In my line of work, I’m constantly thinking about annual reports; I not only read a lot of annual reports but I analyze them every day. And yes, I even believe that annual reports are important! In fact, I’d even say very important- and even useful!
I am also very aware that there is a lot wrong with annual reports – the length, the complexity, the ever changing and demanding legislative and regulatory environment, the list goes on… Despite this, I do firmly believe that you need to see the annual report as an opportunity rather than an obligation. Why? Because it’s a chance to ‘tell your story’. You have to produce an annual report every year so use it as an occasion to get your messaging right. Use the process to stimulate discussion and drive an overarching communications framework that can be used both internally and externally.
I always try to encourage organisations to not only challenge themselves, but to challenge their internal audiences, their Boards and other stakeholders and to look hard at what they are saying to their stakeholders. On top of this, it’s vital companies think about how they are communicating and that they are not missing an opportunity to better communicate their long-term strategy, value creation story and drivers of business performance in a more meaningful, connected way across their communications channels.
This is the reason why I am a huge advocate of Awards that recognise companies that make a proactive effort to promote, clear and consistent investor communications. The Investor Relations Society Best Practice Awards do just that and, now in their 17th year, celebrate those companies that ‘stand out’ across a number of different Awards, including Best Annual Report.
So what are the judges looking for?
Judges last year were looking for evidence of innovative and effective reports that communicate the strategy and investment case of the company. Companies were marked up if they used their Report as a communications tool to provide insight into the company’s main objectives and strategies, the principal risks it faces and how these might affect future prospects. For UK companies there was an additional focus on the objectives set out in the FRC’s Guidance on the Strategic Report.
Recognition across all categories
One of the most popular awards is ‘Best Annual Report’ (there were over 75 entries with 16 companies shortlisted across four categories – FTSE100, FTSE250, Small Cap & Aim and International).
In the FTSE100 category, ARM Holdings came out on top of a very strong shortlist including: British Land, M&S, Pearson, Taylor Wimpey and Sage. The judges stated ARM’s ability to present a complex business model in an easy-to-read Annual Report made them the final recipient of the Award, but it was a close contest and Taylor Wimpey, were highly commended by the judges for a well explained business model which included KPIs and impactful case studies. The judges also congratulated Taylor Wimpey for the concise and engaging presentation of their Report.
In the FTSE250 category there was another competitive shortlist of six, with judges picking DS Smith out from the crowd to win the award due to their clear and easy to understand business model, innovative use of graphics and good communication about sustainability issues.
Here are some of the other shortlists and winners in the other two categories, all which are worth a look for inspiration.
What was apparent across all categories – big and small – is that the best annual reports look to the future and show the vital link between effective governance and the business model, strategy and leadership statements. The very best also show the effectiveness of their business strategy in a way that demonstrates credible management and provide a window into the company and its culture. What is also clear to me and the judges, a good annual report can help differentiate your company, shape your reputation and build confidence with investors. So what’s stopping you? For more information go to irs.gov.