This was a central theme at this year’s IR Society Conference in London, in June 2024, where industry leaders shared insights on the evolving landscape of investor relations and corporate reporting. Here are some key takeaways that underscore the importance of refining annual reports to communicate a simpler, more compelling equity story.
The overarching message at this year’s IR Society Conference? Simplify to stand out.
Throughout all the sessions during the day, the central message from this year’s conference was clear: cutting the clutter in annual reports is essential for creating a more concise and impactful document that stands out in the market. By focusing on material information, reducing repetition and leveraging digital platforms for evergreen content, companies can produce reports that not only comply with regulatory requirements but also engage and inform investors effectively.
As Louise Curran, Head of Investor Relations at Johnson Matthey, noted: “Companies need to tell their story in a very clear, simple way – clear and simple enough that a smart 12-year-old can understand it.”
And as Jimmy Tillotson, Partner at Redwheel European Focus Fund, explained:
“I want to go to the annual report and see very clear and lucid prose about the business model, the strategy. What’s your growth roadmap and a bit of honesty as well in terms of what’s gone well and, more importantly, what’s gone wrong? The annual report remains a very important document. It is the sole source of truth on a company that we have at the moment.”
A bit of optimism for the UK market
London continues to be a favourable venue for UK issuers, offering better long-term valuation prospects compared with US exchanges. The recent IPO of Raspberry Pi highlights a supportive environment for smaller tech companies and innovation. However, there is a need to regain support for UK equities, particularly from pension funds to retail investors.
As an analyst at UBS aptly put it: “It’s important to ‘sell your sector’ and provide context as to why investors should invest in any company in that sector. Then, show why your company is the standout choice within this market.”
The role of AI: humans still needed
While AI adoption is on the rise among IR teams, its current use remains relatively basic, focusing on language models with hurdles around security, authenticity and cost. In the short term, AI may be overhyped, but its long-term potential is significant. Only time will tell how quickly and where the transformation will come. Despite these advancements, the human element in investor relations remains crucial.
ESG is now fundamental
Environmental and social factors are increasingly critical for investors, while governance remains a key area where shareholders expect direct engagement from issuers, especially when advisory rebuttals are necessary. ESG considerations are now a fundamental part of the investment decision-making process, making it essential for companies to integrate these elements clearly and concisely in their reports, especially with CSRD already here for some and ISSB right around the corner.
Conclusion
In essence, refining the annual report is not just about reducing the page count; it’s about enhancing clarity and engagement. By simplifying the narrative and focusing on what truly matters, companies can better communicate their equity story, making it easier for investors to understand their value proposition. This approach not only fulfils regulatory requirements but also positions companies as transparent, innovative and investor-friendly, ultimately helping them stand out in a crowded market.
If you need help to cut the clutter in your annual report and focus on what investors really want – clarity, consistency and transparency – get in touch.
