2012 Judges Report - Hong Kong Management Association
2 0 1 2
BEST ANNUAL
REPORTS AWARDS
JUDGES' REPORT
ORGANIZER
CO-ORGANIZER
LEAD SPONSOR
PRINCIPAL SPONSOR
INTRODUCTION
The Best Annual Reports Awards is an annual competition organized by The Hong Kong
Management Association since 1973. It assesses annual reports with a view to enabling
persons who are involved in preparing annual reports for an organisation to be more effective
in informing the organization’s stakeholders and the public about the performance and
future prospects of their organisation. This is achieved primarily by conducting annual
Awards for Excellence in annual reporting which includes the adjudication of annual reports
and recognizing reports that meet the criteria with an award. In an effort to make the
Awards more meaningful to a wider audience and in an attempt to further improve
relevant Annual Reports with reference to new and broader benchmarks, the HKMA
is pleased to announce, in collaboration with the Australasian Reporting Awards (ARA),
the first Joint HKMA-ARA Sustainability Reporting Award in 2013. The winners of
the HKMA 2012 Sustainability Reporting Award and the ARA 2013 Sustainability
Reporting Award will automatically be considered for the first Joint HKMA-ARA 2013
Sustainability Reporting Award.
OBJECTIVE
The Awards has several objectives. The first objective is to encourage the publication
of accurate, informative, well presented and timely annual reports for shareholders,
employees, and others who may have an interest in the performance and activities of
the organization in question. The second objective is to showcase companies that have
done a good job in reporting. The hope is that these companies will serve as an example
to others. The third objective is to reward companies for excellence in reporting.
This third objective should reinforce the first objective and offer an incentive to companies
to pay even greater care and attention to the preparation of their annual reports.
ENTRIES
103 reports in the two categories were received as follows:
General .................................................................................................................................. 85
Non-profit Making and Charitable Organizations............................................... 18
SCHEDULE OF CRITERIA
2012
HKMA
BEST
ANNUAL
REPORTS
AWARDS
General
1. Conformity with the requirements of the
relevant financial reporting standards,
including Hong Kong Financial Reporting
Standards/International Financial
Reporting Standards/China Accounting
Standards for Business Enterprises; and
the provision of accounting information
over and above the requirements
2. a. Conformity with the disclosure
requirements of the Hong Kong Stock
Exchange and Hong Kong Companies
Ordinance
b. Provision of voluntary information
relating to corporate governance
3. a. General presentation such as design,
general layout, photographs, graphs,
charts, diagrams and indexing
b. Understandability and clarity
4. Summary of past results and highlights
5. Management discussion and analysis
a. General description of business
b. Analysis of assets/liabilities
c. Analysis of income/expenses
6. Indications of prospects/Forward looking
statements
7. Employee relations and development/
Corporate social responsibility
8. Promptness of reporting
Non-profit Making and Charitable
Organizations
1. General presentation of financial statements
a. Balance sheets
b. Income statements
c. Cash flow statements
d. Details of revenue and expenses
e. Sources of financing and application
2. Provision of information relating to
corporate governance
3. a. General presentation such as design,
general layout, photographs, graphs,
charts, diagrams and indexing
b. Understandability and clarity
4. Purpose, general description of activities
and performance
5. Indication of prospects/Forward looking
statements
6. Employee relations and development/
Corporate social responsibility
7. Promptness of reporting
8. Availability of the annual reports on the
organization's website
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2012
HKMA
BEST
ANNUAL
REPORTS
AWARDS
PANEL OF ADJUDICATORS
The following persons have been appointed by The Hong Kong Management Association
to serve on the 2012 Panel of Adjudicators:
Professor Richard Petty
(Chairman)
Past Chairman & President
CPA Australia
Professor in Accounting and Finance
Macquarie Graduate School of
Management
(Representing CPA Australia)
Mr Michael Cheng
Advisor
Listing Division
Hong Kong Exchanges and
Clearing Limited
(Representing Hong Kong
Exchanges and Clearing Limited)
Ms Jill Cheshire
Director
Jill Cheshire Design
Dr Keith Lam
Deputy Principal
HKU SPACE Po Leung Kuk
Community College
(Representing Institute of Financial
Planners of Hong Kong)
Mr Craig Lindsay
Director
Hong Kong Securities and Investment Institute
Managing Director & Chief Operating Officer
CITIC Securities International Investment
Management (HK) Limited
(Representing Hong Kong Securities and
Investment Institute)
Dr Albert Lung
FCIS, FCS
The Hong Kong Institute of
Chartered Secretaries
(Representing The Hong Kong
Institute of Chartered Secretaries)
Dr John Tang
National Director
Independence - China
Ernst & Young
Ms Cheri Wong
Chief Executive Officer
The Hong Kong Society of
Financial Analysts
(Representing The Hong Kong
Society of Financial Analysts)
Mr Ronald Yam
Partner
RSM Nelson Wheeler
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THE AWARDS OF THE 2012 HKMA BEST ANNUAL REPORTS
COMPETITION ARE AS FOLLOWS
Best Report Award
CLP Holdings Limited
“General” Category
Gold: Hong Kong Exchanges and Clearing Limited
Silver: MTR Corporation Limited
Swire Pacific Limited
Bronze: Hang Lung Group Limited
The Link Real Estate Investment Trust
Transport International Holdings Limited
2012
HKMA
BEST
ANNUAL
REPORTS
AWARDS
“Non-profit Making and Charitable Organizations” Category
Gold: Securities and Futures Commission
Silver: The Hong Kong Jockey Club
Bronze: Mandatory Provident Fund Schemes Authority
Honourable Mentions
Companies Registry
COSCO International Holdings Limited
Hang Lung Properties Limited
Hong Kong Monetary Authority
HSBC Holdings plc
The Land Registry
Sustainability Reporting Award
Winner: CLP Holdings Limited
Finalists: Airport Authority Hong Kong
Securities and Futures Commission
Tung Wah Group of Hospitals
Citation for Design
ANTA Sports Products Limited
Hong Kong Police Force
Next Media Limited
Trinity Limited
Citation for Corporate Governance Disclosure
CITIC Securities Company Limited
Hong Kong Productivity Council
Industrial and Commercial Bank of China Limited
Lenovo Group Limited
Best New Entry
“General” Category
Swire Properties Limited
“Non-Profit Making and Charitable Organizations” Category
Hong Kong Applied Science and Technology Research Institute Company Limited
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2012
HKMA
BEST
ANNUAL
REPORTS
AWARDS
BEST REPORT AWARD
CLP Holdings Limited
A top quality report with standout design which
continues to set the bar in overall excellence.
