Head of Corporate Reporting Nick Rose takes a look at the post-Brexit landscape of Corporate Reporting and any changes that might need to be made.
On Friday 24th June, in the aftermath of the Brexit results both the FTSE 350 and FTSE 100 markets reacted with significant drops. While both have now recovered from their dives, the FTSE 100 rebounded from it’s knee jerk reaction to a level higher than where it started the previous week.
There should be no surprise in this response as 75% of the FTSE 100 earn their revenues outside the UK and therefore in foreign currencies, so when combined with a weakening pound it equates to an increase in profit and a surge in investor and analyst confidence and expectation.
By contrast, 75% of companies on the FTSE 250 are UK focused, earn their revenues in the UK and are a true bellwether of the UK economy. These companies suffer greater variance through market turbulence but even here there is an upward trend and while not back to pre-Referendum highs, the index is significantly higher than where it was in the immediate aftermath.
So what does this mean to corporate reporting – should the way companies report change as markets have returned to their original levels? Or will there be new directives and requirements from BIS or the FRC? Or is there more market turbulence ahead with the political situation unresolved?
In brief, no. Reporting regulations will stay the same for the immediate future as the Government and BIS have other priorities to negotiate first, and therefore there is no need to change the approach or structure to a company’s reporting suite.
But, with political and market uncertainty ahead, now is when your reporting needs to work harder, this is when intelligent reporting pays dividends. Effective communication is essential during any period of disquiet and uncertainty, be it global or local – all stakeholders need consistent communication.
A company needs to drive its investment proposition, assure all stakeholders and in so doing provide stability. It is imperative the corporate narrative and key messages are evolving to reflect the market forces and demonstrate what the company is doing to provide stability. Do not pretend the macro issues are not relevant to your company; discuss them openly, advise what the impact and risks could be; and demonstrate how these have already been addressed and you are ready for the future.
So, within corporate reporting reflect these wider corporate communications with one seamless flowing narrative and report with even greater clarity, brevity and disclosure; be concise to ensure the key messages are being communicated simply and engagingly with no opportunity for misunderstanding.
Nick Rose, Head of Corporate Reporting
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January 21, 2021