Each year a sample of portfolio companies are reviewed for compliance with the Guidelines, and over the last ten years there has been a sizable shift in the underlying quality and transparency of reporting. Corporate reporting is an area of rigorous scrutiny and change, with the bar moving ever upwards.

This does not mean the requirements of reporting should be getting longer and more burdensome, as in fact there is a clear move to clarity and focus, with stakeholders expecting insight beyond the key financials metrics. The Guidelines assist in meeting this expectation, but should not be considered in isolation for compliance, rather reflected on as a whole and used to underpin a strategically focused, balanced and truly integrated narrative.

The observations below reflect the trends identified from both the review of companies performance against the guidelines but also feedback from wider considerations of the direction of corporate reporting:

• Discussing past performance is an inherent part of presenting financial statements, but the FRC is clear in its guidance on Strategic Reports that these should include forward-looking information, and this is part of the Guidelines focus. The ‘trends and factors affecting future development and performance’ criteria creates context for stakeholders in assessing the current year performance, future prospects of the business and how this shapes commercial strategy and decisions made today for the future – refer to section 11 of this guide for further detail.
• Risks should not be considered in isolation as this tends to provide a static, boiler plate discussion, when in reality there is an increased level of risk dynamics that should be evident from the reporting to enable stakeholders to understand the changing landscape of risk. The ‘principal risks and uncertainties facing the company’ criteria provides a framework for this – refer to section 6 of this guide for further detail.
• Reporting should link together strategy, risk and KPIs coherently whilst telling a story, integration is the key to achieving corporate reporting that is strategically focused throughout. The ‘strategy’ criteria creates context for the activities of the business and how these underpin the performance and actions taken in the year – refer to section 9 of this guide for further detail.
• As the regulatory and public reporting landscape evolves to embrace wider stakeholder areas of focus, the importance of disclosures for employee matters, human rights and gender reporting have ever increasing focus. The ‘employees’, ‘social, community and human rights’ and ‘gender diversity information’ criteria’s focus on how to address these wider discussions in the context of the business – refer to sections 13, 14 and 15 of this guide for further detail. There has been a trend to publish the bare minimum here, especially around gender statistics, and with the current focus on this in the market, there is a need to add greater transparency over policies companies have in these areas.
• Transparency of ownership is a significant theme in how stakeholders assess businesses they work with and potential implications of this. The ‘identity of private equity firm’ criteria outlines the expectations stakeholders would have that need to be addressed – refer to section 1 of this guide for further detail.

All the Guideline areas require careful consideration to ensure good practice can be achieved and this guide provides both an understanding of what good practice looks like and some actual examples from the most recent review. The examples set out elements of good practice for the specific criteria disclosed. The Group will review the disclosures in the annual report as a whole when reviewing compliance.