Non-profit Making and Charitable Organizations
Gold
Securities and Futures Commission
An outstanding and eye-catching report which
nicely illustrates the idea of interconnectivity.
Silver
Bronze
The Hong Kong Jockey Club
An impressive report with beautifully coordinated
themes, graphic design and other media.
Mandatory Provident Fund Schemes Authority
An informative report with clear and detailed
analysis of the organization’s financial performance.
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General
Gold
2012
HKMA
BEST
ANNUAL
REPORTS
AWARDS
Hong Kong Exchanges and Clearing Limited
A well-executed and accessible report with a high
degree of transparency and professional
presentation of various achievements and project
highlights.
Silver
MTR Corporation Limited
A high quality production with a sustainability
report that effectively demonstrates the importance
of sustainable development.
Swire Pacific Limited
A well-presented report with extensive discussion of
future business plans and prospects.
Bronze
Hang Lung Group Limited
A comprehensive report with in-depth coverage of
employee relations and sustainability performance.
The Link Real Estate Investment Trust
A lively and colourful report with thoughtful use of
attractive graphics and illustrations.
Transport International Holdings Limited
An engaging report which adopts an “excellence
through innovation” theme to project a vibrant and
interactive image of the company.
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COMMENTS ON SPECIFIC CRITERIA BY THE PANEL OF ADJUDICATORS
GENERAL CATEGORY
1. Accounting – Conformity with the Requirements of the Relevant Financial Reporting
Standards, including Hong Kong Financial Reporting Standards / International
Financial Reporting Standards / China Accounting Standards for Business Enterprises;
and the Provision of Accounting Information over and above the Requirements
1.1 Conformity with the requirements of the relevant financial reporting standards
As in past years, there was a high level of compliance with the mandatory disclosure requirements.
The standard of reporting this year was on par with 2011 in terms of compliance with financial
reporting and accounting standards.
HKAS 1 (Revised) Presentation of Financial Statements
Hong Kong Accounting Standard 1 (Revised) “Presentation of Financial Statements” requires qualitative
and quantitative information that enables users of financial statements to evaluate the company’s
objectives, policies and processes for managing capital. The disclosure requirements under this
standard were not fully addressed in all of the annual reports. About 8% of the companies omitted
to disclose the nature, terms and conditions of significant items or transactions and the description
of the nature and purpose of each reserve within equity including, for example, capital redemption
reserve and contributed surplus. In addition, more than 20% of companies did not provide details
of all relevant accounting policies that have a significant effect on the amounts recognized in the
financial statements. Examples of missing accounting policies included those related to segment
reporting, related parties, employee benefits, trade and other payables, provisions and contingent
liabilities and borrowing costs.
HKAS 2 Inventories
As in previous years, various omissions from the standard disclosures required under Hong Kong
Accounting Standard 2 “Inventories” were identified. The Standard requires a reporting entity to
disclose the amount of inventories recognized as an expense during the year, the carrying amount
of inventories pledged as security for liabilities, and the circumstances that led to the reversal of
a write-down of inventories. Approximately 6% of the companies did not include such disclosures.
HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
Some companies engaged in policy changes that were not clearly explained so as to enhance the
relevance and comparability of the entity’s financial statements over time as intended by the Standard.
Stricter compliance with the requirements of the standard should be a focal point for improvement
for next year for some firms.
HKAS 24 (Revised) Related Party Disclosures
Hong Kong Accounting Standard 24 (Revised) “Related Party Disclosures” requires the disclosure of
key management personnel compensation in total and divided into various categories (for example,
short-term employee benefits, post-employment benefits, other long-term benefits, termination
benefits, and share-based payments), the nature of relationship, outstanding balances, and related
provisions. Not all companies made such disclosures. About 18% of the companies omitted to
analyze key management personnel compensation into the relevant categories as required under
the Standard. Some of them did not describe the relationship between the parties while some
provided the terms and conditions of the transactions but omitted disclosure of any related provisions
for doubtful debts on outstanding balances.
HKAS 28 (Revised) Investments in Associates
Hong Kong Accounting Standard 28 (Revised) “Investments in Associates” requires an entity to disclose
the reasons why an investor is regarded to have significant influence when it holds, directly or
indirectly through subsidiaries, less than 20% of the voting or potential voting power of the investee.
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Instances were noted where companies omitted the
disclosure of the reasons why an investor had significant
influence over an investee despite the fact that the
investor held less than 20% equity interest in the
investee.
HKAS 36 Impairment of Assets
The Standard requires companies to disclose the key
assumptions used in determining recoverable amounts
of assets, such as discount and growth rates, as well as
explanations on the methodology used. It also requires
the disclosure of events and circumstances that led to
the recognition or reversal of material impairment losses. Approximately
6% of the companies did not fully comply with the disclosures required.
HKAS 38 Intangible Assets
Hong Kong Accounting Standard 38 “Intangible Assets” provides examples of
factors to be considered in determining the useful life of an intangible asset,
such as the expected usage of the asset and product life cycles. The Standard requires an entity
to disclose the factors that play a significant role in determining that the asset has an indefinite
useful life. About 13% of the companies did not provide the reasons supporting the assessment
of an indefinite useful life. In addition, 7% of companies did not disclose the line item(s) of
the statement of comprehensive income in which amortization of intangible assets was included
as required under the Standard.
HKFRS 3 (Revised) Business Combinations
Various omissions from the standard disclosures required under Hong Kong Financial Reporting
Standard 3 (Revised) “Business Combinations” were noted. The Standard requires, for each business
combination, an entity shall disclose the acquisition-date fair value of the consideration, the reasons
why the transaction has resulted in goodwill or bargain purchase, their share of the acquiree’s
post-acquisition profit and losses as well as the revenue and profit or loss of the combined entity
for the period as if the acquisition during the period had been made at the beginning of the
period. Approximately 10% of the companies did not fully comply with the disclosures.
