JUDGES' REPORT2016

BEST ANNUAL REPORTS AWARDS

General1. 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 information relating to environmental, social and governance

3. a. General presentation such as design, general layout, photographs, graphs, charts, diagrams and indexing

b. Understandability, clarity and conciseness

4. Summary of past results and highlights5. Management discussion and analysis a. General description of business b. Analysis of assets/liabilities c. Analysis of income/expenses6. Indications of prospects/Forward looking

statements7. Promptness of reporting

Non-profit Making and Charitable Organizations1. General presentation of financial

statements a. Balance sheets b. Income statements c. Cash flow statements d. Details of revenue and expenses2. Provision of information relating to

environmental, social and governance3. a. General presentation such as design,

general layout, photographs, graphs, charts, diagrams and indexing

b. Understandability, clarity and conciseness

4. Purpose, general description of activities and performance

5. Indications of prospects/Forward looking statements

6. Promptness of reporting7. Availability of the annual report on the

organization's website

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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 organization to be more effective in informing the organization’s stakeholders and the public about the performance and future prospects of their organization. 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, HKMA has collaborated with the Australasian Reporting Awards (ARA) to organize the Australasia-Hong Kong Sustainability Reporting Award since 2013. The winners of the HKMA Sustainability Reporting Award and the ARA Sustainability Reporting Award will automatically be considered for the Australasia-Hong Kong Sustainability Reporting Award.

OBJECTIVES

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

80 reports in the two categories were received as follows:General ............................................................................................................................................................ 60Non-profit Making and Charitable Organizations ...................................................................... 20

SCHEDULE OF CRITERIA

PANEL OF ADJUDICATORS

The following persons have been appointed by The Hong Kong Management Association to serve on the 2016 Panel of Adjudicators:

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Dr Keith Lam, CFPCM

Former Vice Chairman – Finance and AdministrationInstitute of Financial Planners of Hong KongDeputy PrincipalHKU SPACE Po Leung Kuk Stanley Ho Community

College (Representing Institute of Financial Planners of

Hong Kong)

Dr John Tang, Solicitor, FCPANational Director, Independence - ChinaErnst & Young

Mr Trini Tsang, SFHKSIExecutive Director and General ManagerWocom Holdings Limited

Mr Colin ChauSenior Vice PresidentListing DivisionHong Kong Exchanges and Clearing Limited(Representing Hong Kong Exchanges and

Clearing Limited)

Dr Neale O’Connor, FCPA (Aust.) Associate ProfessorSchool of Business Hong Kong Baptist UniversityCo-founderChina Sourcing Academy

Professor Richard Petty (Chairman) FCPA (Aust., Life), FAICDChairmanAustralian Chamber of Commerce Hong Kong & MacauPast Chairman & PresidentCPA AustraliaProfessor in Accounting and FinanceMacquarie University Graduate School of Management(Representing CPA Australia)

Mr Philip Tye, ACA, SFHKSI, FHKIODBoard Director Hong Kong Securities and Investment InstituteDirectorHFL Advisors Limited(Representing Hong Kong Securities and

Investment Institute)

Ms Jill Cheshire, RIBA, HKIA DirectorJill Cheshire Design

Mr Richard Law, FCIS, FCS Fellow Member The Hong Kong Institute of Chartered SecretariesCompany SecretaryGlobal Brands Group Holding Limited(Representing The Hong Kong Institute of Chartered

Secretaries)

Mr Steve Ong, FCA, FCPASenior Vice President, Head of Accounting

Affairs, Listing DepartmentHong Kong Exchanges and Clearing Limited(Representing Hong Kong Exchanges and

Clearing Limited)

Mr Frederick Tsang, CFAImmediate Past PresidentThe Hong Kong Society of Financial AnalystsChief Risk OfficerChina Everbright Limited(Representing The Hong Kong Society of

Financial Analysts)

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THE AWARDS OF THE 2016 HKMA BEST ANNUAL REPORTS COMPETITION ARE AS FOLLOWS

Best Report AwardCLP Holdings Limited

“General” CategoryGold: Hong Kong Exchanges and Clearing LimitedSilver: The Hongkong and Shanghai Hotels, Limited HSBC Holdings plcBronze: Link Real Estate Investment Trust MTR Corporation Limited Swire Pacific Limited

“Non-profit Making and Charitable Organizations” CategoryGold: Securities and Futures CommissionSilver: Hong Kong Monetary AuthorityBronze: Mandatory Provident Fund Schemes Authority

Honourable MentionFu Hong SocietyHang Lung Properties LimitedHong Kong Housing SocietyThe Hong Kong Jockey ClubSa Sa International Holdings LimitedSwire Properties Limited

Sustainability Reporting Award“General” Category CLP Holdings Limited

“Non-profit Making and Charitable Organizations” CategoryDrainage Services Department

Excellence Award for Charitable OrganizationsFu Hong SocietyThe Hong Kong Jockey Club

Excellence Award for H Share & Red Chip EntriesCOSCO International Holdings LimitedCOSCO SHIPPING Ports LimitedLenovo Group Limited

Excellence Award for Small Size EntriesChina Everbright LimitedEqual Opportunities CommissionPower Assets Holdings Limited

Best New Entry Chow Tai Fook Jewellery Group Limited

Citation for DesignThe Hong Kong Polytechnic University Hong Kong Productivity CouncilNew World China Land LimitedShui On Land Limited

Citation for Environmental, Social and Governance DisclosureCOSCO International Holdings Limited Hysan Development Company LimitedLenovo Group Limited Tung Wah Group of Hospitals

Judges’ Special AwardCK Hutchison Holdings Limited

Australasia-Hong Kong 2016 Sustainability Reporting AwardSanford Limited

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BEST REPORT AWARD

Non-profit Making and Charitable OrganizationsGold

Silver

Hong Kong Monetary AuthorityA well-presented report with thorough description of its key performances and achievements, and extensive coverage of future strategic planning.

Securities and Futures CommissionAn outstanding report which effectively conveys its commitment to strengthening the soundness and competitiveness of Hong Kong’s financial markets.

Bronze

Mandatory Provident Fund Schemes AuthorityAn indicative report with a special Milestones section being aptly inserted at the beginning to highlight its significant developments over the years.

CLP Holdings LimitedA top qual ity repor t which raises the bar again and demonstrates excellence in design, concise communication and innovative repor t ing to enhance the decision-usefulness of the report.

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General

Gold

Silver

Bronze

Hong Kong Exchanges and Clearing LimitedAn excellent report which exhibits high level of transparency and accountability, and adopts integrated reporting approach to provide detailed description of its business strategies.

Link Real Estate Investment TrustAn informative report which provides detailed elaboration of its stakeholder engagement, and comprehensive over v iew of i ts r i sk management system and mitigation measures.

MTR Corporation LimitedA well-designed report with an attractive “5 Million Stories” Sustainability Report which shows its mission of connecting communities and sharing growth through storytelling.

Swire Pacific LimitedAn engaging report with striking highlights pages and succinct presentation of environmental, social and governance related information, enhancing readability of the report.

The Hongkong and Shanghai Hotels, LimitedAn impressive and high quality report using thoughtful design to present in-depth hotel portfolio and depict the theme of “Tradition meets Innovation”.

