Telling an authentic story

15 October 2015

22061_Corp_ReportingSurveyInfographic_AuthenticStory_v11_TH100915_BlogAs someone who loves to read, my task of reading all the FTSE 350 annual reports every year is in many ways ideal. However, whilst the works of fiction I read keep me enthralled and engaged, taking me on eventful journeys through all sorts of different worlds and scenarios, I can’t say the same is true about the annual reports!

But then, that probably isn’t a surprise to you – I don’t know many people who read annual reports for pleasure. I accept that, to some extent, my books have it easier – they’re only trying to serve the purpose of entertaining me. An annual report by contrast is trying to be many different things to many different people, for example complying with regulation, meeting stakeholder needs and providing a document of record.

 I still think there are lessons to be learnt though - the annual report needs to communicate, tell a compelling strategic story and engage (if not enthral) if it’s to be opened, read and its key messages understood.

 The importance of strategy

Our new review of the strategic reports of all FTSE 350 companies, highlights the problem - only 35% of the FTSE 350 underpin their report with their strategic priorities. By this I mean that they put strategy at the heart of their report and use it to structure the other disclosures made, to give context to both activities and performance.

The strategic report is meant to be the opportunity to update investors on your strategic progress and yet for many companies, strategy is merely something raised on page 10 and never mentioned again. Too often we see the same static strategic summary year-on-year with no sense of evolution or progress against the stated goals. I want to understand the journey you’re on – what’s already been achieved against the goals? What are the next steps? And how are you going to achieve them?

There’s also a disconnect between the information presented. For example, if we look at the balance of operational information across the report – our review suggests that most reports make good reference to the importance of operational factors in their business, but are less open about how they measure them. And the same is true for each type of strategic information. Even when reports do appear to show alignment, if we look a little closer it’s clear that, sometimes, good design can show connections when none actually exist.

 Authenticity - actively creating trust

And that takes me to authenticity. When reading annual reports, what I’m really looking for is someone who’s telling me the same story from beginning to end, who’s clear and consistent in the information they provide and who is balanced in the way they report it. Without this, I start to question whether what I’m being told is really a true picture of the business - after all, how often do you have a completely brilliant day where nothing bad happens… let alone a whole year? Without alignment between key elements in reporting – strategy, KPIs and risk – I wonder if internal management information is joined up and in turn if management are aligned in their thinking. In short – authenticity means I’m more likely to trust the information I’m given and for investors, greater trust will have an impact on their investment decisions.

So I leave you with a plea - bring the personality of your company to the fore and be distinctive – own your story so that your annual report isn’t just another annual report on my shelf that I have to read… it’s the one that I, and your investors, will want to.   

You can read our full review of FTSE 350 reports, Searching for Buried Treasure, by clicking here.

Elaine Forrest | Corporate Reporting specialist
 +44 (0)20 7804 2402

 

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