The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), today (Friday) published a report summarising key observations and findings from its review* of 100 periodic financial reports released by listed issuers between October 2009 and April 2011.

During the review process, the Exchange sent 91 letters to issuers. The letters contained more than 340 enquiries and observations, including requests for explanations of possible non-compliance.  Where the omitted disclosures were regarded as less significant or material, the Exchange obtained confirmation from issuers that the required information would be provided in future financial reports.

Key observations and findings included:

• Discussions in the Management Discussion and Analysis should be consistent with the financial statements and should provide an additional useful narrative to explain the company’s performance and financial position;
   
• Additional information should be presented in financial reports to provide a better understanding of the nature and impact of significant events or material balances and transactions; and
   
• Improvements in connected and related party disclosure were noted but there is room for further improvement.

The Exchange encourages directors and other persons responsible for financial reporting to take note of the matters discussed in the report and to review their existing financial reporting systems to ensure the information presented in their financial reports is specific, relevant and material, in compliance with the disclosure requirements, and will be useful to users in making economic decisions.

The report is available under the “Rules & Regulations – Rules and Guidance on Listing Matters – Guidance Materials – Financial reporting matters” section of the HKEx website.

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