preference when it

comes to educational opportunities. As a result, in some areas, women can

account for two-thirds of all those who are illiterate, with girls representing more

than 66% of those who drop out of school before completing their studies.

Watsons China has chosen educational sponsorship as the focus of its community

support efforts, aiding several local initiatives that exist to address the problem

and supporting the overall aim of a better-educated society.

Between 2003 and 2004, funds raised by Watsons China helped build two primary

schools in rural areas, in Jixi in Anhui province and Lianjiang in Guangdong province.

The schools specialise in providing education to 1,000 girls. This project — an

initiative of the China Children and Teenagers’ Fund, under the auspices of the

All China Women’s Federation — aims to provide girls in poor areas of the country

with the means and the incentive to return to school and study for a brighter

future.

Taking the commitment to educational opportunities for the less fortunate one

step further, 2005 saw the launch of the Watsons China University Scholarship

programme covering six of the country’s top tertiary institutes.

Working with the China Foundation for Poverty Alleviation, the scheme offers

a university scholarship of Rmb2,000 to about 100 underprivileged female students

from rural areas. The six universities involved in the scheme are: Beijing Normal

University; the North China University of Technology in Beijing; Fudan University

and Tongji University in Shanghai; and Sun Yat-sen University and the Guangdong

University of Foreign Studies in Guangzhou.


6 .Recognisingthe Importance of

Education

Back in 1999, JSC Drogas decided to support several projects launched by the Latvian Children

Fund. The aim was to provide presents to disabled children in the Baltic country and to raise

funds to establish a rehabilitation centre for children who had suffered from violence. Little

did the company know at the time, but this would lead to a long-term association with children’s

projects.

In 1999 and 2000, Drogas was the biggest local contributor to the rehabilitation centre, which

opened its doors in 2002. To increase awareness of the project, donation boxes with information

about the campaign were placed in all Drogas stores.

Since then, Drogas has supported the Latvian Children’s Homes through the Hope Sail Charity

Fund. After just 12 months, LVL7296.00 had been raised, enough to buy sports equipment,

toys, new flooring, dishes and shoes for the Home.

In 2003, a project to introduce baby-friendly places was initiated in the Latvian capital of Riga

with the backing of Johnson & Johnson, Benckiser and Drogas. The project led to nappy

changing tables for babies being installed in many public places, such as railway stations and

shopping malls, in the city.

Building on this, the same three companies developed a project to modernise the offices of

family doctors and paediatricians, with modern baby measuring equipment provided to 50

health centres for children, maternity homes and family health centres.

One of the initiatives in which Drogas is currently involved, together with Hope Sail, is a

programme to support the Neurology Department of the Latvian Republic’s Children’s

Hospital. Donations collected in stores are being used to install new windows and buy

microwave ovens to prepare baby food, among other things. So the good work continues.


Children in the BalticSupporting7 .

Applying the knowledge gained at university to the commercial world is one of

the ways in which society can benefit from providing education to its citizens.

To this end, marketing students in their final year of study at the City University

of Hong Kong were given a unique opportunity. They were given the chance to

test the skills they had learned in the classroom in a real-world business situation.

The Group’s electrical retail chain FORTRESS provided them with an opportunity

to participate in a marketing consultancy project, in which they were involved in

a post-launch evaluation and enhancement of the FORTRESS website, FORTRESS

Club and FORTRESS’ after-sales services. Their input had a real impact on

developing these areas to make them more customer-friendly.

The project not only provided inspiration to the students as they entered the

job market, it also gave them access to practical experience that they would be

able to apply in their new career.

Offer ingProfessional Advice

in a Time of NeedMuch of the Asia region was hit hard by the SARS outbreak in 2003, with communities gripped

by fear and misunderstanding about the disease. As a result, an increasing number of patients

with chronic illnesses who relied on the public medical service were no longer regularly visiting

their hospitals. Some public hospitals in Hong Kong saw as many as 20% of their chronic disease

patients skipping scheduled appointments and, in some cases, not picking up their medicine.

