Guidance on the Strategic Report
In July 2018, the FRC published Guidance on the Strategic Report (PDF).
The Guidance on the Strategic Report is set in the context of the annual report as a whole to recognise that the strategic report does not exist in isolation from other aspects of corporate reporting.
The Guidance includes communication principles that emphasise the qualities of good corporate reporting. It encourages companies to focus on the application of materiality to disclosures and to be innovative in the structuring of information to improve the clarity and conciseness of information.
The strategic report should provide a company’s shareholders with a holistic and meaningful picture of a company’s business model, strategy, risks, development, performance, position and future prospects including relevant non-financial information..
The Guidance on the Strategic Report (the ‘Guidance’) outlines the content of the strategic report as required by the The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 (the ‘Regulations’). The Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016; and The Companies (Miscellaneous Reporting) Regulations 2018 .
The FRC first published the Guidance in June 2014. In 2018, the Guidance has been updated to strengthen the link between the purpose of the strategic report and the director’s section 172 duty to promote the success of the company. The revised guidance encourages companies to consider the broader matters that may impact the performance of the company over the longer term including the interests of wider stakeholders.
The revised Guidance incorporates the recent non-financial reporting Regulations which were effective for financial years beginning on or after 1 January 2017 and the legislative requirements relating to the director’s section 172 duty to promote the success of the company, which are effective for financial years beginning on or after 1 January 2019.
The feedback statement (PDF) provides an overview of the responses to the 2016 Exposure Draft: Draft amendments to Guidance on the Strategic Report – Non-financial reporting.
Clarifications of the Regulations
While developing the Guidance, the FRC worked closely with the Department for Business, Innovation and Skills (BIS), now the Department for Business, Energy and Industrial Strategy (BEIS). During the consultation process the FRC received a number of queries on legal matters related to the Regulations. BIS has provided clarifications on these matters in a letter to the FRC (PDF).
In respect of The Companies (Miscellaneous Reporting) Regulations 2018, BEIS has issued some frequently asked questions (PDF) to support the legislative requirements. Guidance on the application of the section 172 duty is provided by the GC100.
August 2017 Exposure Draft: Draft amendments to Guidance on the Strategic Report (PDF)
October 2017 – Comment letters
2014 Guidance on the Strategic Report
2014 Guidance on the Strategic Report (PDF)
FRC Staff Guidance Note (PDF) setting out the key features of the Regulations.
August 2013 Exposure Draft: Guidance on the Strategic Report.
November 2013 - Comment letters
June 2014 Feedback Statement: Guidance on the Strategic Report (PDF)
Deepa Raval, Director of Narrative Reporting
Debbie Crawshawe, Project Director