The European Single Electronic Format (ESEF) may sound like something technical that only the finance department or corporate secretary should worry about. But in reality? It impacts Investor Relations, too.
Read on to learn seven things every Investor Relations officer should know about ESEF:
- ESEF is actually “human-readable” in a standard browser.
While the acronym looks technical, ESEF is actually XHTML (i.e. a web page) with embedded inline XBRL tagging of the numbers in the financial statements. That means it’s viewable by stakeholders in a standard browser—so you’ll want to design it with this in mind.
- The full annual report must be in ESEF.
Beyond the financial statements, all required-by-law parts of the annual report need to be included in ESEF—like the Directors’ report, for instance.
- Regulators will make the ESEF report available online.
Companies falling under European Securities and Markets Association (ESMA) jurisdiction can no longer lodge annual reports in PDF format with their local regulator. Instead, they’ll have to file in ESEF—and regulatory bodies will make these reports publicly available on their websites.
- Investors and stakeholders will have an alternative place to find information about your company.
Your annual reports will be made public on regulatory websites, meaning that investors and stakeholders can easily skip over your company’s Investor Relations pages. Because of this, you’ll want to strategically design your XHTML—optimizing branded online communication in this new investor relations channel.
- Software programs will consume the “machine-readable” information in the report.
The tagged information (i.e. the primary financial statements) will be consumed by software programs—fulfilling ESMA’s promise to make information better accessible to all.
- Data aggregators and fund managers will be able to quickly digest information, en masse.
Data aggregators like Bloomberg and Reuters (along with fund managers) will use these new tools to rapidly absorb vast amounts of tagged information. It’s essential that your tagging is correct and complete—because any errors will be noticed.
- It’ll be easier than ever to compare performance against all companies in the EU and UK. All businesses with securities in the European Union and the United Kingdom (yes, the UK adopted ESEF before Brexit) start filing in ESEF at the same time. These disclosures will be readily available to data aggregators and fund managers for benchmarking your company’s performance.
What do these points all add up to? Not only will ESEF impact automated investment decisions—it will also serve as an essential online communications channel (standing alongside the PDF and microsite versions of your annual report).
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