Why the annual report matters

Posted in Reporting on 12 October 2017 By Rachel Crossley, Senior Reporting Consultant

As the buy-side and sell-side prepare for introduction of Mifid II next January, companies wait to see what impact the regulations will have on their activities.

While views vary on how wide-reaching the consequences will be, one thing looks certain: the number of analysts covering individual companies will fall. This will reduce the amount of research published and place an additional burden on in-house IR departments and Finance Directors, particularly in smaller companies where they will become the main point of contact on company activities and performance.

So companies will have a unique opportunity to take control of their communications, connecting and building relationships with stakeholders directly and telling the company’s story.  Today, in our multi-media world, companies have a wide range of options to choose from to help them get their messages across: the corporate website, videos, investor presentations, Capital Markets Days and social media channels, to name just a few.

But the annual report is the only document which discusses the company’s performance and activities during the previous year and provides a forward-looking perspective. It remains a key source of information for investors and other stakeholders. Indeed, 84% of long-term investors globally use annual reports for insight on a company’s strategy.

And in this new regulatory environment, the annual report can play an even more important role in helping companies to communicate their story, setting out their vision, articulating what they do and what makes them distinctive, reporting on their performance and discussing how they create long-term value for their stakeholders. This story can then be cascaded across other communications channels, ensuring a consistent, joined-up approach to communications. So, in the words of Mark Wharrier from Black Rock: “Getting the annual report right is absolutely key”. 

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