A practical guide to your first annual report (Part 1)

Richard Costa

Your IPO is done, and you’re now a listed company. You’re exhausted. What next? This practical two-part guide explains how to transform your annual report into a valuable communications tool.

Becoming a public company brings many changes, including the cultural shift of becoming the custodian of shareholders’ assets. It requires a new approach to engaging stakeholders and controlling the dissemination of market-sensitive information. It is also important to reinforce your investment story – why this sector, why us within it, and why now?

Thinking about the annual reporting process can help address these issues and improve corporate communications. Once listed, the expectations and scrutiny from regulators, investors, and others will increase significantly. There are specific mandatory reporting requirements for compliant annual reports that present a clear and consistent narrative around what your business does and how it does it.

Why is it essential to get your inaugural annual report right?

Understanding the annual report

You will need to create and submit an annual report at the end of your financial year, typically taking about six months and starting three months before year-end. The annual report is heavily regulated and is the only piece of communication that is audited, so investors rely on it.

Additionally, the Financial Reporting Council (FRC) conducts compliance monitoring reviews of the FTSE 350 on a rotating basis, and companies may need to justify disclosures or non-disclosures and adjust reporting based on the review.

 

Keep your investors onside

Your inaugural report needs to build on and develop the messages set out during the IPO roadshow process. Think of it as a continuation of that story with your investors. You must meet all your promises set out as part of the IPO process, A practical guide to your first annual report continued and your first annual report can support this by clearly stating what you promised versus what you’ve achieved. It is part of building trust with your shareholders at the beginning of – you hope – a long and fruitful relationship.

 

Build trust with your other stakeholders

The annual report can be written for a wide audience, including investors, employees, customers, and suppliers. It should convey your story clearly, coherently, and engagingly.

In addition to meeting regulatory requirements specified by the Companies Act, the UK Corporate Governance Code, the Listing Rules, and the Disclosure Guidance and Transparency Rules, companies are encouraged to adhere to ever-evolving best practice guidance, which constantly pushes them to improve and excel.

 

“The quality of your reporting depends on the quality of the information behind it. Therefore, your business needs to take action before it can communicate effectively.”

 

It’s all in the planning

The quality of your reporting depends on the quality of the information behind it. Therefore, your business needs to take action before it can communicate effectively. For instance, if you engage with stakeholders minimally, you will have insufficient information to report.

Start working on this as early as possible, even before your IPO is done, so you can establish processes to ensure that you have meaningful information to share at the end of your first year as a listed company. Conducting a gap analysis is the logical first step.

Understanding requirements and expectations, as well as identifying missing or unrecorded information, will help build the extensive evidence good reporting depends on.

In our August edition of Gather around, our guide will provide an overview of what goes into an annual report. In September, we will complete the guide with important considerations pre- and post-IPO.

If you’d like to discuss this, or any other subject, please get in touch with Richard Costa, Consultancy Director, at richardc@gather.london

We’d love to know what you think.

People

Richard Costa

A practical guide to your first annual report (Part 1)

    Where should we send the download link?