Given the need to combat misinformation and provide people with a trustworthy source of

information, Watsons Hong Kong launched a General Drugs & SARS hotline together with the

Drug Education Resources Centre (DERC) of the Society of Hospital Pharmacists of Hong

Kong. It was the first professional drugs and health counselling hotline in Hong Kong, providing

advice on SARS prevention, drug counselling and general healthcare information from licensed

pharmacists for free.

Indeed, the service was found to be of such use to the public that even after the SARS outbreak had been contained,

the hotline continued to operate. Today, the Watsons Pharmacist Hotline provides expert, professional advice to

those who call on a range of health and personal care issues, and handles about 5,000 enquires each year.

CreativityChannelling

8 .

9 .



The tsunami that swept across the Indian Ocean on 26 December 2004, claimed the lives of some 300,000 people

and left millions more homeless and devastated. The tragedy touched the hearts of people around the world, resulting

in a global response to help those who survived.

Following the tragedy, the A.S. Watson family of companies sprang into action. Staff in Thailand, the west coast of which

had been badly affected, personally delivered 1,000 Watsons bags containing Bt300,000 worth of essential supplies to

victims. They also donated Bt500,000 that had been set aside for the annual staff party to the King’s Relief Fund.

In Hong Kong, initiatives by companies in the Group raised more than HK$5 million for the Hong Kong Red Cross.

Donation boxes were placed in stores throughout our extensive network, in Watsons Your Personal Store, PARKnSHOP,

TASTE, Great, Watson’s Wine Cellar, FORTRESS and Nuance-Watson (HK), with an overwhelming public response.

In addition, a quarter of the amount raised from ticket sales for the Watsons Water Champions Challenge tennis

tournament was donated, and the Group also donated one million bottles of Watsons Water to survivors.

Donations also poured in from throughout our international network, from Watsons China, Malaysia and Singapore,

and 15,000 was raised in The Netherlands.

Meanwhile, A.S. Watson’s parent company, Hutchison Whampoa Limited, and the Li Ka Shing Foundation donated a

total of HK$24 million to the relief effort.

10 .Relief Tsunami

As a Group, we are deeply aware of the impact our businesses have on the world around us. In response

to this we have developed guidelines at all our companies to help them address the environmental challenge.

In some of our operations we also have programmes in place that seek to mitigate the effects of our activities,

to use new environmentally friendly products and processes where appropriate, and to provide support

for environmental protection projects.

Given the reach of our companies in the community, we believe we have a responsibility not only to reduce

our impact on the environment. We also have an important role to play in informing our customers of

the benefits that better environmental choices will bring.

Projects in this vein are actively supported by PARKnSHOP, through a scheme to reduce the use of plastic

bags, by Watsons Water, the Plastic Bottles Recycling Programme, and FORTRESS, the only electrical retail

chain to support the Rechargeable Battery Recycling Programme of Hong Kong’s Environmental Protection

Department.

In some cases, these projects are the first steps in raising environmental awareness, but they are no less

valuable or meaningful for that. We have come a long way already, but for the sake of generations to come,

there is much more yet to do.

Making a

EnvironmentEnvironmentDifference to the



Hong Kong is running out of landfill space earlier than anticipated because waste levels are continuing

to outpace forecasts. The government estimates that remaining landfill space will last only for another

six to 10 years if waste levels continue to increase at their current rate. With more than 220 stores

in Hong Kong and as a leader in its field, the PARKnSHOP supermarket chain is in the frontline in

making consumers think about the choices they make with respect to waste reduction.

In 2005, PARKnSHOP launched the Don’t Drown the Earth programme. Supported by the

Environmental Protection Department and Green Power, a non-profit organisation that promotes

environmental education, the scheme reduced the number of plastic shopping bags used by six million

in just four months. In the process, tens of thousands of dollars were raised for Green Power’s Green

School Network, a pioneering educational programme that fosters green awareness among young

children. Building on the success of 2005, PARKnSHOP launched the "Say No to Plastic Bags" campaign

in 2006 with the target to double the number of plastic bags saved last year.

