Strategic reporting for large and medium-sized companies
All UK-incorporated companies are required to prepare a strategic report, as well as a directors’ report, within their annual report unless they have an exemption. The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 came into force on 1 October 2014 and apply to financial years ending on or after 30 September 2013.
As well as all of the matters previously required in the business review section of the directors’ report that must now be covered in the strategic report instead, the regulation also requires report preparers to place emphasis on the business story and understanding shareholder needs. The changes are intended to provide greater insight into the business through a clear focus on strategy, development and performance. The report should also provide a forward-thinking perspective and understanding of the principal risks and uncertainties facing the company.
All strategic reports must include:
- A fair review of the company’s business
- A description of the principal risks and uncertainties facing the company
A strategic report should provide a balanced and comprehensive view of the company and, where appropriate, include analysis using financial (and nonfinancial for larger companies) Key Performances Indicators (KPIs).
Strategic report requirements for large and medium-sized companies
The following table summarises the Companies Act 2006 strategic report requirements for large and medium-sized companies.
The emphasis of the regulatory guidance is on telling the business story and understanding shareholder needs, with greater focus placed upon the context of the business and the long-term principal risks and uncertainties underpinning the business, as well as future strategic prospects. Small companies are exempt from the requirement to prepare a strategic report.
There are also a number of requirements that are mandatory only for quoted companies. Please contact us for further information on these.
Frequently asked questions
For more information on strategic reporting, please visit our frequently asked questions.
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