• simplifying the narrative reporting framework;
• removing duplication and inconsistency;
• increasing transparency; and
• building on the coalition commitment to increase the quality of companies’ social and environmental reporting.

We wholeheartedly agree with the Government that these are objectives worth pursuing and we think there’s a lot of sense in many (if not all) of the detailed proposals. You can read our full response below.

But two things surprised us about the consultation.

Firstly, whilst there’s plenty of discussion about narrative reporting, communication hardly gets a mention, with the word putting in an appearance only twice in the whole document (pages 17 and 40).

High-quality disclosure is achieved not just by setting out and signing off a laundry list of essential regulatory requirements (strategy, direction, business model, risks, forward-looking analysis of challenges and opportunities, key social and environmental information and high level financial and remuneration information are all on the BIS list).  The annual report can improve shareholder perception of value when it helps investors to find, analyse and understand what the Board thinks is important. 

Just as pertinent as the information to include is, we think, tackling the communications challenge of making it accessible and relevant – the “how” as well as the “what”.  This means highlighting the most significant elements of information (for example, through logical structure and navigation, clear presentation, use of the most appropriate formats for data), explaining how they relate to one another and helping readers to understand what has changed (and why).

By making information accessible, high-quality corporate reporting provides the essential context that allows investors to assess the performance of the company and its management. 

Secondly, clear communication is just as important in the financial statements, and limiting the scope of the consultation to narrative reporting feels to us like a missed opportunity.

The approach that has been proposed for narrative reporting (organising the content into key highlights for shareholders and then providing more detailed supporting data elsewhere) could equally be adopted for the accounts.

Many companies, when publishing their preliminary results, already focus on the material that they think is most useful to investors.  The notes to the financial statements in the prelims (which are provided to meet the needs of shareholders and analysts rather than to address compliance), often only amount to one third or fewer of the notes eventually published in the full annual report.

Given the willingness of companies to take this pragmatic approach when they can do so, we think the regulatory framework for corporate reporting could be updated to allow for greater simplicity and relevance throughout the whole annual report, not just the narrative sections.

Standard Chartered’s Annual Report emerged as a winner for a number of reasons, including the clarity of its disclosures, the presentation of the bank’s strategy throughout the report and high quality of a number of individual sections, particularly risk, strategy and board disclosures.

Further information on the awards can be found here.

For more details, please contact Georgina Herdman, Business Development Manager, on +44 (0)20 7940 4510 , or georgina.herdman@addison.co.uk.

More information can be found here.

This is what the judges said:

National Grid merits a ‘highly commended’ award for the third successive year with another clear and comprehensive annual report. Strong graphics help to explain and clarify the company’s different markets and regulatory environments, with a clear emphasis on strategy and performance against objectives.

Full details of the winners can be found here. 

Before joining Addison, Georgina worked at HSBC where she gained five years’ experience in developing new customer propositions for digital and print. Georgina will be working with prospective clients to identify how Addison’s combination of insight, design and delivery can help companies communicate more effectively.