100% 0% 01 02 03 % 04 86 05 06 07 08 09 10 50 11 % % 12 50 13 14 4% 15 +2 87% 16 43 17 % 58% 18 19 + 20 14 % % 21 +9 22 23 24 36 % % 4 % + 77 25 + 1 1 % 27% 86 % +7 % 0% 100% 100% 0% 89 % + 1 2% 8% % 34 57 % 27% 73 % 34 +17% % +18% % % +9 41 68 % 50 % % 50 94% How does it stack up? 2016 0% 100% At the centre of the reporting debate A review of FTSE 100 narrative reporting How does it stack up? Over 30 years we’ve built a track record for helping clients The job of an annual report is to present the investment improve their annual and sustainability reports. And for case with clarity and conviction, and showcase the past the last 11 of those years we’ve shared our expertise and 12 months in the context of markets and strategy. It should experience through ‘How does it stack up?’. A yearly inspire all stakeholders, from employees and community review of FTSE 100 annual reports, HDISU is now widely organisations to the media and customers, to respect and recognised for its comparative analysis, impartiality and trust the company. This is of course a tall order – but it’s forthright approach to the challenges we all face. We’re something that is very much within the remit of an annual proud of its reputation as a practical tool that promotes report, which has almost unrivalled potential to transform best practice and gives all companies – not just RY clients perceptions and lay the groundwork for a company’s – access to some of the thinking that can establish or future success. keep them at the forefront of reporting. That so many reporters are still not stepping up to the It would be good to write that the last few years have seen mark is disappointing. We hope that this report not only a steady increase in reporting standards, as comms and IR highlights some of the key issues and how they can best teams lead their companies into the future of integrated be addressed, but is also the start of a conversation that reporting. Or, at the very least, move them towards more will continue through the reporting hub on our website. balanced, coherent and transparent reporting. All interested parties – clients, agencies, suppliers and the media – are welcome to contribute. The more the It’s true that the strategic report has taken its rightful place better. Because although this is an RY document with at the heart of reporting. And it’s clear that areas such as an RY perspective, the challenge extends far beyond governance and remuneration are benefiting from some our teams and those of our clients. long overdue transparency. It’s also a fact that integrated reporting has good momentum and is leading to more balanced performance narratives that identify and quantify business impacts beyond financial return. But while some companies have wholeheartedly embraced Brett Simnett the spirit of high quality, transparent reporting – and Director of Investor several of them are featured in this document – others are Engagement, RY continuing to provide incoherent messaging and all-round obfuscation. Why? is the obvious question and that’s something we aim to answer, firstly in this document but also in the interactive reporting hub we’ve launched on our website at ry.com/hdisu. HDISU? 01 Our criteria We use 16 criteria to assess annual reports, grouped into Understanding the the four categories you see here. business and context 02 As we’re a creative consultancy, we use our skills and – Business overview knowledge to arrive at a unique, qualitative judgement. – Business model We acknowledge that this is a subjective view and that – Marketplace other views are available – but it’s guided by experience – Resources and relationships and focused by a deep-seated belief in the value of communication. HDISU isn’t a tick-box exercise in compliance. Instead, we’re able to judge the quality, Explaining and measuring depth, transparency and coherence of content, rather performance 14 than simply identifying that the content in question is – Strategy present. As with many other comms projects, what the – KPIs audience takes away from the experience is not only – Performance shaped by what you say, but by the way that you say it. The criteria themselves are designed to reflect current annual reporting legislation and best practice. We haven’t How sustainable included a separate category to assess Integrated Reporting is the business? 24 because many of the notions that are central to it, such as sustainability and resources and relationships, are picked – Risk up by other criteria. – Sustainability – Governance – Forward-looking aspect How effectively is the story explained? 34 – Messaging – Linkage and flow – Materiality and transparency – Navigation and appeal – Clarity of language The top 10 reporters in 2016 42 A final view… 58 Contributors 60 02 radley yeldar. Understanding the business and context What we measure What we have seen Driven by the increasing prevalence of the strategic report Business overview and the growing influence of the Integrated Reporting Business model Framework, most if not all FTSE 100 constituents make an effort to explain their business model. In the majority Marketplace of cases, it’s no longer hard to understand a company’s Resources and relationships operations, how it creates value and the market where it operates. What do you do, where and how? Who are your customers? The concept of the business model continues to evolve, What trends are impacting the marketplace? And why with many companies using the International Integrated should an investor care about any of this – what makes you Reporting Council’s model as a basis. The leading a different sort of proposition to everybody else in your field? practitioners provide an exceptionally clear articulation These are not always easy questions to answer, but they’re of their products, services and divisions, explaining in a central part of what investors and other stakeholders easy-to-understand words and graphics how they create need to know. So this category aims to get to the heart value for all stakeholders, not just financial return for of what makes a business tick, evaluating the overview shareholders. Readers can look at the relevant pages of the company, its business model, its marketplace of these reports and see transparency and integration, and the resources and relationships it relies on to carry balance and coherence. out its activities. But for others, the opportunity to mark themselves out as distinctive, transparent companies – the sort of organisations that investors can quickly understand and might therefore consider investing in – has passed them by. Although we have our theories, we’re not sure exactly why companies should be so wary of being distinctive and standing out from the crowd. Are they unclear what their business model is? Do they not know the critical resources and relationships that sustain their business? Or is it that they are not sure how to communicate what they do? HDISU? 03 5.34 4.46 Three of the best 5.33 Antofagasta Provident Financial Ashtead 4.29 04 radley yeldar. Understanding the business and context Antofagasta No struggle with the business model here... Antofagasta plc The company has excelled with a clear explanation Annual report and financial statements 2015 of the business and value chain. What’s interesting plc Antofagasta with this report is the easy way in which the reader Annual report and financial statements 2015 can see at a glance what the company does at each stage from inputs through to restoration and outputs, with signposting to where more information can be found. There’s no corporate jargon on these pages. If you knew nothing whatsoever about copper mining, then this section would give you at least the basics. There’s also a good section on the resources and relationships that Antofagasta relies on in its day-to- day operations, such as financial capital, employees, contractors and water. Overall, this is a quality report that details what the company does and the context in which it does it. INPUTS EXPLORATION EVALUATION CONSTRUCTION EXTRACTION PROCESSING MARKETING RESTORATION OUTPUTS Business model OVERVIEW Key relationships Suppliers Relationships with trade unions are based Suppliers play a critical role in the Group’s on mutual respect and transparency. The Group cannot run its business in isolation. The business ability to operate, supplying a large range of This helps the Group to retain employees model is underpinned by a series of relationships with products and services from grinding media and avoid labour disputes, contributing to catering at the mine sites. to greater productivity and business efficiency. During 2014, the Group renewed stakeholders at local, regional, national and international level, More information on key inputs is included on pages 19 to 21. labour agreements at all of its then mining which contribute to the long-term success of the Group. operations, except Zaldívar, ensuring stability The Group currently conducts business until 2018. The Group forms long-term partnerships with some suppliers, with over 5,000 suppliers and is working REPORT STRATEGIC while others are managed with a more short-term focus based with the top suppliers in each category The Group undertakes an annual survey to ensure the most cost-effective and to assess employee satisfaction. Based on market competition. efficient solutions are employed across on the results, action is taken to improve all operations. The corporate procurement the work environment. team has consolidated all procurement More on Employees on pages 61 to 63. practices across the operations and projects. In addition, the team has reduced Contractors the number of suppliers to extract greater The number of contractors working for benefits from elected suppliers over a long Antofagasta varies according to business period of time.