HSBC Holdings plcA well-structured and effective report with extensive disclosure of management discussion and analysis as well as a highly readable section of strategic report.

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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 Requirements1.1 Conformity with the requirements of the relevant financial reporting standards

There was generally a high level of compliance with the mandatory disclosure requirements under the relevant financial reporting standards, except for a few minor exceptions. Specific comments are as below:

HKAS 1 (Revised) Presentation of Financial Statements

Hong Kong Accounting Standard 1 (Revised) “Presentation of Financial Statements” requires companies to provide information which is relevant to an understanding of the financial statements by way of additional notes to the financial statements. The Standard also requires companies to include comparative information for narrative and descriptive information if it is relevant to understanding the current period’s financial statements. As in previous years, there were various omissions from the disclosures required under HKAS 1 (Revised) this year. Some companies did not provide information on significant events leading to significant changes or material balances and transactions in the annual reports. Several companies did not provide details of all relevant accounting policies used by management in accounting that have a significant effect on the amounts recognized in the financial statements. Examples of missing accounting policies included related parties, borrowing costs, segment reporting, provisions and contingent liabilities.

HKAS 2 Inventories

Hong Kong Accounting Standard 2 "Inventories" requires disclosure of circumstances or events that led to the reversal of a write-down of inventories. However, nearly 10% of participants recognized a reversal of write-down of inventories but did not explain the events or circumstances causing the reversal. HKAS 2 also requires an entity to disclose the amount of inventories recognized as expenses during the year. 5% of the participants did not disclose this information.

HKAS 21 The Effects of Changes in Foreign Exchange Rates

Hong Kong Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates" requires that when the presentation currency is different from the functional currency, this fact should be stated in the financial statements, together with disclosure of the functional currency and the reason for using a different presentation currency. Around 13% of the participants did not disclose their functional currency or did not explain the reason for using a presentation currency which was different from the functional currency.

HKAS 24 (Revised) Related Party Disclosures

Hong Kong Accounting Standard 24 (Revised) “Related Party Disclosures” requires that if there are transactions between related parties, there should be disclosure of the nature of the relationship, the amount of the transactions, outstanding balances, and related provisions. Compliance with this Standard varied. Some companies omitted the disclosure of the name of the parent company and, if different, its ultimate controlling party; did not provide separate disclosures of different categories of related parties, including but not limited to the parents, associates, joint ventures and key management personnel; and did not include the remuneration of non-executive directors in the amount of key management personnel compensation.

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HKAS 36 Impairment of Assets

Hong Kong Accounting Standard 36 "Impairment of Assets" requires that where an impairment loss had been recognized or reversed, an entity should disclose the events and circumstances that led to the recognition or reversal. However, nearly 10% of the participants recognized impairment losses on non-financial assets but did not explain the events and circumstances that led to the recognition. HKAS 36 also requires the disclosure of key assumptions used in determining recoverable amounts of assets, such as discount and growth rates, as well as explanations on the methodology used. Around 5% of the participants did not adequately disclose these information.

HKAS 38 Intangible Assets

Hong Kong Accounting Standard 38 "Intangible Assets" requires disclosure of the useful lives or the amortization rates used for finite intangible assets and the line item(s) of the statement comprehensive income in which the amortization of intangible assets is included. Around 15% of the participants did not provide the disclosure.

HKFRS 3 (Revised) Business Combinations

Hong Kong Financial Repor ting Standard 3 (Revised) "Business Combinations" requires that for each business combination that occurs during the reporting period, an entity should disclose the amounts of revenue and profit or loss of the acquiree since the acquisition date included in the consolidated statement of comprehensive income for the reporting period; and the revenue and profit or loss of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. Nearly 10% of the participants did not disclose such information. HKFRS 3 (Revised) also requires disclosure of certain background information of each business combination that occurs during the reporting period, such as name of the acquiree, acquisition date, percentage of equity interests acquired and a qualitative description of the factors that make up the goodwill recognized. However, nearly 5% of the participants did not adequately provide the required disclosures.

HKFRS 7 Financial Instruments: Disclosures

The standard of information disclosed under the requirements of Hong Kong Financial Reporting Standard 7 “Financial Instruments: Disclosures” varied. The Standard requires companies to disclose the fair values of financial assets and financial liabilities and whether fair values are determined directly by reference to published price quotations in an active market or are estimated using a valuation technique. Furthermore, it requires that when a valuation technique is used, the assumptions applied in determining fair values of each class of financial assets and financial liabilities should be disclosed. Various omissions from the standard disclosures required were noted. HKFRS 7 requires disclosure of an analysis of the age of financial assets that are past due as at the end of the reporting period but not impaired. Meanwhile, Appendix 16 to the Listing Rules requires an issuer to disclose ageing analysis of accounts receivable, which should be based on the date of the relevant invoice or demand note. Nearly 10% of the participants only disclosed the ageing analysis required by the Listing Rules but not the one required by HKFRS 7; or provided an ageing analysis without disclosing the basis on which the ageing analysis was prepared.

HKFRS 12 Disclosures of Interests in Other Entities

Hong Kong Financial Reporting Standard 12 “Disclosures of Interests in Other Entities” requires an entity to disclose information about significant judgements and assumptions it has made in determining that it has control of another entity and that it has significant influence over another entity. It was noted that nearly 20% of the participants did not explain how they controlled

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an entity even though they held less than half of the voting rights of that entity or how they had significant influence over an investee even though they held less than 20% equity interest in that investee. In relation to subsidiaries having material non-controlling interests, HKFRS 12 requires disclosure of certain information of those subsidiaries, such as proportion of ownership interests and voting rights (if different from ownership interests) held by non-controlling interests and summarized financial information about the subsidiary. However, more than 10% of the participants appeared to have subsidiaries with material non-controlling interests but did not disclose the required information. In addition, HKFRS 12 requires disclosure of summarized financial information for each material associate and joint venture and financial information in aggregate separately for all individually immaterial associates and joint ventures. About 5% of the participants did not disclose such summarized financial information.

HKFRS 13 Fair Value Measurement

Various omissions from the standard disclosures required under Hong Kong Financial Reporting Standard 13 “Fair Value Measurement” were noted. For example, the Standard requires companies to categorize their assets and liabilities that are measured at fair value into a three-level fair value hierarchy and to disclose transfers between the levels. The Standard also requires descriptions of the valuation techniques and the inputs used for recurring level 2 and level 3 measurements, and significant unobservable inputs for level 3 specifically. Additionally, for recurring fair value measurements categorized within level 3 of the hierarchy, a reconciliation from the opening balances to the closing balances disclosing separately certain changes, the amount of total gains or losses, and sensitivity analysis as to changes in unobservable inputs are needed. Several of the companies did not fully comply with the disclosure requirements.

1.2 Provision of accounting information over and above the requirements

As was the case last year, and the general trend, the move was to more extended value reporting, more sustainability reporting, and more reporting on diversity. This is an excellent development and it would be good for the trend toward more transparency, disclosure and diversity to continue.

