Practical perspectives on reporting #11: A newly listed company’s view: necessary evil or valuable exercise?

By Tamara O’Brien, TMIL’s roving reporter

Congratulations! You’ve spent the last year or two jumping through sky-high hoops. You’ve found your advisers, held your roadshows and IPO, and convinced the biggest sceptics in the land that your business is viable.

Now, you’re required to bare your fledgling corporate soul – taking in the likely impacts of Covid-19, Brexit, climate change and other imponderables – in a publication that must satisfy sharp-eyed auditors and investors, while winning the hearts and minds of a list of stakeholders including, but not limited to, the proverbial Uncle Tom Cobley. All within six months of your year end, please. (Lucky you, two months extra because of Covid.)

That’s the challenge facing every newly listed company. And even a writer like me, for whom the blank page holds no fears, would blanch at the prospect of producing an entire annual report (AR) out of thin air. But it’s also a never-to-be-repeated chance to establish your identity on the corporate stage.

As experienced Company Secretaries, Simon O’Hara of Airtel Africa and WK Groenewald of Bytes Technology Group are old hands at annual reports. In their current roles, they found themselves having to start entirely from scratch – a rather different ballgame, and one which brought them to Falcon Windsor for help.

Building trust from the ground up

Claire opened the discussion with her take on the subject. Speaking with the impassioned fluency that only comes of deep personal experience, she extolled the joys of first-time reports not being weighed down by what’s gone before, or an attitude of “As long it’s not wrong, it’s ok”. Both of which encumbrances lead, in her view, to reporting that’s boring at best, and at worst, incomprehensible. She also warned against two pitfalls for first reports:

  • The false friend of “best practice” – aka filching stuff that looks cool, clever or useful from other reports. Tempting when you’re up against it, and yes you need to know what your rivals are doing – but only after you’ve done the hard thinking yourselves. For a report to be good, it must be unique to you. Besides which, analysts are like lecturers marking essays. They can spot memes and borrowings a mile off.

  • Recycling the IPO prospectus, with added extras. Your prospectus has some use as a source of material, but it was created for an entirely different purpose. The AR is about building a relationship of trust between you and your stakeholders, so be straight with them. The tricky situations and compromises of operating in the real world will rush in all too quickly. Your audiences will be much more inclined to see things from your point of view if you’ve been level with them from the start.

Get your reporting on the right footing, and you’ll reap innumerable benefits. After all, the AR is the anchor for all your communications, internally and externally.

With these admonishments and encouragements ringing in their ears, our panellists spoke of their own ‘first AR’ experiences.

Bursting onto the investor scene – and that difficult second report

Simon had the exacting task of reporting for a company dual-listed in the UK and Nigeria, working with colleagues who’d never had to produce a document to UK regulations before. Moreover, his company – affordable mobile service operator Airtel Africa, which serves east, west and central Africa – faced reservations even from its own advisers (thanks guys!) about whether they could stand on their own two feet, without relying on the parent company.

However, with a multiplicity of languages, cultures and jurisdictions to cope with, subtleties of tone and argument took a back seat. A key learning from Year 1 (2019/20), was simply to ensure that everyone used the same version of spellcheck. A style guide and brief are Simon’s other indispensables. Year 1 also brought reporting colleagues and their advisers to a new appreciation of each other, not least in their ability to produce the AR in the face of exhaustion and the absence of any pre-existing documentation. 

‘You get a pass for the first year. It was us telling our story to the financial community. In the second report, we had to be brutal about our capabilities and what we could achieve, and it was a much better experience. We focused on what mattered most to us – our commitment to transparency and governance. And we took out a lot of repetition, because we were more confident of what we wanted to say.’

In the din of disclosure, make quiet spaces for your personality

WK had a similar experience to Simon when Bytes Technology Group, a UK software, security and cloud services provider, went public on the London and Johannesburg Stock Exchanges in December 2020.

‘You go straight from listing into the AR process. Suddenly you’re operating in a completely different world, where there are new things (regulatory requirements) and people (the Board and management team) to take into account. The Board hasn’t worked together before, everyone wants their own signature on the report… as CoSec you quickly have to establish a rapport with everyone, and ensure they’re comfortable with the direction you’re taking.’

Responding to Claire’s slightly leading question about whether the advantages of a first report (evidencing statements, defining your company’s character and purpose) outweigh the disadvantages – WK is equivocal. ‘It seems like a great opportunity, but you’re working in a strict regulatory environment, where you’re forced to go all-out from the beginning. If you cut through the noise and don’t over-disclose, you’ll find spaces where your company can reveal itself.’

But it’s worth the effort. Just think of the opportunity – to make your response to the seismic changes the world has recently undergone part of your company’s DNA. No awkward bolt-ons, U-turns, post-rationalising, bizsplaining. Just you, a blank sheet of paper, and a braver new world with you in it. And if that doesn’t make your newly-listed heart beat a little faster, we’re all in trouble.