Q. I work for a mid-sized UK firm and a friend of mine on the sell side recently told me that one of our main competitors is about to begin reporting quarterly. My friend says he’s not impressed by the move but it still rattles me. Should we be thinking about the same thing?
A. What do you hope to achieve by going quarterly? The thing about reporting quarterly is that it’s hugely time-consuming and expensive. More to the point, if it’s not required of your company in the UK, as it is in other countries, then what gives you the right to waste shareholders’ money? Send out a trading statement instead.
Q. The top executives at my company are driving me mad. None of them know the first thing about writing but they still insist on editing everything very heavily, even the very early and very last drafts of our annual report. Also, they’re really touchy whenever I suggest any changes. Is there any way around this?
A. This happens all the time and the reason they’re so touchy is that you’re their employee, junior to them and therefore implicitly not as good at writing as they are. One way to stop all this chopping and changing is by getting a writer whose authority won’t be questioned the way yours is. Why not hire a professional writer or journalist to write the copy? If senior management know an experienced financial journalist has drafted the text then they might realize that’s the way professionals want to hear the story.
Q. How do I convince management of the importance of the narrative section of the annual report in relation to the financials at the back of the book? Actually, we’ve gone for a 10K wrap this year, but for a tech company like ours I feel the chairman’s letter and other parts of the wrap are crucial.
A. Investment professionals often claim to skip past the words and pictures to get to the numbers at the back of the annual report. That may be true if they’re already very familiar with your company. But if this is a new investment idea they’re investigating, then they may be swayed by the extra value up front. And if they do skip ahead, you can be sure the opening pages make an impact, even if it’s subconscious.
You should also remind your CEO and CFO that the investment community is just one of many audiences your annual report is aimed at. Employees current and prospective, customers, partners and suppliers – and the press – will all devour your report, front and back.
Q. My company has never had much to say on corporate social responsibility, and neither has our traditional group of institutional investors. Now I hear the way to go is to devote an entire section of the annual report to CSR. But would it ring hollow without real commitment behind it? Or is this shortsighted?
A. The reason your long-term investors haven’t expressed any concerns about your CSR policy is because for the most part they couldn’t care less. This is not because they’re morally repugnant, unpleasant individuals, but because there is still no conclusive evidence that big efforts in CSR produce an improved return on capital, which is what they’re ultimately interested in. Remember, your investors’ concern should be your concern, so if it’s not theirs, don’t make it yours.
E-mail questions to Heather McGregor – [email protected]. McGregor is a former IRO and investment analyst who currently works on IR assignments for Taylor:Bennett, an executive search firm specializing in communications jobs