1.3 Other comments

Too many companies are still treating the annual reporting process as a regulatory impost rather as an opportunity for stakeholder communication and engagement. The annual report is an important document and it should help all stakeholders better understand the company, its performance, its strategy, and its direction. Most stakeholders will be interested in how well the company will perform into the future in financial terms. Past financial performance is one part of the equation, but the other parts are equally important. All factors combined operate to deliver that future financial performance, and often it is the non-financial factors that appear in a past annual report, such as management discussion as to future plans, that are most helpful to understanding and predicting future financial performance. Ultimately a good annual report is one that effectively communicates what the company has done, what it plans on doing, the reasons and rationale underpinning the decisions that are made, and the future potential of the company to its stakeholders. Good annual reports are transparent in providing all of the information that decision makers would find relevant to consider in making their investment and other decisions.

2. Conformity with the Disclosure Requirements of the Hong Kong Stock Exchange and Hong Kong Companies Ordinance, and Provision of Information Relating to Environmental, Social and Governance (ESG)2.1 Overall standards and comments

The Hong Kong Stock Exchange requires that companies make additional disclosures in annual reports under the Listing Rules. The requirements are generally set out in Appendix 16 “Disclosure of Financial Information”, Appendix 14 “Corporate Governance Code and Corporate Governance Report” and Appendix 27 “Environmental, Social and Governance Reporting Guide” to the Listing Rules (the “ESG Guide”). Appendix 16 includes mandatory disclosure requirements and some recommended disclosures in relation to financial information. Appendix 14 includes mandatory disclosure requirements and certain recommended disclosures in relation to corporate governance.

The ESG Guide includes “comply or explain” disclosure requirements and some recommended disclosures in relation to ESG matters. The General Disclosures under each aspect of the ESG Guide becoming “comply or explain” requirements is effective for issuers’ financial years commencing on or after 1 January 2016. The upgrade of the KPIs in the “Environmental” Subject Area of the ESG Guide from recommended to “comply or explain” will be effective for issuers’ financial years commencing on or after 1 January 2017.

The level of detail to be disclosed in annual reports varies with the nature and complexity of listed issuers’ business activities. It was noticeable that, as in previous years, some annual reports only included information that complied with minimum disclosure requirements as required by the Listing Rules and the Hong Kong Companies Ordinance but the better annual reports provided additional information to enable shareholders to make more informed investment decisions. The inclusion of voluntary disclosures made the annual reports more informative. As a whole, Hong Kong companies could do much more in the way of providing information on a voluntary basis. It seems that the benefits of doing this are either not clearly understood, or that companies just don’t sense that those who read financial reports really are looking for this additional information.

2.2 Areas in which this year ’s entries have shown ver y good performance

Most of the entries complied with the disclosure requirements. Those who were willing to provide additional information outnumbered those who underprovided the information. Some companies even disclosed specifics about how the board operated during the past year. The presentation of corporate governance information was more structured than those of employee relations and social responsibilities. Companies were also enthusiastic about disclosing activities related to social goodness. Some provided either a separate ESG or Corporate Sustainability Report in the annual reports, while others issued an independent report on the subjects.

As the community became more sensitive about director pay than before, some entries, particularly those in the financial sector, disclosed detailed calculations on how each of the senior management was being rewarded. A small number of entries even hired an independent party to evaluate the performance of the board, which ensures effective management of the companies.

Examples of additional information included:

(a) Early adoption of the new auditing standards

Hong Kong Standard on Auditing 700 (Revised) / International Standard on Auditing 700 (Revised) “Forming an Opinion and Reporting on Financial Statements” and Hong Kong Standard on Auditing 701 / International Standard on Auditing 701 “Communicating Key Audit Matters in the Independent Auditor's Report” substantially extend the form and content of the auditor’s report and will be effective for audits of financial statements for periods ending on or after 15 December 2016. The auditors of a few participants early applied the new auditing standards and the auditor’s report included in these participants’ annual reports had been issued in accordance with the new auditing standards.

(b) Additional disclosures in Corporate Governance Report

All participants included a Corporate Governance Report in their annual reports. Most of the participants this year complied with the code provisions in the Corporate Governance Code (the “Code”). In addition, some participants complied with the recommended best practices and provided additional disclosures which are set out below:

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• 38% established a risk committee and disclosed its role, function, composition and asummary of work performed and 13% disclosed that the board of directors received a confirmation from management on the effectiveness of the risk management and internal control systems.

• 37% provided details of remuneration payable to senior management (those individualswhose biographical details are disclosed in annual report) and 10% disclosed the number of shares held by senior management on an individual and named basis.

• 37% disclosed the division of responsibilities between the board and management,including their separate powers and level of authority.

• 23% conducted regular evaluation of board performance.

• 22% released separate ESG reports in accordance with the ESG Guide in Appendix 27 ofthe Listing Rules.

• 20% provided a commentary on corporate values, strategy and principal drivers ofperformance.

• 15% included a separate remuneration report which provided details of the RemunerationCommittee, including its composition, role, the number of meetings held, and details of the company’s remuneration policy.

(c) Additional disclosures in relation to internal controls

All of the participants disclosed a narrative statement that the board has conducted a review of the effectiveness of the internal control system in accordance with code provision A.2.1 of the Code, which is mandatory. In addition, over 85% of the participants provided additional disclosures, which are not mandatory, in respect of their internal control system. For example, most of these participants disclosed an acknowledgement that the board is responsible for the internal control system and reviewing its effectiveness, the period covered by their review and whether the board considered their internal control system effective and adequate. Some of them also disclosed the process used to identify, evaluate and manage significant risks, the process used to review the effectiveness of the internal control system and the procedures and internal controls for handling and dissemination of inside information.

(d) Additional disclosures in relation to investor information

57% of the participants provided useful investor information, including details of shareholders by type and aggregate shareholding, details of the last Annual General Meeting such as date, venue and resolutions approved, and important shareholders’ dates in the coming financial year. 53% of the participants disclosed dividend payout policy or details of dividend payment history. 25% of the participants disclosed historical trends in their market prices and some of them compared the trends of their market prices against the Hang Seng Index.

(e) Ten-year financial summaries and other additional financial information and analysis

Approximately 20% of this year's participants included a ten-year financial summary on a voluntary basis in their annual reports. Around half of the participants provided additional financial information in their reports so as to assist shareholders and users of annual reports to understand their performance. The additional financial information included profit margins, return on equity, net earnings, debtor turnover, inventory turnover, amount of undrawn borrowing facilities and other financial statistics in their annual reports. Around 20% of the participants provided an overview of trends in their industry or business to complement their actual performance.

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.

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(a) Disclosure of financial information required under the Listing Rules

Some mandatory disclosures required under the Listing Rules were omitted and are set out below:

• 23% did not fully disclose in directors’ report the informationin relation to “business review” as required under Schedule 5 of Companies Ordinance (Cap. 622) and paragraph 28 of Appendix 16 of the Listing Rules. Most commonly omitted information included description of principal risks and uncertainties and a discussion on compliance with relevant laws and regulation.

• 18% did not provide information in respect of distributable reservesas required under paragraph 29 of Appendix 16 of the Listing Rules.

• 13% did not fully disclose the financial information as requiredunder paragraph 32 of Appendix 16. Most commonly omitted items included the extent to which borrowings are at fixed interest rates and the currencies in which borrowings are made and in which cash and cash equivalents are held.