As part of promoting greater awareness among shoppers, PARKnSHOP stores also sell environmental

friendly bags, with shopping bill discounts provided as an incentive.

W a s t e R e d u c t i o nEncouragingEncouraging1.

Given the landfill problem that Hong Kong faces, another

option that complements the reduction message for

consumers is recycling rather than disposal. This alternative

is the focus of a project by Watsons Water. A pilot scheme

for its Plastic Bottles Recycling Programme began in June

2005, at a private housing estate in Ma On Shan.

Residents are encouraged to put their used plastic bottles

in a waste collection kiosk. As an incentive, they receive

stamps for every five plastic bottles they recycle that can

then be used to redeem gifts. The recycling message is

showcased at an exhibition in the estate’s clubhouse, where

residents can see the advantages of recycling and understand

why it is necessary.

Initial results from the programme have been encouraging,

with more than one tonne of plastic, equivalent to 50,000

bottles, having been collected in the first three months.

More than 20% of the households in the district are

participating, with more joining all the time.

PromotingRecycling

Promoting2.


In 2006, Watsons Water supported the Friends of the Earth’s Tree Planting

Challenge to promote the message of nature conservation and to educate

the public in protecting trees. With the help of some 400 participants,

10,000 trees were planted in remote areas of Tai Lam Country Park in

Hong Kong.

Meanwhile, PARKnSHOP Hong Kong has since 2003 teamed up

with local recycling companies on an "Eco-pine" programme, to

collect used cardboard boxes and paper from PARKnSHOP

stores for recycling. Every 10 tonnes of paper collected contributes

to the planting of a tree in Hong Kong or Mainland China.

The results have been encouraging, with more than 7,500

tonnes of paper collected so far, meaning more than 750

trees will be planted in the years ahead.

Green PlantationGreen3.


4.

27Corporate Social Responsiblilty

The need to cut landfill waste resonates worldwide. An A.S. Watson programme in the Benelux countries

is aimed at doing just that, with additional benefits for the environment.

The company has centralised waste paper and foil collection at its distribution centre in Heteren in The

Netherlands, with these materials picked up from the stores as part of the normal delivery process. The

materials are then separated to produce "clean" waste that can be recycled more efficiently.

The paper and foil are pressed into huge blocks using large compressing machines. Because larger compressing

machines are used, the density of the blocks is high, lowering transportation volumes and leading to lower

vehicle emissions.

With the operation recycling about 8.6 million kg of paper and 425,000 kg of foil, the reduction in landfill

material is considerable. Steel from the stores, which cannot be collected in bulk, is also processed for

recycling.

The success of the programme has led to plans for waste processing to take place at a dedicated building,

which will have the capacity to handle even greater volumes of waste paper and foil for recycling.

Success Inspires

New InitiativesNew Initiatives

HarnessingSuperdrug, one of the two largest beauty and health retailers in the UK, has a comprehensive range of polices relating to

good environmental practice, These run from minimising the impact arising from the use of materials and services provided

in building and shop-fitting to ensuring good practices among its own-brand suppliers.

One project that highlights the company’s high level of commitment is the work that has gone into deciding a new fleet of

lorries to serve its nationwide network.

Not only do the vehicles comply with the Euro 3 emission standards, by being fitted with engines that have an idle time shutdown

set at three minutes, they also feature the latest fuel-efficient technology and fuel-saving equipment. This includes Dynafleet

telemetrics, a system that enables productivity and efficiency improvements in managing vehicle fleets, lowering mileage and

fuel consumption, reducing their environmental impact and improving safety. Augmenting this system are sloping roofs on

double-deck trailers, which are able to greatly increase fuel performance, and I-shift automatic gearboxes that make for easier

driving and increased driver comfort.

Harnessing5.Technology


6.


The operational advantages of good environmental policies are

also appreciated and understood at PARKnSHOP. A wide spectrum

of projects offers the twin benefits of minimising environmental

impact and maximising savings.

