Michael Cobbin's Blog

Founder of Michael Cobbin & Associates

11 Reporting tips

Making company reporting more accessible

Below are 11 reporting tips on company/corporate reporting:

Have a backbone

Use your objectives and strategy to underpin your reporting and provide the context for your activities and performance. Strategic statements set in isolation from the rest of your reporting can appear as hollow statements of intent.

The big picture

Put your results in the context of market trends. Provide management’s perspective on the competitive landscape and macro environment to allow the reader to evaluate your strategic choices and actions along with the quality and sustainability of performance.

Who are you kidding?

Provide an honest and open analysis of both the upsides and the challenges the company faces. Explain how any areas of underperformance are being addressed.

Flash in the pan

Consider using bridge charts to help investors understand what is driving revenue and profit growth. Is the growth sustainable, or not?

Cash is king

Consider including a detailed disclosure about your operating cash flow strategy and performance, including cash conversion ratios, sensitivity to key factors, repatriation restrictions, and so on.

Not the kitchen sink

Highlight principal risks, not all risks. How might they derail your strategy? How are they managed? What is the sensitivity of underlying performance to changes in these risks?

Bottom up

Challenge whether the segment analysis makes visible the different dynamics inherent within the business. Consider including a few additional line items such as working capital, operating cash flow and capital employed for each segment.

Bridging the GAAP

Embrace non-GAAP measures but apply certain ground rules: reconcile non-GAAP back to GAAP; provide clear definitions of terms used; and make sure that the reader can quickly identify which are the non-GAAP numbers.

You owe it to them

Debt information is traditionally scattered throughout the report. Bring it together in one place. Include items not typically recognised in the financial statements, such as operating leases. Provide more granularity in the maturity table and reconcile free cash flow to movements in net debt.

Metrics that pay

Explain clearly how management are incentivised, highlighting the link between strategy, short and long-term performance, and the remuneration package.

Wood for the trees

Key information and messages can get lost in the volume of data and the use of jargon. Take a step back. Are you helping the reader to understand key strategic messages and navigate easily through your report by using clear and consistent headings along with tables and charts?

This post originated from pwc.

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This entry was posted on September 25, 2012 by in Performance Reporting and tagged , .
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