Published on: 2026-09-30
Source: Moscow Exchange –
An important disclaimer is at the bottom of this article.
Why the annual report of public companies should not be a mere formality and how to do it correctly, explained by the director of the department for working with issuers of the Moscow Exchange Natalya Loginova
Contents
- Who is required to publish the annual report
- Why is a report needed if the numbers are already known
- Who the annual report is written for
- Is design necessary if the report is read by AI
The stock market is based on a simple transaction: money in exchange for information. The investor provides capital, and the one who attracts it undertakes the obligation to be transparent. From this arise all the regular disclosure requirements, and the annual report is one of its key and most substantive components.
However, fulfilling this requirement can easily be reduced to a formality, resulting in an impersonal document: dry figures and formulations with a minimal 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 must be substantive and of high quality.
Who is required to publish an annual report
By 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 company’s activities 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 (PJSC);
- non-public companies, if the number of their shareholders exceeds 50;
- non-public companies that have conducted a public offering of securities.
Why is a report needed if the numbers are already known
It may seem that the annual report comes out too late. By the time it is published, investors are usually already familiar with the company’s financial results not only for the year but also for the first quarter, and the key figures from the previous year are already factored into the valuation and cease to be news. But the value of the report lies elsewhere:
Make financial figures understandable, managerial decisions explainable, and risks and strategy measurable within the logic of the business. The annual report not only shows the numbers but also explains their meaning, context, and managerial decisions.
The annual report brings together disparate data into a coherent picture. Financial reporting is a set of numbers and indicators, but without managerial interpretation, the picture will not be complete. A well-prepared annual report allows an investor to understand why revenue has grown, what underlies the margin, and how the company’s debt burden has changed. Such a document answers the questions: “What does this mean?” and “What actions underlie the result?”.
- Translates the company’s results into the language of strategy and risks. The report should show not only past profit or loss but also the trajectory: which directions are developing, which projects are being slowed down, how the risk management system is organized, and what factors may affect future cash flows.
- Improves comparability and verifiability. The annual report provides a more detailed picture of the finances, links forecasts with actual results, and explains key estimates and assumptions. It also reduces information asymmetry: investors find it easier to compare companies, understand the reasons for certain trends, and assess the quality of management decisions.
- Strengthens trust in corporate governance. The annual report reflects the management structure, principles of the board of directors’ work, distribution of responsibilities, personnel decisions, as well as — depending on the company’s practice — issues of sustainable development. For the market, this is a signal of the maturity of processes and transparency: the company shows how it manages not only capital but also the organization itself.
- Shows non-financial sources of value. The real value of a business is not only accounting profit, but also human capital, innovation, technological competencies, reputation.
Who the annual report is written for
Today, more than 650 issuers’ securities are traded on the exchange, and the number of retail investors runs into the millions. On average, about 3 million people make transactions on the Moscow Exchange each month. The readers of the annual report are not only investors. Among them are employees, shareholders, partners — everyone who is in some way connected with the company.
The company decides: to provide faceless numbers and standard phrases or to make the annual report an honest and meaningful dialogue. Issuers should consider the annual report not as a formal obligation, but as an independent communication tool and even more – a tool of trust. Therefore, it must be good in every sense: both in content and in form.
Is design necessary if the report is read by AI
In the age of artificial intelligence, all information is digitized, and regulators strive to make annual reports machine-readable. Nevertheless, there remains value in well-crafted design, attractive layout, and other attributes of a quality document. Machine-readability makes reports convenient for AI agents, but the primary reader remains the person who decides whether to work for the company, buy its securities, or supply goods to it.
The Moscow Exchange has been conducting an annual report contest for almost thirty consecutive years to identify best disclosure practices. The annual report is a key document where the company talks about itself, and how it does this says as much about it as the figures inside. Data processing can be entrusted to an algorithm. Trust cannot.
Please note; This information is raw content obtained directly from the information source. It is an exact report of what the source claims and does not necessarily reflect the position of MIL-OSI or its clients.