• 7% did not disclose information in respect of major customersand suppliers as required under paragraph 31 of Appendix 16.

• 5% omitted general description of the group’s emolumentpolicy or basis of determining emolument payable to directors as required under paragraph 24 of Appendix 16 of the Listing Rules.

• 5% only provided the consolidated balance sheet of the Group intheir annual reports but did not include the balance sheet of the company itself as required under paragraph 28 of Appendix 16 and Rule 13.46 of the Listing Rules.

(b) Disclosure in relation to corporate governance required under the Listing Rules

Although many participants voluntarily provided additional information in their corporate governance reports (see section 2.2 above), some of them omitted certain mandatory disclosures as required under Appendix 14 of the Listing Rules. The omissions included:

• 20% of the companies either did not provide analysis of remunerationin respect of audit and non-audit services provided by the auditors, or did not provide the details of nature of significant non-audit service assignments.

• 10% did not disclose information of corporate governance functions, including the policyfor the corporate governance of the company and duties performed during year under code provision D.3.1.

• 7% did not disclose whether there was a change in articles of association during the year.

• 3% did not disclose the policy concerning diversity of board members.

• 2% did not disclose term of appointment of non-executive directors.

2.4 Outstanding companies deserving special mention

Companies which are particularly outstanding in this area include:

CLP Holdings Limited, COSCO International Holdings Limited, Hong Kong Exchanges and Clearing Limited, The Hongkong and Shanghai Hotels, Limited, HSBC Holdings plc, Hysan Development Company Limited, Lenovo Group Limited, Link Real Estate Investment Trust, MTR Corporation Limited, Sa Sa International Holdings Limited and Swire Pacific Limited.

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3a. General Presentation such as Design, General Layout, Photographs, Graphs, Charts, Diagrams and Indexing

The general presentation standards remained high among the entries, with most companies making good efforts towards the creation of well-designed, engaging and informative reports to uplift the overall quality. Most companies continued to adopt various design and presentation techniques, including the use of compelling headlines, interactive Q&As dialogue, colourful charts, diagrams, graphs and photos to present their financial/non-financial results and operating activities, making it easier for readers to comprehend their key messages. Similar to last year, it was encouraging to note that more companies started using the contemporary integrated reporting approach with innovative charts, diagrams or design effects to depict, among others, their business models, value-creation process or capitals deployed. While some companies provided separate supplementary sheets intending to elaborate on the design concept of their reports, only very few could highlight significant improvements.

Companies which deserve a special mention for their striking and effective highlights pages are:

ANTA Sports Products Limited, Chow Tai Fook Jewellery Group Limited, CK Hutchison Holdings Limited, CLP Holdings Limited, The Hongkong and Shanghai Hotels, Limited, Hysan Development Company Limited, New World China Land Limited and Swire Pacific Limited.

Companies which receive overall design and presentation commendations are:

Chow Tai Fook Jewellery Group Limited – Effective highlight pages and business model at a glance, plus outstanding use of colour, charts, diagrams and bullet points.

CK Hutchison Holdings Limited – Different colour sections were used effectively to differentiate the company's six core businesses with very concise and effective operating and financial highlights.

Clear Media Limited – A striking “three dimensional” design, creating intrigue and interest for the readers.

CLP Holdings Limited – New ways to innovate were demonstrated: clear, concise, informative and stunning presentation, as well as use of design elements such as icons, QR codes and cross-referencing, throughout the report.

The Hongkong and Shanghai Hotels, Limited – The hotel portfolio was informative and plenty elements of integrated reporting approach were adopted with striking non-financial data, demonstrating a very thoughtful design.

HSBC Holdings plc – The report was well-structured and indexed, with effective design using simple colours, very light papers and a strategic report of high readability.

Hysan Development Company Limited – Very well-structured report with outstanding overview and highlights, and a clean and concise design.

MTR Corporation Limited – A colourful, comprehensive and well-organized report, with good use of design elements and an attractive “5 Million Stories” Sustainability Report.

New World China Land Limited – Exceptional design concept using the most common surnames of northern, north eastern, central and southern China to highlight the group’s development in those cities.

Shui On Land Limited – A good, all-round, well-designed and presented report with very comprehensive market updates and project profiles.

Transport International Holdings Limited – A balanced report making good use of colour, photographs, charts, tables as well as Q&As dialogue format.

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3b. Understandability, Clarity and Conciseness

The understandability and clarity of reports showed mild improvements, compared with the 2015 entries, while the gap between the top ranked reports and the lower ranked ones has been narrowed slightly. Companies were putting great efforts in making their annual report as easy to read as possible. With the length of an annual report sometimes going to more than 300 pages, readers may find it hard to digest all of the information being communicated. Very often, companies have lost sight of providing stakeholders with the relevant information, and have taken it as a chance to promote their achievements in the annual report, overwhelming the readers with such information. In particular, investors would like to evaluate a listed entity with a complete picture and anticipate a balance presentation of information. After reading the annual reports produced by the top performers, one would be inclined to invest in their stocks. By contrast, the poor performers could only leave a vague impression and easily be forgotten thereafter.

As in previous years, companies with a relatively longer history listed on the Stock Exchange and the “Blue Chips” stocks continued to produce clearly laid out and well-presented reports and outperformed other entries. Almost all entries incorporated sections relating to their corporate strategies and core competence to produce a link to the past and into the future, and enable readers have a deeper understanding of the companies’ strategic planning. It was pleased to note that the proportion of entries which could clearly identify their strategies and core competence increased significantly from 40% to 70% from 2015 to 2016 Awards. Many companies included sections presenting non-financial information such as their milestones, major events, honors or awards during the year, with only about 13% of the companies excluding such sections. The proportion of entries reporting their vision or mission in the first few pages of their annual reports remained steady and only less than 10% of the companies omitted such items.

In general, the design and presentation of the entries’ annual reports improved with effective content structure, headlines, message quotes, and graphs or charts. Such design elements provided visual depiction of data/trend, made the reports look more interesting and easy to comprehend. It was noted that more than 70% of entries included charts or tables to explain the operating and financial results and summarized the lengthy explanations. About 60% of the companies also included a glossary of terms and abbreviations or provided definitions and formulae referred to in their reports. Furthermore, the top performers produced a unified theme for their annual report, leaving a lasting impression on the readers, and helping readers grasp the important messages with ease.

Compared with last year, a few more entries started applying the International Integrated Reporting (IR) Framework in preparing their reports and/or made better disclosure on risk management and internal controls. These reports showed a better picture of how companies created values for their stakeholders and how they managed the associated risks. In other words, the total performance of the entries could be better understood. These reports would set as examples for other companies if they are going to adopt IR Framework in the future. In addition, three entries encouraged their auditors to early adopt the “long form” auditor’s report, which set out the significant issues identified and how they were dealt with. Such enhanced transparency of auditors’ works would help users understand better the annual reports.