HKFRS 7 (Revised) Financial Instruments: Disclosures
The disclosure requirements under Hong Kong Financial Reporting Standard 7 (Revised) “Financial
Instruments: Disclosures” were not always fully addressed. The Standard requires companies to categorize
their financial instruments into a three-level hierarchy, and to disclose movements between the levels
as well as the assumptions and valuation methods applied for each level. Over 12% of the companies
omitted the disclosure. The Standard also requires the disclosures on objectives, policies and
processes for managing credit risk and the methods used to mitigate credit risk. About 9% of
companies did not provide such information in their reports. Companies should pay closer attention
to requirements of the Standard.
1.2 Provision of accounting information over and above the requirements
In aggregate, companies increasingly are providing accounting information over and above the
statutory minimum. More companies are providing more detailed information on environmental
issues and on sustainability. This is a positive trend and is one that is to be encouraged.
1.3 Other comments
Many entities were making their annual reports more readable, but companies still must fully
report on material items using simple language. Visual images are not a substitute for detailed
written communication. After several years of making this observation, it is still the case that
the descriptions of accounting policies, as well as other information, for some companies appeared
to have been written by the accounting firms’ technical specialists in a too convoluted manner.
In many cases, the drafting of the notes to the financial statements seemed designed more to confuse
or impress the reader than to communicate meaning. There is still room for greater voluntary
disclosure of a meaningful and decision-relevant nature by all companies.
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2. Conformity with the Disclosure Requirements of the Hong Kong Stock Exchange
and Hong Kong Companies Ordinance, and Provision of Voluntary Information
Relating to Corporate Governance
2.1 Overall standards and comments
The overall standard of the annual reports submitted for this year’s review was high. Companies
complied with mandatory disclosure requirements under the relevant financial reporting standards,
the Companies Ordinance and the Listing Rules with some minor exceptions set out in section
2.3 of this report.
The best annual reports among those submitted for competition – as listed in section 2.4 below
– were those which not only included information that complied with minimum disclosure
requirements but also provided additional information for shareholders to make more informed
investment decisions. The inclusion of voluntary disclosures made the annual reports more
informative. Examples of the additional information provided are set out in section 2.2 below.
2.2 Areas in which this year’s entries have shown very good performance
The Listing Rules require listed companies to publish annual results announcements within 3
months of financial year end. Except for one unlisted company, all of this year’s participants were
able to release their annual results announcements within 90 days after their financial year end
and over 25% of the companies were able to do so within 70 days.
Some companies provided information over and above the statutory minimum. This trend is to
be encouraged. Examples of additional information disclosed voluntarily included:
(a) Financial statistics and ten-year financial summaries
A majority of the participants provided additional financial information in their reports by
means of detailed review of financials and performance. These companies provided disclosures
of their profit margin, return on equity, net earnings, dividend yield, gearing ratio, interest
cover, and net asset value per share in their annual reports. About 39% of the companies
provided key performance indicators for the last 5 years together with the basis of computation.
Approximately 21% of the companies also provided details of undrawn borrowing facilities in
their commentary on the company’s financial and liquidity position. Over 20% of this year’s
participants included a ten-year financial summary on a voluntary basis in their annual reports.
(b) Specialized industry information and operation statistics
To provide a better understanding of their business and operations, over 18% of the participants
included operation statistics in their annual reports, for example, the company’s sales and
distribution networks, number of stores/factories by location, production capacity, commentary
on sourcing of goods, major customers and suppliers, and employee utilization and capacity.
Some companies operating in specialized industry sectors provided information which was of
particular relevance to their industry, for example, companies engaged in hotel business disclosed
the number of hotel rooms, average occupancy rate, and average room rate; companies engaged
in banking business disclosed their capital adequacy ratio, loan-to-deposit ratio, average liquidity
ratio; companies engaged in public transportation (for example, aircraft, railway and bus
operators) disclosed their fleet profile and utilization, on-time delivery, safety performance,
bus routes and service networks; companies engaged in property investment and development
disclosed their property portfolio by location, area, and usage, along with analysis of leased
properties versus properties held for sale, and completed properties versus those under
development.
(c) Corporate Governance Report
All participants under the “General” category, including the three unlisted companies, prepared
a corporate governance report and included such report together with biographical details of
directors in their annual reports. This indicates that unlisted companies also acknowledge
the importance of disclosures in their communication with their stakeholders.
The Code on Corporate Governance Practices (“the Code”, now renamed Corporate Governance
Code) applicable to annual reports for this year’s competition includes recommended best
practices and participants provided disclosures as follows:
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Over 82% had appointed independent nonexecutive
directors representing at least onethird
of the full board of directors.
More than 26% disclosed the division of
responsibility between the board and
management, including their separate
functions, powers and level of authority.
18 companies (including 14 A+H companies)
announced and published their quarterly financial
results within 45 days after the end of the
relevant quarter.
About 12% disclosed number of shares held by senior
management on a named basis.
Over 7% provided details of remuneration payables to senior
management on a named basis.
Six companies established separate corporate governance committee
and disclosed the composition, the role and function of the committee.
In October 2011, the Exchange published its Consultation Conclusions on Review of the
Corporate Governance Code and Associated Listing Rules. The amendments from the review
bring the Corporate Governance Code into line with international best practices. For annual
(or interim) reports covering a period after 1 April 2012, listed issuers are required to state
in their annual (or interim) reports whether they have complied with the revised Corporate
Governance Code as well as those of the former Code. Issuers may adopt the revised Code
at an earlier date than 1 April 2012. It was noted that a number of this year’s participants
disclosed in their annual reports that they have early adopted the revised Code or have adopted
various code provisions in the revised Code prior to their effective date.
(d) Shareholders’ rights and investor information
Over 45% of companies disclosed particulars of shareholders’ rights, including the procedures
for putting forward proposals at a shareholders’ meeting, the way in which shareholders can
convene an extraordinary general meeting, and the procedures by which enquiries may be
put to the board of directors.
More than 75% of companies provided useful investor information, including details of
shareholders by type and aggregate shareholding, important shareholders’ dates in the coming
financial year, and public float capitalization at the year end. In addition, over 28% of the
participants disclosed historical trends in their share price and over 68% disclosed their dividend
payment history.