Harmful CFC refrigerants have been eliminated in the refrigerators

used for cooling and chilling food and drink items at all the stores.

All refrigerators produce heat as part of the cooling process, but

this does not go to waste, with the excess heat generated by

refrigeration systems used to boil water for cleaning. This not only

saves energy, it also eliminates heat emissions outside the stores.

Supermarkets require bright lighting conditions. The fluorescent

lights used make use of what is called "ballast" to control and limit

the current. At PARKnSHOP, environmentally friendly electrical

ballast is used for the lighting systems in all the new stores, and is

being fitted in all stores undergoing renovation. The result is reduced

electrical usage.

Elsewhere, a new paper-compacting system is utilised that significantly

reduces the amount of waste paper and cardboard produced by

the stores. While on the shelves, varieties of organically grown local

produce and imported seasonal fruit and vegetables are available

for shoppers looking for an environmentally friendly alternative.

Business Sense

. . . makes

GoodGood

ResponsibleResponsible

WorkingWorking


Savers has been commended for its dedicated environmental efforts. The

Grimsby Savers was honoured for recycling more rubbish than any of the

more than 200 stores in the same district, while the Savers store in Swinton

was presented with a Hygiene Excellence Award by the Environmental Health

Department for its daily, weekly and monthly cleaning rotas, which ensured

that the premises were always spic and span.

8. for Environment

Electrical retail chain FORTRESS has lent its support to the Hong Kong

Environmental Protection Department’s Rechargeable Battery Recycling

Programme. This pioneering scheme aims to help conserve natural

resources and reduce environmental risk through the collection of

portable rechargeable batteries, including those used in mobile phones,

MP3 players, cordless phones, power tools and digital and video cameras.

While most new batteries available today are environmentally friendly,

certain types of rechargeable battery still contain materials that are

considered hazardous. The Rechargeable Battery Recycling Programme

addresses this by recycling the batteries in an environmentally friendly

manner.

The public can return used batteries to any of the more than 60

FORTRESS stores in Hong Kong. Under the scheme, which is advertised

through promotional materials in the stores, these are then collected,

sorted according to battery type, stored and then exported for recycling.

7.Retailing

Healthier


Increasingly urban lifestyles can lead to breakdown in the link between people and

the land. Aiming to correct this disconnect is Produce Green Foundation, a non-

profit organisation established in Hong Kong by a group of local enthusiasts concerned

about modern farming and the environment. It sets up the first organic farm in the

city, and aims to educate the public about eating safer and more healthy food and

the environment.

Supporting its efforts, and emphasising the importance of drinking juice as part of

a balanced diet, was the Mr. Juicy Produce Green Foundation Fun Day. Mr. Juicy is

Hong Kong’s most popular juice drink among children. Held in a natural setting in

the rural New Territories, and featuring games and fun activities, the event attracted

close to 2,000 students and their parents.

The success of the day was underpinned by the Mr. Juicy School Programme, which

organises games and activities in kindergartens, primary schools and secondary

schools, and spreads the message of a healthy lifestyle. The aim is to get children to

make better and healthier choices when it comes to diet.

C h o i c e sHealthier10.

9.EnvironmentalEnvironmentalIt is not just among consumers and the wider community that companies within the

A.S. Watson family are promoting the messages of environmental protection. We are

engaged in good environmental practices wherever we can, because we believe these

are also good business practices.

At Watsons Water, for example, we seek opportunities to conserve energy, and to

reduce and recycle waste, which can all help contribute to lower operating costs.

Awareness and understanding of the benefits among staff is key to the successful

implementation of schemes in this area, and so continuous training is provided.

Augmenting this are projects with external partners. Watsons Water participates in

the Earth partner programme led by Friends of the Earth. The project promotes eco-

friendly initiatives, ranging from saving energy through lower air-conditioning usage in

the office to reducing waste and recycling at the company’s Taipo facility in Hong Kong.

Implementing Good

Policies . . .t lt l


Make a Difference

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