Nevertheless, there are several areas which require further improvements. For example, only less than 10% of entries included a question and answer section in their annual reports to address some of the stakeholders’ commonly asked questions or concerns, which could further support the companies’ strategies and core messages. Disclosure on relevant markets or industries performance/data and their bases of calculation or formulae also remained relatively weak. For companies especially state-owned enterprises, they should highlight corporate strategies in a more prominent manner in their annual reports instead of embedding them in the Chairman's or the

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Chief Executive's Statement, and to discuss material threats or risks faced by the companies in details.

On the other hand, it was harder for the readers to understand if the reports were directly translated from Chinese, so companies should avoid using plain translators to do the job and should give due consideration to the use of both English and Chinese. Incomplete explanation or excessive details were also barriers to the understanding of some reports.

Outstanding companies deserving special mention are:

ANTA Sports Products Limited, CLP Holdings Limited, Hang Lung Properties Limited, The Hongkong and Shanghai Hotels, Limited, HSBC Holdings plc, Link Real Estate Investment Trust, MTR Corporation Limited, Sa Sa International Holdings Limited, Swire Pacific Limited and Swire Properties Limited.

4. Summary of Past Results and Highlights

The overall quality of presentation in this area remained high. Most companies were able to present a good and informative summary of their past financial results while some could provide concise highlights of their business activities. These kinds of information were essential for helping stakeholders to gain a clearer understanding of the performance, identify prevalent trends and detect any major structural changes of the companies. The disclosure on per-share data also remained steady. Over 50% of the companies presented per-share data related to the shareholders' equity, total assets, net tangible assets, net assets, or net operating cash flow. Companies could further increase the number of ratios being presented to enable users deepen understanding of their past performance.

In addition, graphs, charts and ratios were used effectively by about 55% of entries to highlight their financial performance and operations, but decrease in number of companies doing well in this area was noted. Disclosure on key performance indicators or highlights on non-financial performance data, such as operating or ESG data, remained weak as well. Companies are encouraged to spend more effort in presenting such data and making thoughtful use of charts and ratios in their reports.

Organizations which are particularly outstanding in this aspect include:

Chow Tai Fook Jewellery Group Limited, CITIC Limited, CK Hutchison Holdings Limited, Hang Seng Bank Limited, Hong Kong Exchanges and Clearing Limited, The Hongkong and Shanghai Hotels, Limited, Li & Fung Limited, MTR Corporation Limited, Shui On Land Limited, Swire Pacific Limited and Swire Properties Limited.

5. Management Discussion and Analysis

Many of the companies demonstrated excellent presentation in this area. Most of them continued to offer comprehensive discussions and analyses of their business operations and performances. The content included discussion of the general business environment, analysis of their business operations by segment, major product lines and/or geographic locations, analysis of the assets/liabilities and income/expenses items, risk management, and future prospects. However, as in previous years, the discussion of future prospects and risk factors affecting future operation were not sufficient, and more disclosure in this aspect is required.

5.1 General description of business

Most companies did well in comprehensively evaluating the factors which influenced their operations during the reporting year including the general economy, the industry and company specific factors such as expansion of production capacity and diversification of product lines.

5.2 Analysis of assets / liabilities

It was pleasing to note that many companies, especially the banks, were able to provide analyses of their assets/liabilities positions as well as risk management in details.

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5.3 Analysis of income / expenses

High performers provided detailed reviews of the income/expenses items and maintained high level of standard. Rationales of the changes in the income/expenses items were explained by segments, product lines and/or geographic locations.

Companies that deserve mention for extensive and informative management discussion and analysis include:

CLP Holdings Limited, Hang Seng Bank Limited, The Hongkong and Shanghai Hotels, Limited, HSBC Holdings plc, Kerry Properties Limited, Li & Fung Limited, Shui On Land Limited, Swire Pacific Limited and Swire Properties Limited.

6. Indications of Prospects / Forward Looking Statements

This is the area that few entries have done well. Regulations aside, it takes a lot of courage for management to make a commitment regarding future performance. As the business environment has become ever uncertain, management tends to remain vague about the companies’ future prospects. While it may be hard to predict the future, stakeholders generally welcome frank discussion about the companies’ prospects and challenges that they may face in the future.

Among the entries, most of them stated the companies’ outlook in the Chairman’s Statement, and some provided additional information under Management Discussion for each of the business sectors. Macro development, industry trends, companies’ business plans, specific projects and capital expenditure were commonly discussed.

Apart from providing general information about the companies’ prospects, companies should gather market forecasts for the business sectors which help readers to predict the performance of the companies. It is also constructive if management could give guidance about changes of the cost items. Outlining challenges and steps to be taken to overcome them would be useful in the analysis of the companies’ prospects. While it is convenient to include part of the outlook under each of business sectors, it is advisable to put all of the analyses under a separate section for easy reading and understanding.

Companies deserving special mention in this area include:

CITIC Securities Company Limited, COSCO International Holdings Limited, Hang Lung Properties Limited, The Hongkong and Shanghai Hotels, Limited, HSBC Holdings plc, Li & Fung Limited, New World Department Store China Limited, Shui On Land Limited and Swire Pacific Limited.

7. Sustainability Reporting7.1 Overall standards and comments

The overall standard of sustainability reporting varied substantially among companies. Many nominees have invested significant resources in areas of corporate social responsibility (CSR), sustainable development, health and safety, and environment and community, and adopted a range of approaches to report on their sustainability strategy. They continued to provide a comprehensive insight into the sustainability of the companies through tables of initiatives and achievements, thus building and formulating awareness of such issues both inside and out the companies. Some companies had put a lot of effort in producing the sustainability report which was either presented as a part of the annual report or as a separate booklet. It was also gratifying to see more companies adopting the Hong Kong Stock Exchange’s ESG Reporting Guide in preparing the sustainability reports. Whilst this was a recommended practice in 2015, listed issuers are to note that amendments to the ESG Reporting Guide had been published

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in December 2015. The upgrade of the General Disclosures in the ESG Reporting Guide from recommended to “comply or explain” is effective for issuers’ financial years commencing on or after 1 January 2016 and the upgrade of the KPIs in the “Environmental” Subject Area of the ESG Reporting Guide from recommended to “comply or explain” will be effective for issuers’ financial years commencing on or after 1 January 2017.

However, some of the companies still simply presented a description of the list of social events in which the companies had engaged in, the lists of awards, achievements and/or short summaries of the various initiatives taken during the past year, without presenting details that readers could use to verify the value of such actions in contributing to a sustainable enterprise. Also, only five companies were able to use a materiality matrix as a way of delineating the tradeoffs of the variety of sustainability issues across multiple stakeholders.

7.2 Areas in which this year’s entries have shown very good performance

Some companies really did exceedingly well. They not only presented the strategy for sustainability, but also provided informative key performance indicators and measurable targets as well as tracking of the achievement of these targets. Some of them also paid attention to identify and prioritize the issues in terms of materiality and significance. Examples of good practices were listed below:

(i) used infographics and photos suitably which not only enabled an effective communication to the readers but also made the report sound more convincing;

(ii) provided a comprehensive insight into the sustainability of the company as a whole by driving the review into different aspects as well as the achievement attained;

(iii) added in special topics to make relevant information quickly and easily accessible by interested parties;

(iv) applied storytelling as a report form from stakeholders to indicate relevant sustainability topic;

(v) reflected the commitment to environment-friendly innovation and service excellence with a clear and colourful illustration of different stakeholders;

(vi) numerically disclosed the measure of greenhouse gas emissions as well as usefully and meaningfully conveying some other material figures, hence facilitating the comparison to the previous years;

(vii) exhibited its materiality matrix and used Global Reporting Initiative Statement which showed a clear path in corporate strategy in sustainable aspect;

(viii) clearly projected a thorough and transparent analysis using the Sustainability Data Statement; and

(ix) provided a connected and comprehensive view of the different aspects of the business operation and financial performance, an easy way to convey company’s goal and performance to the stakeholders.