(e) Review of internal controls
A majority of the participants provided a narrative statement explaining how they have complied
with the Code’s code provisions concerning internal control. Some companies also disclosed
the procedures adopted for handling and dissemination of price sensitive information. A number
of companies also included a statement on how often internal controls were reviewed, an
explanation of how they defined their system of internal control, the criteria used by the
directors in assessing the effectiveness of internal controls, and a statement on whether the
directors considered that their internal control systems were effective and adequate.
(f) Voluntary additional disclosures
More than half of this year’s participants provided a commentary on corporate values and strategy,
long term business models and principal drivers of performance. About 40% of the companies
provided a discussion on business risks they faced and their risk management policy.
Ten companies included a separate Remuneration Report covering the composition of the
Remuneration Committee, its roles, the number of meetings held, and details of the company’s
remuneration policy, incentive scheme, retirement and pension plan, remuneration arrangements
for executive directors and non-executive directors, and emoluments paid to directors and senior
management on an individual and named basis.
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Over 60% of the companies included a Corporate Social Responsibility Report either as a separate
booklet or in a separate section within their annual reports. This report often contained
commentary on their responsibility to the community and other social and reputational issues,
disclosures of their environmental policies including compliance with relevant laws and
regulations, as well as disclosures of relationships with their employees, customers and suppliers.
2.3 Areas in which this year’s entries have performed poorly
Although the overall standard of disclosure in relation to financial reporting and regulatory
requirements remained high this year, there were certain exceptions and some examples of these
are set out below.
(a) Disclosure of financial information required under the Listing Rules
As in the previous year, some omissions from the mandatory disclosures required under the
Listing Rules were noted as follows:
About 5% of the companies did not provide details of their credit policy or ageing analysis
of receivables as required under paragraph 4(2)(b)(ii) of Appendix 16 of the Listing Rules.
Over 3% did not disclose information in respect of their directors’ emolument policy or
the basis of determining the emolument payable to directors as required under paragraph
24B of Appendix 16.
23% did not provide information in respect of distributable reserves as required under
paragraph 29 of Appendix 16.
Approximately 10% only provided the consolidated balance sheet of the Group in their annual
reports. They failed to include the balance sheet of the company itself as required under
paragraph 28 of Appendix 16 and Rule 13.46 of the Listing Rules.
One company did not disclose whether its auditor had issued a confirmation on its continuing
connected transactions as required under Rule 14A.39 of the Listing Rules.
Four mineral companies that submitted their reports for review had provided details of
exploration, development and mining production activities in their annual reports. However,
two omitted to include a summary of expenditure incurred on such activities and another
one did not provide an update of resources and reserves as required under Chapter 18 of
the Listing Rules.
(b) Disclosure of corporate governance required under the Listing Rules
The mandatory disclosure requirements under Appendix 23 of the Listing Rules (that was
merged with Appendix 14 on 1 April 2012) were not always fully complied with. Some findings
included:
3 companies disclosed that both the roles of chairman and chief executive officer were carried
out by the same individual. This did not follow the Code’s code provision which requires
that the roles of chairman and chief executive officer of a listed company should be carried
out by separate individuals and that the division of responsibilities should be clearly set
out in writing.
About 30% of the companies either did not provide details of auditors’ remuneration, or
the stated amounts in their corporate governance report differed from that disclosed in
the financial statements.
2.4 Outstanding companies deserving special mention
The following companies deserve special mention for the overall standard of presentation in their
annual reports. They exhibited compliance with the disclosure requirements of accounting standards,
the Listing Rules, and the Companies Ordinance, and also provided additional voluntary information.
Airport Authority Hong Kong, Bank of China Limited, BOC Hong Kong (Holdings) Limited, CLP
Holdings Limited, COSCO Pacific Limited, Hang Lung Properties Limited, Hang Seng Bank Limited,
Hong Kong Exchanges and Clearing Limited, Hysan Development Company Limited, Industrial and
Commercial Bank of China Limited, Li & Fung Limited, MTR Corporation Limited, Pacific Basin
Shipping Limited, Shenzhen Expressway Company Limited and Transport International Holdings
Limited.
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3a. General Presentation such as Design, General
Layout, Photographs, Graphs, Charts, Diagrams
and Indexing
The overall standard continued to be high with many
companies utilizing design in an imaginative way, to
portray their corporate identity and engage the
readers.
Companies which deserve a special mention for their
design of highlights pages and striking front cover
designs are:
Airport Authority Hong Kong, ANTA Sports Products Limited, China
Resources Enterprise, Limited, China Rongsheng Heavy Industries Group
Holdings Limited, COSCO International Holdings Limited, Esprit Holdings
Limited, Franshion Properties (China) Limited, Hang Seng Bank Limited, The
Hongkong and Shanghai Hotels, Limited, Ping An Insurance (Group)
Company of China, Ltd., Power Assets Holdings Limited, Swire Pacific
Limited, The Wharf (Holdings) Limited and Xtep International Holdings Limited.
Companies which deserve a special mention for overall excellence are:
China Telecom Corporation Limited – Well presented, with a Feedback Survey Questionnaire, for
readers to complete and return.
CLP Holdings Limited – As ever, a “cut above the rest”. This company continued to “set the
bar” in design excellence.
Hysan Development Company Limited – A well-executed report, with a concise and effective
Corporate Responsibility Report.
The Link Real Estate Investment Trust – A lively and colourful report with good consistency through
their chosen graphics.
Minmetals Resources Limited – A particularly engaging Sustainability Report which was informative
and reader friendly.
MTR Corporation Limited – Outstanding, with a thorough Sustainability Report.
Next Media Limited – Beautifully presented, with a clever front cover design, which focused the
reader on the core aspects of the company business.
Transport International Holdings Limited – With its “excellence through innovation” theme, and
to quote the company’s own description, the design of this report projected a “vibrant and interactive
image of the company and its services”.
Trinity Limited – This company made a clear effort, investing in a design that was complimentary
to the nature of their business.
