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The FRC encourages companies to experiment and be innovative in the drafting of their annual reports, presenting narrative information in a way that allows them to 'tell their story' to investors concisely; linking related information in a fair, balanced and understandable way.
Commenting on the consultation, Melanie McLaren, Executive Director Codes & Standards, said: "While the new regulations represent a relatively modest change to the existing legal requirements, we hope that our proposed guidance will act as a catalyst for companies to publish more relevant narrative reports, facilitating communication and engagement with investors. Investors tell us that they want information to be forward-looking and focussed on strategy and the business model, highlighting relationships and interdependencies between information presented in different parts of the annual report, and with an emphasis on materiality and conciseness.
The guidance builds on the changes made to the UK Corporate Governance Code in October 2012, requiring annual reports to be fair, balanced and understandable. Along with our project on establishing a framework for disclosure, the guidance is aimed at 'cutting clutter' and improving relevance of corporate reporting to investors. In drafting the guidance we have borne in mind developments in integrated thinking and reporting."