7.3 Areas in which this year’s entries have performed poorly

Some companies simply presented their contribution to sustainability using few pages or paragraphs, which were too ambiguous and simplified for readers to understand. Some of them used only words to summarize their focus on CSR but lack any supporting, and lacked presentation of achievements by the organized activities. The strategies reported were also obscure which showed only the big picture. Companies are suggested to improve their reports by:

(i) presenting a clear strategy of sustainability with measurable targets and tracking the performance of these targets;

(ii) understanding all relevant stakeholders in the report, and using clearer and simpler language to communicate with a wider range of audience;

(iii) categorizing and prioritizing the issues in terms of significance;

(iv) clearly stating the events encountered about CSR as well as showing the impacts to the environment of each event; and

(v) describing any improvements to be made as a going concern company, but not only disclosing the positive news.

7.4 Companies to be commended on their sustainability reporting

China Pacific Insurance (Group) Co., Ltd., CLP Holdings Limited, COSCO SHIPPING Ports Limited, Hang Seng Bank Limited, The Hongkong and Shanghai Hotels, Limited, Lenovo Group Limited, MTR Corporation Limited, New World China Land Limited, New World Department Store China Limited and Sa Sa International Holdings Limited.

8. Promptness of Reporting

Among all companies which submitted their reports, around 20% of them delivered their annual reports within 90 days after their fiscal year end, and one of them was able to produce the reports within 60 days. Decrease in number of companies producing timely information was observed when compared to 2015 and there is room for improvement in this area. It is important for companies to produce their reports as promptly as possible to maximize the relevance and usefulness of disclosed information.

9. Conclusion

The standard of reporting was on par with the 2015 Awards in most aspects. Some companies presented extremely well. They demonstrated a high level of transparency in reporting, disclosed a clear corporate vision and mission as well as complete financial information. Many of them applied thoughtful layout and design in their reports to facilitate effective communication and enhance overall readability. It was also satisfying to observe that more and more companies included detailed review of key performance indicators, allocated more resources on sustainability and produced a separate ESG/CSR report to provide a comprehensive insight into sustainability of the companies.

Despite the generally high standard of reporting, many companies sacrificed conciseness for the sake of over pending information, reducing the readability of the reports. The discussion of future prospects and clearly defined risk factors affecting future operation are still areas for further improvement. These elements are important because if any of them is missing then the usefulness of the report as a decision tool and as a source of important information on the company is diminished. Therefore, more emphasis should be put on these areas to help stakeholders predict the company’s long term development and make investment decisions.

The Best Report Award winner, CLP Holdings Limited, continued to raise the bar. It demonstrated clear and concise communication, and adopted innovative reporting that enhanced the decision-usefulness of the annual report as a tool for understanding and evaluating the business. Other medal winners were also outstanding in producing well-structured and well-designed reports with high level of understandability.

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 sub-categories including Best New Entry, Citation for Design, Citation for Environmental, Social and Governance Disclosure and Judges’ Special Award this year.

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NON-PROFIT MAKING AND CHARITABLE ORGANIZATIONS CATEGORY

1. General Presentation of Financial Statements

Generally, the presentation of financial reports was very good. There were very few organizations which did really poorly in this regard.

Most of the submissions paid great attention to the presentation of financial statements with careful use of charts and graphs, despite being non-commercial entities. Most entries provided useful and concise information on Income Statement and Balance Sheet. There were also disclosures on sources of revenue and details about expenditures, and cash flow information was commonly included in the report. Relatively large-scale organizations were able to provide detailed information in the useful explanation notes, while for some entries, a separate financial report was produced.

However, there were still some reports which lacked a cash flow statement. All entries should have included such information in their reports since the information is much valuable than the profit and loss figures for non-commercial entities. Also, only a few submissions contained an analysis of financial data, similar to the practice by listed companies. It is advisable for more entries to provide an analysis of financial data, even a brief one, and disclose explanation notes for the accounting data, which will help readers better understand the financial situation.

Outstanding organizations which deserve special mention are:

Hong Kong Housing Society, The Hong Kong Jockey Club, Hong Kong Monetary Authority, The Hong Kong Polytechnic University, Hong Kong Productivity Council, Mandatory Provident Fund Schemes Authority, Securities and Futures Commission and Urban Renewal Authority.

2. Provision of Information Relating to Environmental, Social and Governance (ESG)

Most of the organizations did well in providing information on ESG, notwithstanding their limited resources, and a few of them even issued a separate CSR report. The top performers were believed to be led by management with a social and service centric mindset. Since most of the reports were produced by service providers, it was relatively easy for them to cover the environmental aspects if they chose to disclose such information.

Most organizations were able to provide information related to corporate governance including the establishment of committees such as audit committee, remuneration committee and other executive committees, and offer comprehensive explanation of the functions and structure of the committees, the frequency of committee meetings and members' attendance during the year. Nearly all organizations included a section on ESG highlighting their involvement in protecting the environment, community services and employee relations, such as training and development and work safety. Some organizations also set out their financial statements and independent auditor’s report in a separate document, enhancing clarity and disclosure for those readers who required more detailed financial information on the organizations. Furthermore, readers were able to understand the corporate governance aspects of an organization since performance pledges were disclosed, and analysis on enquiries and complaints handled were included in some reports.

For those organizations having separate board and management, 80% described respective roles and relationship between the board and senior management. Over 70% mentioned the functions and structure of various board committees and all disclosed the identity of their Chairman and Chief Executive Officer. Over 80% of the participating organizations included their management hierarchy in their annual reports by use of organization charts. Approximately 60% of the organizations included information on risk management as well as the internal audit function and about 50% disclosed remuneration package of senior executives and non-executive board members, mostly using remuneration bands instead of actual figures, but some organizations disclosed the remuneration package of senior executives on a named basis. It was encouraging to note that some 90% of the organizations described their ESG activities with very extensive coverage on the engagement of their employees, such as the goals and achievements of employee award winners, thus motivating other individuals to pursue personal and professional development, as well as inspiring more organizations to spend effort to encourage employee development.

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However, there is still need to improve disclosures on environmental issues as many organizations did not include much information. Some just provided a general policy regarding protection for the environment. Most disclosed standard information without additional materials relevant to their particular operation. For those that involve allocation of charity money, it is recommended that detailed information regarding approval procedures and oversight should be disclosed to the public.

Organizations which are particularly outstanding in this aspect include:

Companies Registry, Fu Hong Society, Hong Kong Housing Society, The Hong Kong Jockey Club, The Land Registry, Mandatory Provident Fund Schemes Authority, Securities and Futures Commission, Tung Wah Group of Hospitals and Urban Renewal Authority.