3b. Understandability and Clarity
In general, the reports were well-written and information was clearly laid out. More than 10%
of the companies presented their milestones, major events, honors and awards during the year,
and their corporate strategies and core competence to assist readers to more fully understand the
operations of the companies. Many of them provided an overview of the structure of the report
and page references, and over 20% included in the first few pages the vision, mission and values
that best described the identity of the companies. A number of companies have also included
a Corporate Social Responsibility Report in their annual reports to demonstrate their good practice
of corporate governance.
Many companies used design and presentation techniques to help make the financial statements
look more interesting and appealing. About 85% of entrants made use of diagrams, photos, pictures,
maps and other illustrations to supplement the description of their operating activities and financial
information. The pictures and photos well depicted some of these companies’ products, senior
management and staff at work or in the community, and current/future projects, thus bringing
to light the vigor of the companies and making their annual reports full of life. Some of the
chart design also effectively summarized key issues and data without using lengthy explanations.
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In addition, over 50% of the companies included a glossary of terms and abbreviations or provided
definitions and formulas referred to in their reports, which further enhanced a reader’s
understanding of the annual reports. Some reports made use of a Question and Answer format
to bring out the highlights and present the core messages.
Companies to be commended are:
ANTA Sports Products Limited, CLP Holdings Limited, Hang Lung Group Limited, Hang Seng
Bank Limited, The Hongkong and Shanghai Hotels, Limited, Hong Kong Exchanges and Clearing
Limited, The Link Real Estate Investment Trust, MTR Corporation Limited, Swire Pacific Limited,
Transport International Holdings Limited, The Wharf (Holdings) Limited and Xtep International
Holdings Limited.
4. Summary of Past Results and Highlights
Users of financial reports have a keen interest in knowing the past performance of a company
in order to identify prevalent trends and detect any major structural changes of the company.
Summary of past results and highlights provides insights on them. Same as last year, the overall
quality of presentation in this area was very high. Many companies were able to convey these
messages clearly and comprehensively. Most of them presented a good summary of their past
financial results as well as clear reports of their business activities. The use of graphs, charts
as well as ratios with formulas and reconciliation under different accounting standards helped users
better understand their past performance, but expansion of the number of ratios presented is
encouraged. Furthermore, the per-share data has been improved. For instance, other than the
conventional earnings per share and dividend per share, over 20% of the organizations presented
per-share data in respect of the shareholders’ equity, total assets, net tangible assets, net assets,
and net operating cash flow. In addition, some companies disclosed their operating highlights
apart from the traditional financial highlights, which demonstrated the enhancement in the yearon-year
comparisons.
Organizations which are particularly outstanding in this aspect include:
ANTA Sports Products Limited, CLP Holdings Limited, First Pacific Company Limited, Hang Lung
Group Limited, Hang Lung Properties Limited, Hang Seng Bank Limited, Hong Kong Exchanges
and Clearing Limited, Hutchison Whampoa Limited, Industrial and Commercial Bank of China
Limited, Li Ning Company Limited, MTR Corporation Limited, Swire Properties Limited, The Wharf
(Holdings) Limited and Xtep International Holdings Limited.
5. Management Discussion and Analysis
The overall standard of Management Discussion and Analysis was excellent. Most companies provided
detailed discussions and analyses of their business operations and performances including (i)
discussion of the general business environment, (ii) analysis of their business by operations by
segment, major product lines and/or geographic locations, (iii) analysis of the assets/liabilities and
income/expenses items, (iv) risk management, and (v) future prospects. However, the discussion
of future prospects and risk factors affecting future operation was still quite weak for many
companies.
5.1 General description of business
Most companies did well in providing a comprehensive review of the factors that affected their
operations in the reporting year including the general economy, the industry and company specific
factors like expansion of production capacity and diversification of product lines.
5.2 Analysis of assets / liabilities
Many companies, particularly the banks, provided detailed analyses of their assets/liabilities positions
and risk management.
5.3 Analysis of income / expenses
Reviews of the income/expenses items were comprehensive and the standard was high. Explanations
of the changes in the income/expenses items were presented by segments, product lines and/
or geographic locations.
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Companies that deserve mention for extensive and
informative management discussion and analysis
include:
ANTA Sports Products Limited, Bank of China
Limited, CLP Holding Limited, Hang Lung Properties
Limited, Hong Kong Exchanges and Clearing Limited,
HSBC Holdings plc, Li & Fung Limited and Transport
International Holdings Limited.
6. Indications of Prospects / Forward Looking
Statements
A good report in this area should begin with an overview of the
macro environment and then provide a more detailed industry analysis.
It should then discuss in detail the prospects and the operating environment
of the company followed by future business plans and strategy. There is further
room for improvement in the area of future plans and specific targets to
be achieved as stakeholders care more about the future than the past.
Most companies gave good general overview of the outlook for the global economy and structural
adjustment and macroeconomic challenges in the Chinese economy. Although there was evident
improvement as most companies provided more discussion on their prospects and operating
environment, few companies gave sufficient coverage to specific issues related to future business
plans and prospects, especially on how companies were positioned to face future challenges and
to take advantage of future opportunities. It would be helpful if companies could provide details
both at the divisional level and the overall company as a whole.
Companies deserving special mention in this area include:
China Overseas Land & Investment Limited, CLP Holdings Limited, First Pacific Company Limited,
Hong Kong Exchanges and Clearing Limited, Pacific Basin Shipping Limited, Shenzhen Expressway
Company Limited, Shui On Land Limited and Swire Pacific Limited.
7. Employee Relations and Development / Corporate Social Responsibility
The standard of disclosure for this area varied but improvement was shown in some reports. About
80% of companies provided adequate coverage of matters in the area of employee relations and
development/corporate social responsibility. Top performers included corporate social responsibility
policy statements covering Human Resources, Environment, Health and Safety. A discussion on
the implementation and summary of sustainability performance and progress with measurable
benchmarks was reviewed. Future strategic priorities were set.
On employee relations, investors are interested in knowing about staff training and retention
programs and in particular about the succession planning for its senior executive team. In general,
the overall standard in reporting information of this type needs to be improved.
