evolution of the annual report: strategic report accolades
DESCRIPTION
The Strategic Report Accolades presentation by Ian McDonald-Wood from the Evolution of the annual report conferenceTRANSCRIPT
2 October 2014
The 2014 Strategic Report Index Accolades
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The seventh year of the Accolades – the ‘no nomination’ awards
– Why the Accolades matter:
– Case studies that show the effective use of business strategy in reporting and its value to investors
– The benefit of recognition for companies that are outstanding at articulating and applying strategic thinking
– A window to propagate the valuable but often misused management technique that is business strategy
Dr Anthony Hesketh
Lancaster University Management SchoolCopenhagen Business SchoolDeloitte Analytics
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Background to the Accolades
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Tangibles
Intangibles
Reducing uncertainty for shareholders is the primary role of the Annual Report
Market value
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Book value
Audited accounts assure past performance
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£
A rigorous, consistently applied evaluation basis addressing past, present and future
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+ clarity and logicObjectives and
strategy
Business model
Govern
ance
SustainabilityFuture factors and risk
Performance and KPIs
Strengths and resources
Past
Future
Future
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How we build the Strategic Report Index
Annual Report
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How scores have changed over time
Good strategic narrative reduces uncertainty
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The six 2014 Accolades
– Best Business Model
– Best Key Performance Indicators
– Best Strategic Risk
– Best Strategic Capability
– Best Shared Strategic Value
– Strategic Leadership
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16 Companies from 15 sectors short-listed
6 Companies for ≥ 2 Accolades
3 Companies from the FTSE250
12 of these short-listed in previous years
27 Companies from 21 sectors long-listed
9 Companies for ≥ 2 Accolades
8 Companies from the FTSE250
Best Business Model
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Long-listed Short-listed Winner
British American Tobacco
British American Tobacco
Experian
Halma
Marks and Spencer Group
Marks and Spencer Group
Provident Financial Group
Provident Financial Group
Rexam Rexam
Spirent Communications
Tate and Lyle
Foundation of the strategic framework
Defines the logic of the business
Distinct sources of value – created, developing
Basis for sustainable profitability
Encompasses value system of enterprise
Comprehensive exposition of PFG’s business model is the foundation of its strategy
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Explains simply, clearly how PFG creates value uniquely for customers
Clarifies why PFG is profitable by highlighting, exploring key differentiators
Relates application of Group model to divisions and operational processes
12-page business model section cornerstone of Strategic Report
Best Key Performance Indicators
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Long-listed Short-listed Winner
ARM Holdings ARM Holdings
Balfour Beatty Balfour Beatty
Fresnillo
Halma Halma
ITV ITV
Land Securities Group
Lloyds Banking Group
Provident Financial Group
Complete set of KPIs – financial and non-financial
Ease of intelligibility
Good trend data
Illustrative of strategic progress
Usefulness in monitoring performance
ARM’S KPIs are quite clearly central to its whole strategic management process
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Comprehensive KPIs linked directly to growth drivers of ARM’s strategy
8-page KPI section provides context for discussion of strategy and performance against strategy
Clear indication of role each KPI plays in ARM's strategic management process
KPI presentation contributes to simplifying complexity of the business
Best Strategic Risk
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Long-listed Short-listed Winner
Domino Printing Sciences
Fresnillo Fresnillo
Halma
Land Securities Group Land Securities Group
Legal and General Group
Legal and General Group
Marks and Spencer Group
TUI Travel TUI Travel
Unilever
Key risk factors relative to strategy
Direct influence on achieving objectives
Specific management, control or mitigation comments
Risk governance, appetite, management
Clear sensitivity to the future
Fresnillo’s evaluation of risk inspires real confidence
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Comprehensive in its evaluation of risk, its governance and management
Demonstrates an unrelenting focus on strategic risk
Accessible, intelligible and useful to the shareholder
Contributes to perceptions of good strategic management
Best Strategic Capability
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Long-listed Short-listed Winner
AstraZeneca
Aviva
Coca-Cola HBC Coca-Cola HBC
Lloyds Banking Group Lloyds Banking Group
Marks and Spencer Group
Marks and Spencer Group
Rexam
Unilever Unilever
Weir Group
Investment in key strengths and resources
Development of intangibles and hidden assets
Attention to value drivers
Enterprise value system wide
Match to indicated demands of strategy
What makes Marks and Spencer’s Strategic Report more strategically capable
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83 relevant references across a concise 34-page Strategic Report
Expansive narrative rich in relevant scope and content
Recurrent themes reflect key capabilities required for sustained strategy-driven success
Focus on customer value drivers, and on process, systems and reputation intangibles
Coverage of full enterprise-wide value system
Best Shared Strategic Value
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Long-listed Short-listed Winner
Anglo American Anglo American
Catlin Group
Coca-Cola HBC Coca-Cola HBC
Galliford Try
Johnson Matthey
Lloyds Banking Group Lloyds Banking Group
Rio Tinto
Unilever Unilever Integration of social, environmental in business
strategy
Attention to full range of stakeholders
Clear environmental policy, commitment
Sustainability governance
Reporting of social and environmental performance
Coca-Cola HBC AG produces an integrated de facto Strategic Report of remarkable quality
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“The reason we have adopted integrated reporting is that this better reflects how we operate as a business. After a decade of embedding sustainability throughout our organisation, we now think and operate in a more integrated manner; there is therefore no longer a need to publish separate reports on our financial and non-financial performance.”“The four pillars of our strategy – Community Trust, Consumer Relevance, Customer Preference and Cost Leadership – frame the discussion of our key activities during the year.”
Strategic Leadership
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Long-listed Short-listed Winner
Fresnillo
Land Securities Group
Lloyds Banking Group
Marks and Spencer Group
Rexam
Unilever
Clarity and rigour of strategic thinking
Robust and integrated strategic framework
Strategic management in past, present and future
Development of strategic capability
Clear and persuasive shared value
Lloyds displays outstanding quality in almost every aspect of its strategy framework
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Topped the 2014 Index with 9.0
Placed in 4 long-lists and then 3 short lists for the 6 Accolades
Full set of KPIs illustrates strategic progress as well as strategy in action
Expansive narrative matches capabilities to the likely demands of strategy
12 out of 44-pages on social and environmental dimensions fully integrated with business strategy
The 2014 Strategic Report Accolade winners
– Strategic Leadership: Lloyds Banking Group plc
– Best Business Model: Provident Financial Group plc
– Best Key Performance Indicators: ARM Holdings plc
– Best Strategic Risk: Fresnillo plc
– Best Strategic Capability: Marks and Spencer Group plc
– Best Shared Strategic Value: Coca-Cola HBC AG
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