3a. General Presentation such as Design, General Layout, Photographs, Graphs, Charts, Diagrams and Indexing

Often with limited staff and resources, this category still rose to the challenge and often achieved excellence in design.

Organizations to be commended are:

Companies Registry – The contents were presented in a manner which was attractive and likely to engage and educate readers. Expressing the theme of “Serving the Business Community”, the front cover and chapter dividers sought to convey the message that the Companies Registry was serving businesses of different sizes and in different industries efficiently and in a business friendly manner.

Equal Opportunities Commission – The theme of “Equality for the Future” was adopted for highlighting the vision of an inclusive society with equity for all, with the front cover featuring different groups of the community coming together under the trees, and the use of the Braille on the front cover and on the first page. Chapter dividers featuring photographs and illustrations on planting and growth of trees were used to signify the nurturing of younger generations and the growth of equal opportunities in our society.

Fu Hong Society – Photos of stakeholders including persons with disabilities embraced in a diamond shaped diagram were used to symbolize “love”, with which the strength of all stakeholders was connected for the benefits of persons served by Fu Hong Society.

Hong Kong Housing Society – The all-round, well-designed and executed report with effective highlights pages was easy and inviting to read. Front cover was designed with drawings of elderly persons enjoying comfort at home to depict the theme, “Helping the Elderly Age in Place”, and emphasize the focus on “Elderly Housing and Care”, which is one of the four business focuses of the Society, others being, “Estate Management”, “Property Management”, and “Social Contributions”.

The Hong Kong Jockey Club – It continued to delight with overall excellence in design – exciting, and informative with striking highlights. Photo of a racing horse on the turf, with different stakeholders in the community, against the background of high rise buildings in Hong Kong, depicted the theme, “Riding High Together For a Better Future” on the front cover.

The Hong Kong Polytechnic University – The annual report with a subtle yet impactful design brought out the University’s new brand promise for education and research, “Opening Minds – Shaping the Future”, using a triangle in red as a prime visual element. Triangular die-cut windows on opening pages of chapters showing chapter names on the back pages were also used to convey a sense of “looking into the future”.

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Hong Kong Productivity Council – A lively, colourful and clearly considered design was demonstrated. The Council’s role in providing one-stop and comprehensive services to small and medium sized enterprises as a process of change with unexpected achievements was emphasized. Circles were used on the front cover and chapter dividers to depict the phrase “From Zero to One”, based on a quotation from the Chinese philosopher Lao-Tze that, “The Tao produced One, One produced Two, Two produced Three, Three produced All things”.

Hongkong Post – The report with an engaging and relevant design was simply presented, yet with impact. The picture of gear with icon on the front cover and content page depicted Hongkong Post’s e-commerce service, with each gear correlating with each other to highlight how the e-commerce service connected the corporate sector and the community with the rest of the world, adding value to users and creating and delivering value in the community.

Mandatory Provident Fund Schemes Authority – A special Milestones section was aptly inserted at the beginning of the Authority’s annual report to highlight significant developments over the years. This marked the 15th anniversary of the Mandatory Provident Fund system, echoed by the important message, “Start early, keep monitoring and steer towards the goal of saving for retirement”, conveyed by photographs or diagrams of an individual jogging or running on the “Journey to Retirement” on the cover, section dividers and design elements in the inner pages.

Urban Renewal Authority – The contents were presented in a manner which was attractive and easy to read, with appropriate use of headings and diagrams. Photos of seeds being sown on soil, and of a “cross-section” of the sprouts and soil layers underneath on the front cover and introductory pages projected a vivid image of the Authority’s role with respect to regenerating and revitalizing older areas in Hong Kong.

3b. Understandability, Clarity and Conciseness

In general, this area was of a high standard. It was noted that most organizations had spared no efforts in making the reports outstanding, and as such, deserved an applaud from the readers.

Most of the essential elements were included in the reports to help readers understand the organizations’ operations. For example, most organizations have done well in describing their major mission, values and delineating information regarding their overall performance during the year relative to these mission and values. Many of them continued to make use of different colours or divider pages to divide the contents of their reports into various sections to attract reading and help readers locate the topics in which they were interested. Photos, charts and diagrams were used extensively to illustrate financial and non-financial information, providing a clear and simple picture to portray the organizations’ major activities. It was also pleasing to notice the increase in number of entries which included abbreviation and index sections to facilitate ease of reading.

Nevertheless, it was noted for some submissions, there were excessive pictures and long description of activities, making it hard to follow. Some organizations also did not target their reports well at all relevant stakeholders. Without a clear defining of stakeholders, messages delivered to the readers became less effective.

Outstanding organizations deserving special mention are:

Companies Registry, Hong Kong Housing Society, The Hong Kong Jockey Club, Hong Kong Monetary Authority, Securities and Futures Commission and Tung Wah Group of Hospitals.

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4. Purpose, General Description of Activities and Performance

Again, this was an area that most organizations exceled. Almost all of them included milestones, organizations’ mission, vision or values, highlights of the year, awards and recognitions in their reports to demonstrate their achievements during the year, while all organizations included statement from top management to provide overview of the organizations’ operations and strategic planning. Furthermore, performance pledge tables were commonly found in the reports. A comprehensive review of key performances of different departments and how their initiatives contributed to the overall organization were also presented in some reports.

Most organizations disclosed non-financial achievements since financial performance was not their prime objective. Organizations should adopt measurements of non-financial performance and benchmark them against their mission. More thoughts should also be given on presenting information around the objective of the organizations. For instance, for a profit making organization, management should figure out whether the information should focus on profit or serving the community. For a university, whether it is on educating the students, or research achievements.

Organizations which are particularly outstanding in this aspect include:

Companies Registry, Equal Opportunities Commission, Fu Hong Society, The Hong Kong Jockey Club, Hong Kong Monetary Authority, The Land Registry and Securities and Futures Commission.

5. Indications of Prospects / Forward Looking Statements

Similar to the commercial entries, the submissions in the “Non-profit Making and Charitable Organizations” Category did less well in their forward looking statements, but continuous improvement was shown. About 80% of the entries were able to provide clear future plans, organizations’ goals and initiatives for the year ahead, some of which were quite in-depth, helping stakeholders to gain a better understanding of their strategic directions and values. An outlook for the economy and/or their operating sectors was also included in the reports of business service providers.

On the contrary, around 50% of the organizations provided little discussion or failed to mention their challenges and risk management plans. Among the submissions, one entry experienced perennial heavy losses, but was silent about its financial situation. Organizations are advised to describe their challenges and risk management plans as readers would be interested in knowing the remedial action taken by the organizations, if any, to rectify the situation. Organizations are also encouraged to include some financial forecasts in the reports to help stakeholders comprehend their viability.

Organizations which are particularly outstanding in this aspect include:

Fu Hong Society, Hong Kong Monetary Authority, Mandatory Provident Fund Schemes Authority, The Open University of Hong Kong and Securities and Futures Commission.

