What do investors want from the annual report?
Earlier this week we held an event at which we presented the findings of our research study ‘If investors were in charge of reporting’. We had spoken to a range of professional investors in both the UK and the US and explored what they value in the annual report, which sections they read the most, what style they preferred and if the non-audited information was credible. The main purpose of the research was to get a better understanding of how investors use the annual and what they want from it. Knowing how the corporate reporting landscape is evolving is critical if we are to support our clients in developing reports that communicate effectively to investors.
In summary, these are the key findings.
Clarity. Authenticity. Connectivity.
Credible communication plays a fundamental part in building corporate trust. The annual report needs to provide clarity as to why certain decisions were made, particularly regarding a company’s risks, strategy, and remuneration. Not only does the annual report need to be clear and concise, it also needs to demonstrate accountability and consistency. Has the company done what it said it would do? If so, how well? Tone, context, and connectivity matter. Explaining the interdependencies of the different report elements, such as how the business model, strategy, risks and KPIs impact one another, helps to provide a clear and holistic picture of a company’s performance, position, and prospects, far better than simply stating that the corporate strategy is “to grow as a business”.
The six key insights from the report
Our six key insights show that there is still work to be done by companies to produce good quality reporting that goes beyond compliance and tells the corporate story in an engaging and credible way to the people who read the annual report the most – investors.
- Don’t underestimate the importance of the annual report
- Know your audience
- The colour behind the investment case is important
- Credibility is hard-earned, and easily lost
- Ignore technology at your peril!
If you would like a personal presentation of the report findings, including detailed analysis and practical advice for what it means for you, please contact Carly Mercer, Director, Business Development.