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Annual reporting in 2015:
evolving communication in a changing world
September 2016 | Third edition

Annual reporting in 2015: evolving communication in a changing world is the third edition of EY’s annual review of FTSE 350 annual reports and accounts (ARAs).

This follows up on our reviews from previous years, Reflections on the past, direction for the future and Out with the old, in with the new, which set out the hallmarks of leading practice reporting in each of the core sections of an annual report.

This year, we have focused on five key themes which have all been the subject of much discussion in the corporate governance and reporting world over the last year to see how annual reports are evolving to meet investors’ changing needs and interests:

EY - Annual reporting in 2015
Clear and concise
 
EY - Annual reporting in 2015
Business models, risk and viability
 
EY - Annual reporting in 2015
Culture and people
 
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Broader societal impacts
 
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Looking ahead
 

We found that although narrative reporting seems to have reached a plateau in many areas, there is evidence of some evolution of reporting to address these new areas of interest to investors and stakeholders.

Listen to Mala Shah-Coulon, Natalie Bell and Fiona Burgess of the EY Corporate Governance team discussing the report and a few of the key insights under each of the five themes:

 
EY - Ken Williamson

Ken Williamson
Partner, Head of Corporate Governance
+44 (0)20 7951 4641
LinkedIn linkedin

EY - Mala Shah-Coulon

Mala Shah-Coulon
Executive Director
Corporate Governance
+44 (0)20 7951 0355
LinkedIn linkedin

Getting practical

Our report has a number of practical features, including:

  • Interviews with the Financial Reporting Lab, Fidelity International, Standard Life Investments, BT and Aviva Investors
  • Case studies highlighting companies with leading practice reporting in certain areas
  • An acid test and aide mémoire
  • A useful summary table of the upcoming reporting developments companies should be preparing for or keeping a watching brief on as forthcoming requirements become clearer (up to date as at early September)

We hope these features will help you and your team as you start planning your 2016 annual report.

Annual reporting in 2015: poll results

Following the publication of its third annual review of FTSE 350 annual reports and accounts (ARAs), Annual reporting in 2015: evolving communication in a changing world, EY’s Corporate Governance team ran a webcast on 5 October 2016 to discuss our key findings and help preparers think about how their next annual report may need to evolve.

The webcast was attended by 180 participants, largely from corporates, including representatives from 120 FTSE 350 companies, and a number of other stakeholders, including investors and regulators.

We conducted live opinion polls to gain an understanding of participant views. Here are some highlights:

It’s time to engage

We polled preparers on whether they either actively sought feedback from their investors, or whether they had voluntarily received feedback on their ARA.

A sizeable 52% reported no engagement – i.e. they had neither sought nor received feedback. We believe feedback is essential to enhance the quality of annual reports, and the information in them should provide a “hook” for investors to engage in dialogue and discussion with companies, which should drive better governance outcomes.

As companies start planning their 2016 ARAs, we recommend that both boards and investors proactively engage in how the ARA can be improved.

EY - ar2015 poll results - looking back what best describes

Does your annual report give a sense of your culture?

In our June 2016 Is your board yet to realise the true value of culture report 86% of respondents say culture is fundamental, or very important, to culture, yet we found in our third annual review of FTSE 350 ARAs that only 10% report on it meaningfully, and only 9% explain how the board monitors and gets assurance on culture.

We sought to understand this mis-match by polling participantsi at the webcast. An overwhelming 70% of preparers said that the biggest challenge in disclosing information on culture was an absence of well-understood metrics.

We recommend that preparers and boards take time to discuss the importance of culture (e.g. to strategy and business models), and start developing appropriate metrics which over time they can report on.

EY - ar2015 poll results - what challenges disclosing future

How are you going to achieve clear and concise reporting?

We asked participants who tuned into our recent webcast on annual reporting trends to think ahead to their next annual report and identify which aspect they were going to focus on improving the most. Encouragingly, 45% said they would focus on clear and concise reporting.

However, clear and concise reporting is not simply about reducing ARA length. Read EY’s publication for tips and case studies on how to make your next annual report clearer and more concise.

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Want to know more? View the webcast and polling results and read the report.