Now it’s normally my esteemed colleague, Nick Topazio who talks about company reporting, but I’ve managed to stick my oar in of late on account of getting involved in governance reporting.

I will be one of the judges for the ICSA Hermes Transparency in Governance Awards 2011 (as I was in 2010) and to launch them, ICSA held an excellent seminar last Thursday, chaired by Sir Roger Carr, Chairman of Centrica plc, Chair of the awards judging panel and President of CBI (in short, a captain of industry).

First up was Business Minister, Ed Davey MP who told us about the UK government’s plans to improve the standard of narrative reporting.  In short, the plan is to split the narrative report into two.  The first part (the strategic report) would be where the business tells its story, unencumbered by compliance requirements.  The second part (the annual directors’ statement) would contain the detailed disclosures, including compliance statements and there was a hint that companies will be able to do much of this online.  More on this to follow when the government issues its consultation paper in autumn – Nick has it on his ‘to do’ list for after the summer holidays.

But actually, the main focus of the seminar was to give some of last year’s winners to talk about what the awards meant to them (a lot) and their approach to reporting.  This was absolutely fascinating because it illustrated like nothing else the richness of a principles-based approach and the freedom that this gives for different players to interpret these principles in a way that is meaningful to their specific circumstances.I’ll explain.

There is a pretty broad consensus as to what makes a good annual report.  For a useful summary, I would recommend A Good set of Report and Accounts set out in the 2010 Annual Report of the UK Financial Reporting Review Panel.  This sets out nine characteristics including a single coherent story, cut clutter, clarity – all the features that you might expect.  Seminar participants also agreed that the report should reflect the values of the company (not just the value!) as well as the spirit (not just the letter) of compliance requirements.  All well and good, but here is where it gets interesting.

The joint winners for the 2010 best annual report in the FTSE100 category were Aggreko and BAe Systems and their respective CEOs (Rupert Soames and Ian King) provided their take on reporting.  There’s no doubt that they each subscribed to the broad principles of good reporting and are strongly committed to delivering an honest picture of the company.  But there the similarity ends.  Aggreko doesn’t like using pictures and graphics – they don’t see the annual report as a sales document and they want investors to take the trouble to read the report, not get distracted by the glossy stuff.  Aggreko prefers to produce the report inhouse and not use specialist designers.  I was intrigued to discover that the CEO and CFO write the report themselves and it’s then corrected by the CEO’s PA.

Take a look at the BAe Systems report and it’s clear from the quality of the presentation and style that this is a company that takes a very different approach – but I would not for one minute wish to imply that their preference for pictures and graphics means less substance.  Absolutely not – just two different companies doing the same thing in a different way.  BAe Systems is particularly keen to provide a richer feel for the different cultures of the companies that make up the group thus giving a greater link from governance through to the management.  That really chimes with us here at CIMA where we see the external report being fully aligned with internal reporting and management.

Another interesting consideration, as pointed out by the Chairman of the FTSE250 category winning company, Amlin plc is that if you are a company with a tangible product, then it’s your products that do the talking rather than the annual report.  For others such as the insurance, the annual report provides a way of building reputation and profile.The best thing about these very different winners thought is that they should hopefully provoke other companies into considering how they should approach their external reporting rather than just aping the winner.

And what did I find most interesting?  Well, I had already read the three annual reports mentioned as part of judging for the 2010 awards and now I got to hear the winners’ chief executives or chairmen.  If you hadn’t told me who they were, I would have been able to guess which annual report each was responsible for -  such was the congruence between the two.  Real reports with personality!