How to Improve Quarterly Reports for 2021

As we start off a year still impacted by COVID-19 but with an end in sight thanks to the development of effective vaccines, we give our take on what investors may want to see in your quarterly reports in 2021. Overall, investors want more not less detailed information, and more frequent updates on key developments.

In part as a result of the pandemic, in 2020 we saw that investors and analysts wanted more detail on liquidity to be given in quarterly reports, including a more comprehensive cash flow breakdown. We expect this to continue throughout most of 2021, at least until the end of the second quarter.

Depending on your business lines and how relevant each one is, it could be beneficial to give a more detailed breakdown of how each business line is performing individually in the current environment. This is especially true if one specific business line has done particularly well or badly due to the pandemic as it will help to explain the results and give more context for investors; for example, so they can see the proportion of the business that the line accounts for. It could also be helpful to include any changes to the business model or strategy as a result of the pandemic, or (perhaps later in the year) in response to the arrival of a vaccine.

In terms of guidance for 2021, it is worth investigating what your company’s peers across the globe are doing/have done, before making the decision to publish or withhold guidance for the year. It is likely that for some sectors which have been heavily affected by the pandemic, no company will issue guidance for 2021, whilst for other sectors issuing guidance will continue to be the norm.

The desire for ESG disclosure continues to grow in importance in Mexico, and any ESG developments should be included in the quarterly report. This could range from a new member of the Board being appointed, who brings diversity to the team, to the company adopting the UN’s SDGs, for example.

Unfortunately, Covid-19 is not going away quite yet, and so where necessary, Covid-19 plans and explanations should remain in quarterly reports for now, although we hope that by the end of the year they will no longer be necessary.

Below are the key best practices that we advise you to follow for your quarterly reports, regardless of the pandemic.

1.  Include the following sections:

• Key events
• CEO message
• Summary table with main metrics
• Summary of operating results (if applicable)
• Analysis of operating results
• Summary and analysis of the Income Statement
• Balance Sheet summary and analysis
• Other relevant events
• ESG section
• Analyst coverage
• Earnings call information
• IR contact details
• Disclaimer
• Financial statements, including: Balance Sheet, Income Statement and Cash Flow Statement

2.  Include a highlights section with bullet points to make the information easy to digest.

3. Use tables and graphs to explain the relevant operating information and key financial metrics.

4. The report should be presented in a visually appealing way to make it easy to read.

5. The quarter must be compared with the same quarter of the previous year (the Balance Sheet, is usually also compared with the end of the previous year). It is recommended to present cumulative information from the second quarter and results for the full year must of course  be included in the fourth quarter report.

6. The report should answer investors’ and analysts’ main questions about the company.

7. If possible, it should have the same level or more of disclosure as peers. Review the disclosure policy at least once a year and keep asking analysts and investors what information they would like to see (thorough perception studies etc.).

8. The length of the report depends on the company and the information available; explanations and messages must be accurate and concise. Try to avoid repetition and thus making the report longer than necessary

9. Include hyperlinks to previous reports or press releases that offer more information, instead of copy/paste of the information, to help investors and analysts get a more complete picture, without making the report too long.

10. Have a checklist to ensure that nothing is missed.

More general advice includes the following:

1. When it comes to deadlines it is better to report early, this shows that the company’s management systems work well and gives the impression of being organized and timely.

2. The CEO’s comment should add strategic value and look to the future.

3. Keep the definitions and information consistent across all reports. Minimize the use of adjusted numbers and, when used, explain the differences between the adjusted numbers and reported numbers. Avoid changing the definitions of adjusted numbers every quarter as this undermines confidence and trust.

4. If the company provides results guidance, the quarterly report is a good place to update it.

5. After sending the report to EMISNET or BIVA, it should be sent by email to the company’s distribution list. We recommend also sending the report via a Wire, such as Miranda Newswire (our in-house Wire service), to reach platforms such as Refinitiv, Bloomberg, Infosel and Dow Jones, among other media.

If you require any advice on quarterly reports and how to reach the greatest audience, our Miranda Investor Relations and Miranda Newswire specialists would be happy to help.