6. Sustainability Reporting

The overall standard was similar to prior years and it varied substantially among the non-profit entries. Some entries prepared very comprehensive sustainability report to highlight their effort in implementing sustainability within the organizations, especially this year’s winner, Drainage Services Department, which continued to maintain a high standard in terms of providing tables, stories, and a level of detail that the readers could verify and fully assess its sustainability actions.

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Organizations showing good performance were able to:

(i) provide detailed key performance indicators and measurable targets as well as tracking of the achievement of these targets;

(ii) identify and present the issues in terms of significance;

(iii) take into consideration of all the stakeholders of the organizations, and make relevant information quickly and easily accessible by interested parties;

(iv) successfully use the environmental data summary to present several information;

(v) divide detailed sustainability reports into sub-sections which provided a clear understanding to the readers about the companies’ sustainability performance; and

(vi) exhibit a materiality matrix and used the Global Reporting Initiative Statement which demonstrated a clear path in corporate strategy in sustainable aspect.

On the other hand, there were some organizations which fell short in terms of providing a clear set of initiatives, targets and offering details of achievement of such initiatives. They lacked presentation of achievements by the organized activities but merely the titles of events mentioned, and simply used lots of pictures to present contribution but with little sense of their value and impact. CSR section was also omitted in some reports. Organizations are encouraged to put more emphasis on this area.

Outstanding organizations deserving special mention are:

Drainage Services Department, Hong Kong Housing Society, The Hong Kong Jockey Club, The Hong Kong Polytechnic University, Hong Kong Productivity Council and Tung Wah Group of Hospitals.

7. Promptness of Reporting

This year, 15% of the entries were able to release their reports within 90 days after their year end, but 60% of the reports were published 180 days or more after their balance sheet date. Although slightly more organizations took shorter time to deliver their reports when compared to the 2015 entries, organizations are highly recommended to report on a timely basis to maximize the usefulness of the information disclosed to the general public.

8. Availability of the Annual Report on the Organization’s Website

To meet the demand of speedy and easily accessible information, and respond to the rapid technological advancement, all organizations made their annual reports available on their websites, enabling the general public to gain wide access to the reports and understand the overall performance of the organizations as fast and convenient as possible.

9. Conclusion

Overall standard of reporting was high, particularly with respect and governance while most entries in this category seemed to take very seriously in their reports. There was considerable professionalism, with clear, detailed and comprehensive reports of the organizations’ financial situation set out in an easily understood manner. Some charitable organizations have successfully highlighted the gap between charity reporting and more “business like” reporting of their financial results.

All entries have demonstrated excellence in presenting corporate mission and values, performance during the year with commentary and analysis on the overall performance towards meeting their mission and values. In addition, organizations generally continued to dedicate more efforts on promoting and implementing ESG disclosure, with improved disclosures especially in relation to green or environmentally friendly measures undertaken. However, the major weaknesses of most entries continued to be promptness of reporting and discussion on future plans. Organizations are advised to produce their reports in a more timely fashion to preserve the relevance of information disclosed, and set longer-term goals and strategies.

THE PANEL OF ADJUDICATORS WISHES TO RECORD ITS THANKS TO THE FOLLOWING COMPANIES AND ORGANIZATIONS WHICH HAVE SUBMITTED THEIR REPORTS FOR JUDGING

Airport Authority Hong KongANTA Sports Products LimitedBank of China LimitedBank of Communications Co., Ltd.BOC Hong Kong (Holdings) LimitedCathay Pacific Airways LimitedCGN Power Co., Ltd.China Construction Bank CorporationChina Everbright LimitedChina International Marine Containers (Group)

Co., Ltd.China Minsheng Banking Corporation LimitedChina Mobile LimitedChina NT Pharma Group Company LimitedChina Pacific Insurance (Group) Co., Ltd.China Telecom Corporation LimitedChinese YMCA of Hong KongChow Tai Fook Jewellery Group LimitedCITIC LimitedCITIC Securities Company LimitedCK Hutchison Holdings LimitedClear Media LimitedCLP Holdings LimitedCompanies RegistryCOSCO International Holdings LimitedCOSCO SHIPPING Ports LimitedCRRC Corporation LimitedDongfeng Motor Group Company LimitedDrainage Services DepartmentEqual Opportunities CommissionEsprit Holdings LimitedFirst Pacific Company LimitedFu Hong SocietyHang Lung Properties LimitedHang Seng Bank LimitedHong Kong Examinations and Assessment

AuthorityHong Kong Exchanges and Clearing LimitedHong Kong Housing SocietyThe Hong Kong Jockey ClubHong Kong Monetary AuthorityThe Hong Kong Polytechnic University

Hong Kong Productivity CouncilThe Hongkong and Shanghai Hotels, LimitedHongkong PostHSBC Holdings plcHuaneng Power International, Inc.Huaneng Renewables Corporation LimitedHysan Development Company LimitedIndustrial and Commercial Bank of China LimitedJiangsu Expressway Company LimitedKarrie International Holdings LimitedKerry Logistics Network LimitedKerry Properties LimitedThe Land RegistryLanding International Development LimitedLenovo Group LimitedLi & Fung LimitedLink Real Estate Investment TrustMandatory Provident Fund Schemes AuthorityMTR Corporation LimitedNew Life Psychiatric Rehabilitation AssociationNew World China Land LimitedNew World Department Store China LimitedThe Open University of Hong KongPo Leung KukPower Assets Holdings LimitedSa Sa International Holdings LimitedSecurities and Futures CommissionShenzhen Expressway Company LimitedShui On Land LimitedSpring Real Estate Investment TrustSwire Pacific LimitedSwire Properties LimitedTechtronic Industries Company LimitedTransport International Holdings LimitedTse Sui Luen Jewellery (International) LimitedTung Wah Group of HospitalsUrban Renewal AuthorityXtep International Holdings LimitedYuzhou Properties Company LimitedZhaojin Mining Industry Company Limited

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ACKNOWLEDGEMENTS

The Hong Kong Management Association would like to express its sincere thanks to the Awards’ Co-organizer, South China Morning Post Publishers Limited.

The Association would also offer its heartfelt gratitude to the Principal Sponsor, CPA Australia, and to the Lead Sponsor, Island Shangri-La Hong Kong, as well as to all award sponsors for their generosity in supporting the Awards.

APPRECIATION

The Hong Kong Management Association would like to express its appreciation to the Panel of Adjudicators, including Professor Richard Petty from Macquarie University Graduate School of Management, Ms Jill Cheshire from Jill Cheshire Design, Dr Keith Lam from HKU SPACE Po Leung Kuk Stanley Ho Community College, Mr Richard Law from Global Brands Group Holding Limited, Dr Neale O’Connor from Hong Kong Baptist University, Mr Steve Ong from Hong Kong Exchanges and Clearing Limited, Dr John Tang from Ernst & Young, Mr Frederick Tsang from China Everbright Limited, Mr Trini Tsang from Wocom Holdings Limited and Mr Philip Tye from HFL Advisors Limited, 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.

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Co-organizer

Organizer

Lead Sponsor

Principal Sponsor

Grand Sponsors

Sponsors Companies RegistryCOSCO International Holdings LimitedHong Kong Exchanges and Clearing LimitedThe Hongkong and Shanghai Hotels, LimitedHysan Development Company LimitedKerry Properties Limited