The following companies deserved a special mention for this area of disclosure:
China Mobile Limited, CLP Holdings Limited, Hang Lung Group Limited, Hang Lung Properties
Limited, The Hongkong and Shanghai Hotels, Limited, Hong Kong Exchanges and Clearing Limited,
The Link Real Estate Investment Trust, Minmetals Resources Limited and MTR Corporation Limited.
8. Sustainability Reporting
8.1 Overall standards and comments
Many companies have invested significant resources into sustainability and in areas of corporate
social responsibility, sustainable development, health safety environment and community. Some
companies also put resources into the preparation of sustainability report which was either included
in the annual report or as a separate booklet.
Some companies asked shareholders to give comments and feedback on their annual report and
on their sustainability reporting and attached a reply form so that shareholders could easily
communicate with the companies. Some companies have also attached in the annual report/
13
sustainability report comment from third parties on the results and performance of the companies
on sustainable development. It was good to observe that some companies have set up a separate
Sustainability Committee to oversee this area of reporting.
Although most companies have included information on sustainability, the information was in some
cases scattered throughout the annual report and could be more focused. For example, some
companies have mentioned the importance of sustainability, but they have not set out the work
that had been done during the year in relation to sustainability and it was difficult to evaluate
their work or confirm that it was actually carried out in the company. Having a contingency
plan and confirming that one is in place is important as there may have been unforeseen events
that may occur which are unexpected. Companies that don’t have such a plan are advised that
it would be desirable to have one.
Companies to be commended on their sustainability reporting are:
Airport Authority Hong Kong, Cathay Pacific Airways Limited, China Mobile Limited, CLP Holdings
Limited, The Hongkong and Shanghai Hotels, Limited, HSBC Holdings plc, MTR Corporation
Limited and Shui On Land Limited.
9. Promptness of Reporting
More than 30% of this year’s participants published their annual reports within 90 days after their
financial year end to provide more timely financial information. Companies are encouraged to
continue to make efforts in achieving promptness of reporting so as to enhance the value and
usefulness of the information which is essential to all stakeholders.
10. Conclusion
The overall standard compared well with last year with continued improvement in provision of
voluntary information, presentation techniques and preparation of sustainability report. Simple
and straightforward language with a clear format was used to enhance understandability. It was
pleasing to see a general commitment on the part of most companies to communicate openly
with stakeholders and actively collecting their feedback to satisfy their needs.
Despite the generally high standards of reporting, the Panel did identify several areas for
improvement. Companies are encouraged to report more on future strategic planning and on
employee relations, and to present an overall outlook of the company that is more useful to help
shareholders assess risk, governance, and the likely future performance of their investment.
Promptness of reporting is also highly encouraged to maximize the value and usefulness of
information provided.
The Best Report Award winner, CLP Holdings Limited, was a standout performer this year with
a report that was transparent and detailed. It was a thoroughly comprehensive yet highly readable
report. Other medal winners were of very high standard and more companies than ever produced
good and often well-designed reports. Entities wishing to improve their performance should look
to those leaders for lessons in what to do to make their annual reports better.
This year for the first time an award was being given for reporting on sustainability. This recognizes
the growing importance of this information to stakeholders and society’s expressed desire for entities
to report on the overall impacts of their operations – using both financial and non-financial metrics
– so as to explain the way in which the entity is working to be socially and environmentally friendly,
and to be sustainable over the long-term.
Winners of the lead award categories and those that received Honourable Mentions have already
attained an outstanding level in each of the judging criteria. As in previous years, they are deemed
ineligible for consideration for an award in any of the sub-categories.
14
NON-PROFIT MAKING AND CHARITABLE
ORGANIZATIONS CATEGORY
1. General Presentation of Financial Statements
The general presentation of financial reports was
generally very good. There was a high degree of
professionalism, with clear, detailed and comprehensive
reports of the organization’s financial situation set out
in an easily understood manner, and careful use of
charts and graphs, and useful explanatory notes. Some entities also
presented a separate financial report to provide more detailed information
as appropriate.
Outstanding entities deserving special mention are:
Companies Registry, The Hong Kong Jockey Club, Hong Kong Monetary
Authority, The Hong Kong Polytechnic University, Hong Kong Productivity Council,
The Land Registry, Mandatory Provident Fund Schemes Authority and Securities and Futures
Commission.
2. Provision of Information Relating to Corporate Governance
The general standard of disclosure in relation to corporate governance was good and some
organizations continued to achieve a very high standard. Some of them have done well in disclosing
information in respect of their corporate vision, mission and values, corporate governance practice
emphasizing accountability, transparency and fairness, their performance during the year with
commentary as well as analysis on their overall performance towards meeting their vision, mission
and values. Some organizations also included organization chart and Corporate Social Responsibility
Report to reflect their good corporate governance.
Examples of information provided included disclosure of business outlook, the care for staff and
society, the establishment of an audit committee, a remuneration committee and other executive
committees together, with an explanation of the functions and composition of the committees and
the number of committee meetings held and members’ attendance during the year. Some
organizations provided information on risk management and included separate sessions, namely
their internal audit functions and the independent audit report, which helped readers to understand
the corporate governance aspects of an organization. Some also included detailed information on
remuneration of senior executives and non-executive board members, performance pledges, and past
chairmen and historical events highlighted; while others included statistics on enquiries and
complaints handled during the year.
Over 60% described respective roles and relationship between the board and management.
Approximately 50% mentioned the functions and composition of different committees. About
40% provided information on risk management and the internal audit function. Over 60% disclosed
the identity of their chairman and chief executive officer, and whether the roles were undertaken
by separate individuals. About 40% disclosed remuneration package of senior executives and nonexecutive
board members, but mostly using remuneration bands rather than actual figures. However,
one organization was noted to have ceased the practice of disclosing information on remuneration
package of senior executives.
Organizations which are particularly outstanding in this aspect include:
Companies Registry, Hong Kong Housing Society, Hong Kong Monetary Authority, Hong Kong
Productivity Council, Mandatory Provident Fund Schemes Authority and Securities and Futures
Commission.
3a. General Presentation such as Design, General Layout, Photographs, Graphs, Charts,
Often with limited staff and resources, this category still rose to the challenge and often achieved
excellence in design.
15
Organizations to be commended are:
City University of Hong Kong – A well-presented, clear and well-written report.
