The Institute of Chartered Secretaries and Administrators (ICSA) has published a guidance note on good practice for annual reports which sets out what, in their view, makes a good annual report
The guidance highlights the qualities of best reports that set them apart from rest. These include:
- an understanding of the links between governance, shareholder value creation, and the avoidance of value destruction;
- responding to the opportunities created by reporting requirements rather than seeing them as obligations;
- innovative and creative forms of disclosure, which move away from ‘boilerplate’ reporting and explain how the board and company is run;
- explanations of the way the board runs itself and its committees, and how decisions are taken;
- a governance report that demonstrates clear ownership by the chairman and a real desire to use governance to enhance the business rather than as a ‘box-ticking’ exercise;
- comprehensive explanations of departures from the provisions of the Code;
- a full description, and explanation, of the business model and the strategy, with key performance indicators (KPIs), performance against targets, and important information cross referenced to elsewhere in the report;
- discussion of the principal risks to the strategy, the company’s risk appetite and culture, how the risk profile is changing, and how the risks are being managed;
- joined-up thinking that links strategy, pay, performance and risk;
- evidence of directors having satisfied their statutory duties, including the duty to promote the success of the company over the longer term; and
- recognition and balancing of the needs and expectations of different shareholder and stakeholder priorities.
The guidance then lists what ICSA considers are the features of the best strategic reports, board disclosures, audit and risk reports, remuneration reports and sustainability and stakeholder reports.
The guidance note also names the following winners of the 2014 ICSA Excellence in Governance Awards 2014 and provides links to their award winning reports:
· Best Annual Report
- FTSE 100 – GlaxoSmithKline PLC
- FTSE 250 – Lonmin plc
- SmallCap and AIM company – VITEC Group plc
- Unlisted company – John Lewis Partnership
· Best Strategic report
- FTSE 100 – Babcock International plc
- FTSE 250 – Cairn Energy plc
· Best board disclosure
- FTSE 100 – Marks and Spencer Group plc
- FTSE 250 – Provident Financial plc
· Best Audit and Risk Disclosure
- FTSE 100 – GKN plc
- FTSE 250 – Halma plc
· Best Remuneration Report
- FTSE 100 – Smith and Nephew plc
- FTSE 250 – Lonmin plc
· Best Sustainability and Stakeholder Disclosure
- FTSE100 – Johnson Matthey plc
- FTSE 250 – Rathbone Brothers plc
The guidance note is available here