Money in exchange for information. What should be the annual report of the issuer

At the heart of the stock market is a simple transaction: money in exchange for information. The investor provides capital, and the person who attracts it commits to transparency. All regular disclosure requirements follow from this, and the annual report is one of the key and most informative parts of it.

However, the fulfillment of this requirement is easy to reduce to formality, and the result is an impersonal document: dry numbers and wording with a minimum set of meanings. For a public issuer, the annual report is one of the main tools for dialogue with the market, for an investor it is a source of information for decision-making. Therefore, it should be meaningful and qualitative.

Who is required to publish an annual report

Entering the capital market and attracting funds from a wide range of investors, the company assumes increased responsibility. Public disclosure is required where information about the activities of the company is needed not only by management and a narrow circle of owners. The obligation to publish an annual report applies to:

public joint-stock companies (PJSCs); non-public companies if the number of their shareholders exceeds 50; non-public companies that have made a public offering of securities.

Why do I need a report if the numbers are already known

The annual report may seem too late. By the time of its publication, investors, as a rule, are already familiar with the financial results of the company not only for the year, but also for the first quarter, and the key figures of last year have already been taken into account in the assessment and are no longer news. But the value of the report is different:

Make financial figures understandable, management decisions understandable, and risks and strategy measurable in business logic. The annual report not only shows the figures, but also explains their meaning, context and management decisions.

The annual report collects disparate data into a coherent picture. Financial statements are a set of figures and indicators, but without a management interpretation, the picture is not complete. A well-written annual report will allow the investor to understand why revenue grew, what is behind the margin, how the debt load of the company has changed. Such a document answers the questions "What does this mean?" and "What actions are behind the result?".

Translate the results of the company into the language of strategy and risk. The report should show not only the past profit or loss, but also the trajectory: which directions are developing, which projects are being slowed down, how the risk management system is arranged, what factors may affect future cash flows. Increases comparability and verifiability. The annual report provides a more detailed picture of finances, links forecasts with actual results, explains key estimates and assumptions. It also reduces information asymmetry: it is easier for investors to compare companies, understand the causes of this or that dynamics and assess the quality of management decisions. It builds confidence in corporate governance. The annual report reflects the management structure, the principles of the board of directors, the distribution of responsibilities, personnel decisions, and, depending on the company’s practices, sustainability issues. For the market, this is a signal of process maturity and transparency: the company shows how it manages not only capital, but also the organization itself. It shows non-financial sources of value. The real value of a business is not only accounting profit, but also human capital, innovation, technological competence, reputation.

For whom is the annual report written

Today, more than 650 issuers are trading on the stock exchange, and the number of retail investors is in the millions. On average, about 3 million people make transactions on the Moscow Stock Exchange every month. Readers of the annual report are not just investors. Among them are employees, shareholders, partners - everyone who is somehow connected with the company.

The company decides whether to give faceless figures and standard wording or to make an honest and meaningful dialogue out of the annual report. Issuers should consider the annual report not as a formal obligation, but as an independent tool of communication and even more – a tool of trust. Therefore, it must be good in every sense: both in content and in form.

Need a design if the report is read by AI

In the age of artificial intelligence, all information is translated into numbers, and the regulator seeks to make annual reports machine-readable. Nevertheless, there is a sense in the elaborate design, beautiful layout and other attributes of a quality document. Machine readability makes reports convenient for AI agents, but the main reader remains the person who decides whether to work for the company, whether to buy its securities, whether to supply it with goods.

For almost thirty years in a row, the Moscow Exchange has been holding a competition of annual reports to identify best disclosure practices. The annual report is a key document in which a company speaks about itself, and how it does so speaks to it as much as the numbers inside. Data processing can be entrusted to an algorithm. Trust is impossible.