Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Thursday, April 09, 2009

Annual report season: what a variation in approach.

Its that time of year again when the calendar year end annual reports become available. And I have been working on a project for Radley Yeldar to review the FTSE 100 reports. The result will be available in May, when the final deadline of end April has passed, so watch this space.

What is already apparent is the vast range of approach taken by different companies.

First, what is the purpose of the annual report? Some clearly take the view that the annual report is a compliance document, pure and simple. Disclosures are made, and the intended audience is the regulators such as the FRC who will review whether the rules and guidance have been followed.

At the other end of scale, companies have regarded the annual report as a great communications opportunity for different stakeholders: employees, institutional and retail investors, suppliers, customers, environmentalists. Each will have their own informational needs, and the best reports are written and designed in ways that meet all those needs.

Second, how have companies adapted to reporting in the very different economic conditions from the last time? Again, there are some outstanding examples, and some that have followed a formulaic approach. The approach to explanation of liquidity risk and debt disclosures, for example, vary markedly.

The ‘accessibility’ is also varied. In some, a great ‘story’ is told, with engaging commentary and supporting images. In others, lawyer-speak is used, and text dominates.

So the analysis of best practice through “How does it stack up” (the RY research) will be fascinating.


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