Hong Kong Applied Science and Technology Research Institute Company Limited – A cleverly
designed report which was likely both to engage and educate readers of it.
The Hong Kong Jockey Club – Outstanding in design, with its beautifully coordinated themes,
graphics, photographs and other media, all coming together to provide an entertaining and
informative report.
Hong Kong Police Force – As in previous years, their motto of “serving with Pride and Care”
was clearly manifested in the design of the report. Their photographs portraying their department
representatives (inside cover) was a great method to summarize their core services to the public.
Oxfam Hong Kong – Whilst concise, this report was beautifully executed, having effective highlights
pages, and used design to effectively showcase the nature of the company’s work.
Entities which deserve a special mention, for their striking front cover and highlights pages are:
Hong Kong Examinations and Assessment Authority, Hong Kong Housing Society, The Hong Kong
Polytechnic University and The Land Registry.
3b. Understandability and Clarity
In general, the understandability and clarity was of a high standard. Most organizations under
this category have done well in presenting a high quality report describing their organizations’
major mission, values and delineating information regarding their overall performance during the
year relative to these mission and values. Many of them clearly presented their activities by dividing
the contents of their annual reports into various sections by using different colors or divider pages
to attract reading and for the ease of locating the relevant topics by the readers. An increasing
number of entities also included abbreviation and index sessions which were conducive to the ease
of reading and understanding of their annual reports. In addition, many organizations were able
to present information in a clear, logical and structured manner with careful use of photographs,
charts, diagrams and graphs. Such presentation gave a clear and simple picture to portray the
organization’s structure and major activities during the year.
Organizations to be commended are:
Companies Registry, Hong Kong Housing Society, The Hong Kong Jockey Club, Hong Kong
Monetary Authority, Hong Kong Police Force, The Hong Kong Polytechnic University, Hong Kong
Productivity Council, The Land Registry, Mandatory Provident Fund Schemes Authority and Tung
Wah Group of Hospitals.
4. Purpose, General Description of Activities and Performance
The disclosure for this area has shown marked improvement, for example, more organizations
included the events highlight and over 90% of the organizations disclosed their vision, mission, or
value at the beginning of the annual reports. A good report in this area presented a detailed
review of the key divisional performance and how its initiatives contributed to the overall organization
and the economy in general.
About 70% disclosed their milestones, highlights of the year, awards, recognitions and achievements
while over 60% of the entries included the respective statement from the chairman and/or the
chief executive officer and/or general manager. This information demonstrated the organizations’
accomplishments, revealing their message of commitment to diversity and key historic development
to the readers. Some improvements were found in the area of management philosophy and direction
of the organizations as over 90% of the organizations disclosed their vision, mission and values
which enabled the readers to better understand the management philosophy and strategic insight
of the organizations.
Organizations which are particularly outstanding in this aspect include:
Companies Registry, Hong Kong Housing Society, The Hong Kong Jockey Club, Hong Kong
Monetary Authority, Hong Kong Productivity Council, The Land Registry, Mandatory Provident
Fund Schemes Authority, Securities and Futures Commission and Tung Wah Group of Hospitals.
16
5. Indications of Prospects / Forward Looking
Statements
The disclosure for this area has seen some
improvements but further enhancement is still
warranted. Although an increasing number of
organizations mentioned their future plans and
activities whilst top performers provided detailed
plans, goals and initiatives for the year ahead, there
was a general lack of details in the discussion and
further improvement is justified. About 40% of
organizations failed to mention their outlook for the
future and plans. More effort is needed to incorporate challenges
the organizations may face and their risk management plan, and give an
indication how the organizations will position themselves. This will help the
stakeholders learn about their strategic plan for the years to come in order
to better understand the value of the public sector and non-profit
organizations to society.
Organizations which are particularly outstanding in this aspect include:
Companies Registry, Hong Kong Applied Science and Technology Research Institute Company
Limited, Hong Kong Housing Society, Hong Kong Monetary Authority, Hong Kong Productivity
Council, Mandatory Provident Fund Schemes Authority and Securities and Futures Commission.
6. Employee Relations and Development / Corporate Social Responsibility
Public sector and non-profit making organizations make vital contributions to the Hong Kong
community by providing a wide range of essential public services. It is therefore important for
these organizations to maintain a high standard of corporate governance principles and practices.
The policy of these organizations toward their employees is one of the key factors that reflect
their corporate governance practices and future development and more information on such policies
is to be encouraged. While 75% of the participating organizations included organization charts
in their annual report, about 40% of the entries contained little or no discussion on employee
relationships and development/ corporate social responsibility. A more detailed disclosure in the
employee relationships and development and/or social responsibility enables the stakeholders to
gauge the effectiveness of these organizations’ services and to evaluate the efficient utilization of
their resources.
Organizations which deserve special mention for their inclusion of wide coverage on human resources
management, staff training and development plans, safety at work as well as staff welfare and benefits,
and social responsibility are:
Companies Registry, Hong Kong Housing Authority, The Hong Kong Jockey Club, Hong Kong
Monetary Authority, The Land Registry, Mandatory Provident Fund Schemes Authority, Securities
and Futures Commission and Tung Wah Group of Hospitals.
7. Sustainability Reporting
Some companies prepared a separate sustainability report to highlight their effort in promoting
and implementing sustainability within the organization and in Hong Kong generally, through a
green governance structure to oversee and implement the organization’s sustainability strategy, with
input from different functional areas within the organization as well as other stakeholders such
as green groups, suppliers and customers. Indications from some entities as to how they fulfilled
their commitment as a responsible employer to upholding the highest standards in their employment
practices also provided a variety of learning and development opportunities to employees and
supported their physical and mental well-being.
Entities to be commended are:
The Hong Kong Jockey Club, Hong Kong Monetary Authority, Hong Kong Productivity Council,
New Life Psychiatric Rehabilitation Association, Securities and Futures Commission and Tung Wah
Group of Hospitals.
17
8. Promptness of Reporting
Only 17% of the entries succeeded in delivering their reports within 90 days after their year end
this year. Organizations should continue to make an effort in achieving prompt delivery of
information to the general public. Timely preparation of annual reports is essential to maximize
the value and usefulness of the information provided for public interest.
