Guidance on the Strategic Report

In June 2014, the FRC published Guidance on the Strategic Report (PDF).

The purpose of the strategic report is to provide a company’s shareholders with a holistic and meaningful picture of a company’s business model, strategy, development, performance, position and future prospects.

The Guidance on the Strategic Report (the ‘Guidance’) outlines the content of the strategic report as required by the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 (the ‘Regulations’), and includes communication principles that emphasise the qualities of good financial reporting. The Guidance also encourages companies to focus on the application of materiality to disclosures and to be innovative in the structure of information to improve the clarity and conciseness of information.

Clarifications of the Regulations

While developing the Guidance, the FRC worked closely with the Department for Business, Innovation and Skills (BIS). 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):

Draft amendments to Guidance on the Strategic Report

On 15 August 2017, the FRC published a consultation with proposals to amend the Guidance on the Strategic Report. The proposed amendments reflect the legislative changes arising from the UK implementation of the EU Directive on disclosure of non-financial and diversity information; and strengthen the link between the purpose of the strategic report and the director’s duty under section 172 of the Companies Act 2006 (duty to promote the success of the company).

The consultation closed on 24 October 2017 and responses are available here.

In 2018, we are expecting the government to introduce a new reporting requirement relating to section 172. It is likely that this requirement will form part of the strategic report. To avoid two sets of changes to the guidance within a short timeframe, we are delaying publication of the updated guidance until the new legislation is published (expected in March/April 2018).
The new regulations on non-financial reporting became effective for financial periods beginning on or after 1 January 2017. To assist companies with the preparation of their December 2017 annual report, the FRC has published a factsheet on the new regulations as well as some Frequently Asked Questions.

Further Information

Non-financial reporting
Frequently Asked Questions

2014 Guidance on the Strategic Report
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)

2016 Consultation
August 2016 Exposure Draft: Amendments to the Guidance on the Strategic Report


Deepa Raval, Director of Narrative Reporting
Debbie Crawshawe, Project Director