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Preparing for your Business Review and the Companies Bill

Preparing for your Business Review and the Companies Bill. Tony Hoskins. The changing nature of company reporting. How have companies coped?. Research amongst 25 listed companies with 31st March reporting – out of a total of 39. 12 FTSE100. 48% produced an OFR – But the devil lies

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Preparing for your Business Review and the Companies Bill

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  1. Preparing for your Business Review and the Companies Bill Tony Hoskins

  2. The changing nature of company reporting

  3. How have companies coped? Research amongst 25 listed companies with 31st March reporting – out of a total of 39 12 FTSE100 48% produced an OFR – But the devil lies in the detail!! 4 FTSE30 9 FTSE200 Assessing compliance with BR requirements – and the extent to which they built an informed picture of the company for shareholders and investors

  4. The research findings - 1 1 in 3 gave further explanation to the accounts Very little explanation about the purpose of the BR 27 pp – BR/OFR ave. length A few had both a BR & an OFR Companies were generally good at giving a fair review The weaknesses lay in the “balanced and comprehensive” – particularly the strategies & outlook for business areas

  5. The research findings - 2 Risks – Tended to be a list Ave 11 – Max. 33 - few companies reported mitigation KPIs – clearly caused problems – too few could identify KEY measures Ave 2 financial & c.5 non financial - max 33 The weaknesses: failure to identify the KPIs used to manage the business very few related to key business areas e.g. customers or employees.

  6. The research findings - 3 • How well does this help • investors judge a • company’s performance? KPIs – Very few companies reported > 2 years’ data • Alignment required • between business segment • strategy and outlook, • the risks and the KPIs Report development – the BRs appear drawn up in a silo fashion • Suggests that • RS1 gives a useful structure, • in the • absence of BR guidance Companies producing an OFR – Better quality statutory BR reporting FTSE30 more complete in BR reporting than FTSE100, and FTSE200 counterparts

  7. And the new BR requirements? Extends KPI reporting – specific requirements for non-financial areas Gives BR an additional rationale with the new role of directors Report on policies related to KPIs – & comment on their effectiveness Effectively creates the BR for listed companies, similar to the OFR

  8. Preparing for the BR – now and in 2007 Identify the key issues under the BR A system to assess policy effectiveness A multi-functional approach Streamline corporate reporting Mock up the BR to “touch and feel” Consistency across qualifying subsidiaries Execs & Non-Executives – aware of the new role

  9. But the most important questions! Do BR’s and the OFR's help investors and shareholders gain a more informed view How can your BR preparation help you improve your business’ reputation What are investors looking for from your BR reporting?

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