9. Availability of the Annual Report on the Organization’s Website
It was pleasing to notice that all entities made their reports available on the organization’s website,
allowing the general public to gain access to the reports more conveniently and have a deeper
understanding of the performance and activities of the organizations.
10. Conclusion
The standard of performance was generally good with regard to the general presentation of financial
statements and governance disclosure. All organizations under this category have done well in
disclosing information in respect of their corporate mission and values, and their performance during
the year with commentary and analysis on the overall performance towards meeting their mission
and values. Many organizations in this sector succeeded in making the annual reports speak for
their organizations in a user friendly and easy to understand fashion with an effective use of
photographs, charts and graphs. It was also encouraging to see that areas in employee relations
and development / social responsibility have improved and that many of the entities have invested
in the area of sustainability and sustainability reporting. The needs for improved promptness in
reporting and for comment on future strategic planning are areas that entrants can look to better
address next year.
18
THE PANEL OF ADJUDICATORS WISHES TO RECORD ITS THANKS TO THE
FOLLOWING COMPANIES AND ORGANIZATIONS WHICH HAVE
SUBMITTED THEIR REPORTS FOR JUDGING
Agricultural Bank of China Limited
Airport Authority Hong Kong
ANTA Sports Products Limited
Anton Oilfield Services Group
Bank of China Limited
Bank of Communications Co., Ltd.
BOC Hong Kong (Holdings) Limited
Cathay Pacific Airways Limited
China Agri-Industries Holdings Limited
China Construction Bank
China Merchants Bank
China Minsheng Banking Corp., Ltd.
China Mobile Limited
China Overseas Land & Investment Limited
China Resources Enterprise, Limited
China Resources Power Holdings Company Limited
China Rongsheng Heavy Industries Group Holdings Limited
China Telecom Corporation Limited
China Unicom (Hong Kong) Limited
CITIC Pacific Ltd.
CITIC Securities Company Limited
CITIC Telecom International Holdings Limited
City University of Hong Kong
Clear Media Limited
CLP Holdings Limited
Companies Registry
COSCO International Holdings Limited
COSCO Pacific Limited
CSR Corporation Limited
Datang International Power Generation Co., Ltd.
Emperor International Holdings Limited
Employees Retraining Board
English Schools Foundation
Esprit Holdings Limited
First Pacific Company Limited
Franshion Properties (China) Limited
Galaxy Entertainment Group Limited
Hang Lung Group Limited
Hang Lung Properties Limited
Hang Seng Bank Limited
HKR International Limited
Hong Kong Applied Science and Technology Research Institute
Company Limited
Hong Kong Examinations and Assessment Authority
Hong Kong Exchanges and Clearing Limited
The Hong Kong Federation of Insurers
Hong Kong Housing Society
The Hong Kong Jockey Club
Hong Kong Monetary Authority
Hong Kong Police Force
The Hong Kong Polytechnic University
Hong Kong Productivity Council
The Hongkong and Shanghai Hotels, Limited
HSBC Holdings plc
Huaneng Power International, Inc.
Hui Xian Asset Management Limited
Hutchison Whampoa Limited
Hysan Development Company Limited
Industrial and Commercial Bank of China Limited
The Insurance Claims Complaints Bureau
IRC Limited
Karrie International Holdings Limited
Kerry Properties Limited
The Land Registry
Lenovo Group Limited
Li & Fung Limited
Li Ning Company Limited
The Link Real Estate Investment Trust
Mandatory Provident Fund Schemes Authority
Minmetals Resources Limited
Mongolia Energy Corporation Limited
MTR Corporation Limited
NetDimensions (Holdings) Limited
New Life Psychiatric Rehabilitation Association
New World Department Store China Limited
Next Media Limited
Noble Group Limited
NWS Holdings Limited
Orient Overseas (International) Limited
Oxfam Hong Kong
Pacific Basin Shipping Limited
Ping An Insurance (Group) Company of China, Ltd.
Power Assets Holdings Limited
Prosperity REIT
Sa Sa International Holdings Limited
Sands China Ltd.
Sateri Holdings Limited
Securities and Futures Commission
Shenzhen Expressway Company Limited
Shui On Land Limited
Sino Land Company Limited
SOCAM Development Limited
Soloman Systech (International) Limited
Swire Pacific Limited
Swire Properties Limited
Techtronic Industries Co. Ltd.
Transport International Holdings Limited
Trinity Limited
Tse Sui Luen Jewellery (International) Limited
Tung Wah Group of Hospitals
The Wharf (Holdings) Limited
Xinjiang Goldwind Science & Technology Co., Ltd.
Xtep International Holdings Limited
Zhaojin Mining Industry Company Limited
19
APPRECIATION
The Hong Kong Management Association would like to express its appreciation to the Panel of
Adjudicators, including Professor Richard Petty from Macquarie Graduate School of Management, Mr
Michael Cheng from Hong Kong Exchanges and Clearing Limited, Ms Jill Cheshire from Jill Cheshire
Design, Dr Keith Lam from HKU SPACE Po Leung Kuk Community College, Mr Craig Lindsay from
CITIC Securities International Investment Management (HK) Limited, Dr Albert Lung from The Hong
Kong Institute of Chartered Secretaries, Dr John Tang from Ernst & Young, Ms Cheri Wong from
The Hong Kong Society of Financial Analysts, and Mr Ronald Yam from RSM Nelson Wheeler, for
their efforts and time given to judging the entries.
The Association would also like to thank CPA Australia, Hong Kong Exchanges and Clearing Limited,
The Hong Kong Institute of Chartered Secretaries, Hong Kong Securities and Investment Institute,
The Hong Kong Society of Financial Analysts, and Institute of Financial Planners of Hong Kong for
nominating their representatives to serve on the Panel.
20
CO-ORGANIZER
LEAD SPONSOR
PRINCIPAL SPONSOR
GRAND SPONSORS
SPONSORS
Airport Authority Hong Kong
COSCO International Holdings Limited
First Pacific Company Limited
Hong Kong Exchanges and Clearing Limited
The Hongkong and Shanghai Hotels, Limited
Hysan Development Company Limited
Kerry Properties Limited
The Link Real Estate Investment Trust
Power Assets Holdings Limited
Toppan Vite Limited
Transport International Holdings Limited
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