Strategy, success and stakeholders why your reporting matters

Transcription

1 Strategy, success and stakeholders why your reporting matters School of Mines Peter Acloque Duncan Hunter Richard Haig The Royal Institution 14 June 2018

2 Session outline Introduction Discussion - Reporting to your stakeholders Technical update Closing remarks/q&a

3 What do investors think about the Annual Report? PwC s Extracting value: What do investment professionals need from mining company reporting? Investor survey results 88% of investors agree that the quality and integrity of reporting impacts their perception of the quality and integrity of management 74% of investors typically review the annual report of the companies that they follow 36% Annual reports provide useful insight into principal risks 20% The business model captures what's distinctive about a company

4 Navigating stakeholders

5 What good stakeholder engagement looks like There is stakeholder relevance at all stages of a company s strategic story. From a company s point of view stakeholder relationships affect its risks and opportunities. From a stakeholder side, companies primarily make a contribution to them or impact upon them. Company Stakeholders

6 Is your reporting relevant? What s going on in the market, how is it changing, and how are you positioned to capitalise on this? How can strategy be measured? Do the disclosed KPIs align to remuneration and strategy? If not, then are these really the key measures? What more can I say about our strategy? We dig it up, and we sell it. That s it Are these really the principal risks that keep the directors up at night? Does the risk section reflect the true nature of the business? Stakeholders are fundamental to the sustainable long-term success of the company. How do you engage and take account of their views? 6

7 Putting yourself in the position of the stakeholder Group exercise (15 minutes) Consider the Annual report extracts from the perspective of a stakeholder group - Group 1:Employees, - Group 2: Government and society - Group 3: Investors For each extract, how is the impact of the company s activities on stakeholders factored into the strategic disclosure? What are the highlights of each extract, and how could these be improved further? 7

8 Technical update 8

9 Technical update - Alternative Performance Measures (APM s) ESMA Guidelines The Guidelines define APM s and outline principles for their disclosure Presentation Define APM s in a clear and readable way and give meaningful labels. Reconciliation Explanation Reconcile APM s to most directly reconcilable GAAP line item explaining material reconciling items. The use of APM s should be explained so users understand relevance and reliability. Simply explaining these are useful measures is not sufficient. Prominence Comparatives Consistency Do not display with more prominence, emphasis or authority than GAAP measures. APM s should be presented with comparatives which also need to be reconciled. APM s should be defined consistently over time and any changes justified. 9

10 Technical update - Navigating the stakeholder agenda Non-financial reporting regulations BEIS secondary legislation Website disclosures eg Modern Slavery Task Force on Climate-related Financial Disclosure The stakeholder agenda ICSA/IA guidance on stakeholder voice GC 100 guidance on s172 FRC Guidance on the Strategic Report FRC UK Corporate Governance Code

11 Technical update Non-financial reporting regulations Companies must disclose their impact in the following areas employees, environment, social matters, human rights, anti-corruption/bribery. This applies to EU-PIEs with over 500 employees. Recognition of the regulations and compliance Policies, their outcomes and related due diligence Discussing impact No requirement for a separate statement (yet) But indicate acknowledgement or compliance of the regulations Explain - if no content - that the content area is immaterial Do more than just list policies give a sense of their purpose Assess the outcome of the policy what was achieved? Don t forget due diligence. If processes aren t in place, then should there be? Provide an insightful disclosure that answers the question Don t just present the positives. Discuss negative impacts and what the company is doing to combat these. 11

12 Technical update - s172 Companies Act Section 172 Duty to promote the success of the company 1. A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to a. The likely consequences of any decision in the long term, b. The interests of the company s employees, c. The need to foster the company s business relationships with suppliers, customers and others, d. The impact of the company s operations on the community and the environment, e. The desirability of the company maintaining a reputation for high standards of business conduct, and f. The need to act fairly as between members of the company. 12

13 Any questions? 13

14 This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers LLP. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. 14