About nine years ago we highlighted the deficiencies in UK financial
reporting – particularly the bits with words. While British companies with Wall
Street share listings were getting well stuck into their compulsory ‘management
discussion and analysis’ (MDA) commentaries, most were busily telling their UK
shareholders not very much at all, via the entirely optional OFR.
But it looked good. Hanson was a case in point (but by no means exceptional).
Its 1996 US Form 20F report contained information about timber prices in the
northwest and southeast states. The UK annual report had some lovely photography
of forests. American investors read about where subsidiary ARC had its
operations, how many people it employed, how many tonnes of rock, sand and
gravel it produced. British readers were told that former prime minister John
Major opened the new Needingworth Quarry in his Huntingdon constituency.
Times have changed. Nowadays, there’s a significant number of companies that
like to abide by ‘best practice’, many others who sort of do their best to
achieve best practice, and a handful who have to be dragged kicking and
screaming into doing anything at all. And then there’s a handful of companies
that break the mould – they not only clear the bar, they raise it.
The recent PricewaterhouseCoopers Building Public Trust Awards help showcase
the very best in financial reporting. There were several categories, with the
likes of SMG winning an award for its executive remuneration reporting while
AstraZeneca picked up an award for the way it explained its tax strategy,
accounting and exposure. The Ministry of Defence – a department not
traditionally renowned for openness and transparency – even walked away with the
“Telling It How It Is” award in the public sector category.
In a few weeks, the winners in the Accountancy Age Awards will be announced
and, as a judge in the annual reports categories, I can tell you that there are
some very impressive examples of financial reporting in the running (the
shortlist is on page 66). Some companies – are you sitting down, are you ready
for this? – even use the directors’ biographies section to tell readers
something about what each board member has actually done in the past year,
rather than simply reeling off their CV. How cool/terrifying is that!
By the way, if you’re wondering about the headline on this page, I’m told
that there was once one company that, under the heading ‘Outlook’, wrote a
simple one-word comment: ‘Good’.
Not good enough, not anymore.