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Practical steps to achieve Better Business Reporting 

Some of the best examples of reporting help readers understand how to model value - how to structure a cash flow model of the business and how to form views on the key model judgments. Businesses that don't do this risk greater capital markets volatility.

Practical steps to achieve better business reporting

Ultimately good reporting is about meeting investors' needs. For an Annual Report this comes down to answering two key questions:

 

  • What does the annual report tell me about the value of the business?
  • What does the annual report tell me about the management's stewardship of the business?

 

Companies do not however, need to fully commit themselves to producing an Integrated Report in order to achieve some of the benefits outlined above.

 

A progressive approach to Better Business Reporting consistent with an ultimate goal of integrated Reporting can be taken through small steps, each of which provides its own value.

 

 

 Possible Action

Key Steps 

Comment 

 

Cut clutter from  existing financial reporting

  1. Restructure reporting around the key performance measures
  2. Explain each section in plain English
  3. Remove duplicate information and immaterial disclosures

Key challenges:

 

  • Aligning structure with the Group’s strategy
  • Simplifying disclosures requires deep under-standing of underlying standards 

Reveiw, rationalise, and consolidate all externally reported material

  1. Consolidate information material to shareholders from existing reporting
     Annual report narrative
     Group sustainability report
     Investor pack
  2. Reassess value of reporting other information not selected from the above 
  • Recognises the growing importance of non-financial information in explaining performance

 

  • Rationalises shareholder reporting on a consistent basis
  • Cuts across existing reporting flows

Restructure reporting around business model and strategy

  1. Build a description of the business
  2. Structure the presentation of existing KPI’s, assets & liabilities, risks & opportunities around the objective of providing an understanding of current performance
    and value 
  • Reporting in this structure requires close co-ordination with Operational
    Management to align content with the business model
  • Dry-run will enable any gaps between the business model presented and operational reporting to be considered 

Develop reporting around the Integrated Reporting framework

  1. Needs a clear description of the business model around which reporting can be built
  2. Structure the report around the six IR content elements with detailed content driven by shareholder needs (stewardship and valuation assessment)
  3. Develop reporting process to address new disclosure needs – Sourcing, Data quality, Process embedding
  • Integrated Reporting is evolving but it presents an opportunity for companies to present their story to investors from the perspective of their business model.
  • It is unlikely to be mandated in the near term but current reporting proposals reflect similar objectives.

 

 

Kontakt

 

Hans Peter Lindegård Buhrkal

Head of Financial Reporting Advisory Services

Phone +45 73 23 39 21

hpbuhrkal@kpmg.dk

 

 

 

David Vestengen Hopkins

Senior Manager

Phone +45 73 23 66 37

dvhopkins@kpmg.dk

KPMG's Insights and publications

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Better Business Reporting follows the journey to improved communication with the capital markets and the development of better business reporting frameworks and practices.

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Download our fact sheet, "Users Demand improvement in the quality of annual reports" and learn more about how we can help you acheive better business reporting