PwC: More analytical views in annual report benefits investors

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KUALA LUMPUR (Sept 8): More public listed companies should provide analytical views in their annual reports to empower investors make better decisions, according to a report by Pricewaterhouse Coopers (PwC).

In the report entitled ‘Inspiring trust through insight — Integrated Reporting in Malaysia’, PwC said only a fraction of Bursa Malaysia’s Top 50 companies provided analytical views in their annual reports.

PwC recommends annual reports should have key content elements that include organisational overview and external environment, strategy and resource allocation, opportunities and risks, business model, performance, governance, and outlook.

However, in PwC’s report which surveyed the top 50 listed companies on Bursa Malaysia, only 10% of companies had linked market discussion to strategic choices, while 18% had included strategic priorities in strategy and resource allocation.

Of the 50 companies, 24% had detailed principal risks involved in business operations and strategies.

PwC Malaysia's executive chairman Datuk Mohammad Faiz Azmi said investors demand more relevant, reliable and outcome-driven information to help them make more informed decisions.

“The integrated report can be a very compelling stakeholder engagement tool, especially in the extraordinary times we are operating in,” he said.

He said for example, disclosing the company's environmental, social and governance (ESG) activities, can be a useful barometer of the company's management and is also beneficial in creating long term shareholder value.

“These measures can provide significant opportunities for companies to sustain the trust that is so fragile and fleeting in our emerging market,” he added.

PwC Malaysia's assurance leader Pauline Ho said providing a clear linkage between reported information is critical in supporting investor analysis, especially at a time where public trust is low.

“At the speed at which our landscape is evolving, we need more insights, rather than just information in the annual report,” she said.

“We need to be cognisant that integrated reporting is a journey which needs to be both holistic and authentic, beyond mere aesthetic enhancements of the annual report as a quick fix to improve its usefulness to the reader,” she added.

PwC recommended a roadmap which sets out five stages to introduce and embed integrated reporting, with the view to help companies achieve greater connectivity across the business.

These are looking at engaging with stakeholders, determining stakeholder value proposition and refreshing strategy, aligning internal processes to strategy, demonstrating how the company’s strategy makes an impact and creates value, as well as integrating reporting by connecting previous activity and output.

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