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Clear and concise annual reporting - Coggle Diagram
Clear and concise annual reporting
Disclosure of dividends
Dividend disclosures are important to companies and investors alike and a key measure by which companies demonstrate their stewardship of the company and by which investors validate their investment case
Investors have indicated that a good dividend disclosure combined with a description of the dividend policy will cover the following issues
Why this policy?
What will the policy mean in practice?
What are the risks and constraints associated with this policy?
What was done in practice to deliver under the policy?
In addition, investors have expressed a preference for the dividend disclosures to be grouped together rather than spread out either in different parts of the annual financial statements or in different communications and announcements
Business model reporting
A common theme from investors is that business model descriptions require additional information
There's a preference that companies should assume that the reader knows nothing about the company and should provide a comprehensive description of the business model including
What the company does
Key divisions, legal structure and contribution to assets, liabilities and profit
Key markets
Its USP
Key assets and liabilities, relationships and resources including the measures taken to preserve and enhance them
Key revenue and profit drivers
Value created for other stakeholders and the benefits this brings to the company
Statistics to illustrate relative importance of elements
Risk and viability reporting
The annual financial statement is the primary source of information on a company for many investors and disclosure of principle risks facing the company and how the company is managing those risks is vital to their understanding of the underlying business
Investors are looking fir company specific risks linked to the business model, disclosing how those risks have changed over time and what the impact of risks occurring might be
The introduction of the viability statement has improved directors consideration of sustainability and risk resilience. However that increased awareness has not necessarily been reflected in the viability statement which too often resembles an extended going concern statement
Investors are looking for information on the sustainability of the company's business model and the company's resilience to the risks it faces. In addition investors are looking for more information on the prospects and risks over a much longer period even if the viability statement itself is limited to a shorter period
Performance metrics
Performance of a company is crucial to all investors and although the specific measures key to an investment will vary from one investor to another, all investors would agree that a range of measures is required
Performance measures are essential for companies and directors to demonstrate the value they create and consequently how investors value companies
The performance measures chosen, how they are reported and whether the information is reported in a way that investors consider to be fair, balanced and understandable are central to this assessment
From its search the reporting lab has reported that investors prefer a range of measures covering fincnail measures comprising numbers prepared under recognised defined GAAP methodology together with appropriate non GAAP defined numbers combined with non financial measures also being a combination of standard and company specific measures
Whichever measures are chosen, they should all meet the following principles
Aligned to stategy
Transparent
In context
Reliable