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Increase the readability of your corporate reports

One of the biggest problems in corporate reporting is, that actually not many are really reading the big company reports (corporate annual reports or sustainability reports). There are a lot of people and departments involved in producing these comprehensive reports; however only a small community reads it in the end (i.e. the investment community or NGO’s). So how to overcome the problem of people not reading the reports, bad corporate reports readability and how to awaken interest of your stakeholders?

  1. You should focus and extract the most important information in a separate report or at the beginning of your report.
  2. You should summarize the data based on the materiality matrix, as this table gives an overview about the most important topics of your company. The materiality matrix has been invented by sustainability reporters but for our purposes it should not focus on sustainability topics (as it is usually nowadays) but on all relevant topics for your company.
  3. Based on this materiality matrix the relevant topics could be described.
  4. But how to summarize then financial and non-financial topics? The best way would be to give the following summarized information per aspect:
  5. Start with a short description of the topic – what is it about
  6. Give an overview about the non-financial relevance of this topic and its development in the current year – as this is the basis for the financial development
  7. Give an overview about the financial development of your company and the financial impact outside your company (maybe report also your internal controls)
  8. Explain the impact of your company to the outside (i.e. society and other stakeholders) and the goals of your company

This gives a comprehensive overview of the most relevant aspects in order to increase corporate reports readability, which should also be summarised in a online (webbased) report.

See the following (brief) examples:

1st example: Balance sheet: Build a safe and modern infrastructure – Property, plant and equipment

  1. Description of the topic

The property, plant and equipment item shows the tangible assets that the company XY has invested and created. The value of property, plant and equipment at the balance sheet date was around XX mEUR (IFRS: XX mEUR) and comprises technical equipment and machinery, land, leasehold rights and buildings.

  • Operational development of this aspect (non-financial and financial)

The Company XY Group made investments with a total volume of EUR XX million in 20XX, of which EUR XZ million (e.g. xy%) are related to property, plant and equipment and the following areas:

  • Networks
  • Cars
  • Buildings

Fixed assets increased by more than EUR XX mEUR due to XYZ. In financial year 20YY, the impairment testing of assets in accordance with IAS 36 resulted in impairment losses of EUR XY million.

  • Impact and goals

Our network is servicing more than XY households and about XYZ commercial enterprises. The main goals for the coming years are:

  • Establishment of an innovation culture in the following areas: XYZ
  • Development of Mobility solutions

2nd example: P&L: Be a fair revenue generator – Revenues

  1. Description of the topic

The sales of XX mEUR reflect the income of Company XY in the following business divisions

  • Energy
  • Merchandise
  • etc

The A-division comprises the Production and Network Operation divisions. Company XY also provides comprehensive services in the areas of mobility solutions and as well as traditional infrastructure.

  • Operational development of the aspect (non-financial and financial)

One reason for the decline in sales revenue has been … e.g. a very warm winter. The higher revenues from the networks result mainly from service revenues.

  • IFRS adjustments

Revenue under IFRS fell by around XX mEUR due to changes in the scope of consolidation.

  • Impact and goals

Company XY is the most important infrastructure service provider in this area. The new group strategy defined in XYZ focuses on these objectives: Firstly, the financial stability and secondly, supporting the implementation of a Smart City.

3rd example: P&L: Employees are the basis of our success – Personnel expenses / employees

  1. Description of the topic

Personnel expenses show the costs of the approx. XY thousand employees of the Company XY Group. The average number of employees developed as follows (full-time equivalents):

  • Blue collar         
  • White collar
  • Apprentices
  • Operational development of the aspect (non-financial and financial)

Personnel expenses show negative effects due to a different evaluation for the pension obligations. We are supporting our employees with training and further education.

  • IFRS adjustments

IFRS Adjustment of personnel provisions: Provisions for pensions and similar obligations and provisions for severance payments are measured by new IFRS standards. Pension provisions were revalued by EUR XY million in the financial year due to IFRS.

  • Impact and goals

Value added by Company XY: Every job at our company creates four more in our region.

4th example: We support sustainable business practices – Sustainability level of suppliers

  1. Description of the topic

Company XY works with organisations or natural persons who share the sustainability values and visions of Company XY. As a promoter of regionality, we contribute to the purchase of those products or services that correspond to our sustainability values.

  • Operational development of the aspect (non-financial and financial)

The development of expenses for suppliers is as follows: Cost of goods sold and services rendered: Cost of materials and other purchased manufacturing services: 201Y XY mEUR. An vendor evaluation carried out within the group in year XXXX showed that XY percent of the suppliers of Company XY originate locally.

  • Impact and goals

Company XY has set itself the goal of strengthening the sustainability values of its partners within the framework of cooperation with suppliers and ensuring that these are in line with the values of Company XY.

5th example: In addition relevant KPI (Key Performance Indicators) could be included for all these topics: e.g.

  • Return on sales
  • Personnel costs per employee
  • Revenue per value driver
  • Revenue per customers
  • Emissions per Megawatthours
  • etc

Contact us if you want to improve your company reporting, integrate different pieces of your company report to one valuable source of information and increase corporate reports readability.

By Georg Tichy

Georg Tichy is a management consultant in Europe, focusing on top-management consultancy, projectmanagement, corporate reporting and fundingsupport. Dr. Georg Tichy is also trainer, lecturer at university and advisor on current economic issues.

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