Research & Strategy

By - 04 Feb 2016

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As champions of smaller company reporting and in partnership with the Quoted Companies Alliance (QCA), we recently held our first corporate reporting event in Leeds. The event was a great success and, with the attendance of chairmen, CFOs, company secretaries and marketeers alike, it provided the perfect forum to discuss both the challenges and opportunities that smaller listed and AIM-quoted companies face in preparing their corporate reports.

The value creation challenge

One of the main things we wanted to tackle as part of the session, because our clients ask us so many questions about it, is how to tell a company’s value creation story.

  • What makes a successful value creation story?
  • How do you provide market context to the Group strategy?
  • How do you implement transparent and accountable risk reporting?

Of course, the business model is the heart of the value creation story and prompted much discussion. It is the framework which details how a company utilises key resources through its business activities, creating sustainable value for all stakeholders. But, as one attendee asked, what if you’re a small company and you don’t want to give such valuable information away to your competitors? A valid point and one considered by many finance departments of smaller listed companies, I’m sure, but the importance of the business model as an investment case cannot be understated. We argued that it should be seen as a benefit rather than a burden. The business model can be a great tool to demonstrate a company’s key differentiators whilst also outlining the long-term value creating prospects of the company, helping to attract long-term investors.

Building trust

With the support of the QCA & the UHY Hacker Young Corporate Governance Behaviour Review 2015, Tim Ward, chief executive of the QCA, took on the tough subject of corporate governance and how this largely regulation-driven section of the annual report can be made more engaging, transparent and personable, helping to improve perceptions amongst investors and, ultimately, build trust. Tim speaks with many investors in his role and he reinforced that investors of smaller listed and AIM-quoted companies still believe the annual report is key, and one of the few reliable means of communication. For this reason it is important that compliance does not outweigh communication. Tim identified a number of governance reporting tips to help build a level of trust between a company and its key stakeholders, some of which are listed below:

  • explain the link between strategy and corporate governance;
  • explain why each director is on the board and part of the team;
  • focus on the bumps in the road;
  • focus on the audit committee report; and
  • describe board evaluation procedures.

It’s a journey

The general sentiment of the workshop was the appetite for smaller quoted and AIM-listed companies to improve reporting and communicate value; however, often these companies are held back by a lack of time, resource and budget. That is why, at Design Portfolio, we see reporting as a journey. We build relationships and help our clients evolve their communications at the right pace whilst navigating the choppy waters of budget, resource and time.

Providing validation of our philosophy, Caroline Farbridge, company secretary at EMIS Group plc, acted as a live case study in which she detailed her journey with Design Portfolio in taking a compliance-focused report and turning it into a best practice communications tool, building trust with investors and wider stakeholders.

The session ended with drinks and canapés at the hotel bar, providing an opportunity to reflect on the past year in reporting and share experiences. All in all, a great success.

If you missed our “Size doesn’t matter but reporting does” event, don’t panic; we have plans to hold similar events around a number of locations in the UK over 2016. Alternatively, if you would like to find out more about how we can help you in your reporting journey, please email us at info@design-portfolio.co.uk.