This is our 13th edition of ‘How does it stack up?’. It represents a lot of hard work each year, so we are immensely proud that it is recognised as a valuable industry benchmark. During 2018, we have seen significant changes in reporting legislation, but also significant improvements in the quality of reporting. The criteria we use to assess companies does not reflect our own personal view of the world. Instead, it represents considerable collaboration with key industry bodies, including – the government, financial, investor and sustainability stakeholders. It assesses reports based on what audiences want to read and those audiences extend beyond just the investment community and shareholders.
At first glance, this is very similar to Landsec’s previous report, but further reading reveals a lot of work to develop the content within an already strong structure. The remuneration report illustrates a desire to make this section more accessible. The annual statement has a good line-by-line breakdown on outcomes and the ‘At a glance’ has a clean and simple approach with clear navigation to further detail. Its governance report hasn’t rested on its laurels. It includes information on the appointment of its new chairman, induction programmes for board promotions and a stronger shareholder engagement piece.
Overall, this is a very strong report. It shows what is possible when the basic structure is right. The business model and ‘Creating Value the Mondi Way’ framework are used effectively to structure the report and provide linkage. Cross-referencing is evident throughout and the flow and structure of the report is good. Here, sustainability reporting is strong and divided into ten components with Mondi’s commitments clearly identified at the start. It then reports on progress and initiatives during the year, which are supported by performance measures.
3. BT Group
The most notable change for BT Group this year is a much bolder story around ‘Making it happen’ with several case studies in the opening pages bringing the theme to life. While the presentation could be more consistent, BT Group remains a leader in reporting on resources and relationships, while other reporters are still waking up to their importance. This report has retained a strong narrative structure for its strategy and the section is framed by a hierarchy that shows how purpose, vision, goals, strategic priorities and values fit together. The guidance for financial KPIs and non-financial performance measures, now supported by a non-financial performance summary, continues to provide a rounded view of performance and a forward-looking perspective.
4. United Utilities
This report consistently covers a lot of ground across all 15 criteria. It’s deserving of the title of ‘integrated report’, which aligns it with the top end of best-practice reporters. The three elements of their strategy have a strong sustainability bias and act as lynchpin throughout the report. There is a lot of detailed content, which in an odd way is probably its only weakness. A little more space, elegance and a stronger story would make it difficult to beat. The business insight case studies provide a great opportunity to have a story-led customer focus, but in conjunction with an already detailed report, they felt a bit long to be engaging.
New information in Vodafone’s strategy section provides more consistency with its investor presentations. While the pages look very full, it has managed to retain the market context and goals. There are some strong ideas in the presentation of its KPIs. Separating out the financial KPIs from those supporting the strategic growth engines – and core programmes that the overall performance is derived from – makes sense. It’s also good to see a commentary that provides context and shows what’s behind the charts, rather than merely describing them. Vodafone is a leading reporter on governance. This impressive report goes beyond the regulatory requirements, using design to make mandatory disclosures more accessible.
6. British Land
British Land has created a report that is a strong all-rounder, scoring well across many of our criteria. The risk section continues to be a highlight with named ‘responsible executives’ for each risk and a clear narrative on how the risk has changed. We also think it’s great that they discuss their financial policies and principles’ – something we have not seen many reporters do. This helps to make financial discussion feel strategic and connected to the rest of the report. The overlap between business model and strategy has reduced compared to previous reports, but there is more work to do here to make the business model truly best practice.
The highlights of this report sit with its governance disclosure. The risk management is highly insightful and explicitly linked to its business model and strategy. There is an honest and explicit discussion of sustainability issues which are materially linked to its operations. The governance section makes an e ort to bring board and committee behaviour to the fore. It’s also nice to see a target-driven approach to KPI reporting.
Fresnillo’s report continues to hit the mark in terms of content across risk, governance and sustainability reporting. This report aims to provide a forward-looking slant throughout and there is a real effort to deliver a detailed view of how the business is performing. With that said, the report isn’t as strong as others in our top 10 for business model, resources and relationships and linkage between performance and remuneration. The report would also benefit from an attempt to be more concise.
9. Severn Trent
A newcomer to this year’s top 10, Severn Trent’s annual report is particularly strong. This is due to the emphasis on how resources and relationships are managed to create long-term value, both for the company’s shareholders and wider society. The report does not shy away from transparent discussions on regulatory challenges, and in a time when businesses are being penalised for insufficient reporting on climate change, Severn Trent addresses weather and climate-related risks early on. The purpose ‘to serve our communities and build a lasting water legacy’ appears throughout their annual report, from the business model to governance, and nicely adds to the story about who they are as a business.
In an industry under constant scrutiny and ever-evolving regulation, AstraZeneca’s annual report continues to lead the way with its frank and honest reporting. With a clear set of strategic objectives, explicitly linked performance measures and an honest view of the market environment, the report demonstrates the challenges and opportunities it faces alongside the direction and progress of the business. The report also continues to provide excellent commentary on the key resources and relationships critical to AstraZeneca’s business model.