Interactive Investor

Richard Beddard: best and worst annual reports of 2023

After reading 50 or so annual reports over the past year, columnist Richard Beddard names his top three, plus the ones that could be much better. He also reveals the book he’s never without.

22nd December 2023 10:14

Richard Beddard from interactive investor

Happy Christmas!

My editor suggested a book review for weary investors, perhaps wanting to read something lighter than usual so close to Christmas.

Some book chat is appended, but there is another kind of financial publication I feel more qualified to review: annual reports. I have selected the best and the worst of the 50 or so reports that I read fully in 2023.

To be fair to the worst, there is much worse out there. Reading an annual report is a big commitment, and I must believe it will be worth it to start.

To my mind there are two requirements of an annual report:

  1. The business should explain itself well: how it makes money, how it plans to make more, and the challenges it faces
  2. The accounting should be clear because the numbers are our principal method of checking this story.

Annual reports should not make a literate and numerate investor equipped with a basic understanding of accounts feel stupid.

The best ones make me feel clever.

Three honourable mentions

Here are my top three annual reports.


First, let me put aside an obvious objection to Focusrite’s annual report.

Many investors complain about the verbiage in doorstopper-sized modern reports, and Focusrite’s is large.

I love it, though, because Focusrite (LSE:TUNE) is a niche business run by enthusiasts. If non-musicians are to understand what makes the business special, then explanations and enthusiasm are necessary.

At the risk of winding up Games Workshop Group (LSE:GAW) shareholders, this is something I think the Warhammer hobby’s mothership could do better.

The side panels explaining emerging trends in the music industry, the numbers showing the size of Focusrite’s markets, and data on customer and staff satisfaction, are also very useful.

However, Focusrite has spent more on acquisitions than it has earned in free cash flow in recent years, and spending on that scale cannot go on forever.

I would have appreciated some guidance on its appetite for acquisitions over the next year or two.

In that respect, it could take a leaf out of FW Thorpe’s book.

FW Thorpe

FW Thorpe’s annual report is this year’s favourite. The accounting is clear. The business is explained well, and the commentary is sober.

The company makes the business of designing and selling commercial lighting accessible through case studies.

Timelines break down the development of the group, and also the history of the company’s latest acquisition. This helps, because we need to know where a business has come from to have confidence in where it is going.

The tone of Thorpe (F W) (LSE:TFW)’s annual report is responsible. It does not raise our expectations too high, even though the company’s performance gives it much to crow about.

Despite recent acquisitions, FW Thorpe is far from financially stretched, yet in this year’s report, the chair and co-chief executive explained: “It has been the intention of the board to make no further acquisitions while the Group builds its cash reserves and fully integrates recent acquisitions.”

Pauses like this are a good idea, because companies get into trouble when they run too fast. Letting investors know what is going on is a good idea, because then we do not have to worry about it.

When I scored FW Thorpe, I wrote that its annual report “induces a sense of calm”. If only they all did.


Porvair (LSE:PRV) does not skirt the challenges it faces. Some of its products, filters in the main, keep the fossil fuel industry going. Filtration also has applications in clean energy technologies such as carbon capture, nuclear and hydrogen.

Investors need a sober evaluation of the opportunities and threats in these specialised markets, and that is what we got in the annual report. By sharing this information, Porvair shows us how it might adapt and change as energy supply does.

The filters are small but vital. They protect much more expensive equipment from damage and the environment from pollution. Customers will pay for reliable filters, and often they need to be replaced on fixed schedules which brings in repeat business.

The coherent way Porvair explains this business model also builds confidence.

Three less-honourable mentions

At the other end of the scale, three annual reports made me work harder. Sometimes they did not tell me what I wanted to know. Sometimes they buried what we should know.

Hollywood Bowl

My reading of the ten-pin bowling alley operator’s annual report left me wondering where the explanation for the bad news was.

The company did not explain why it was slowing the roll-out of its new Puttstars crazy golf format. It also used an eccentric and potentially self-serving methodology for adjusting earnings per share.

I discovered the answer to the Puttstars conundrum in the auditor’s report. Puttstars was not making as much money as expected. The eccentric adjusted earnings per share calculation was to be found in the tiniest of footnotes. There was no explanation.

Most companies put a positive spin on things, it is human nature, but I feared Hollywood Bowl Group (LSE:BOWL) was going too far. It seemed to be burying things it did not want investors to see in places they knew many of us would not look.

Reduced confidence in the reporting was one of the reasons I removed Hollywood Bowl from the Share Sleuth portfolio in 2023.

James Halstead

I follow vinyl flooring manufacturer James Halstead (LSE:JHD) because it is a nice simple business, it has very straightforward accounts, and it is hugely profitable. 

The annual report should be one of my favourites, but it is not, and that is because it does not tell us enough. Companies are supposed to tell us about their business models (how they make money), and their strategies (how they will make more).

James Halstead skates over the business model in a paragraph, which oversimplifies, and drops isolated short-term goals hither and thither in the management commentary.

If I cannot find a strategy, I cannot score it.

XP Power

XP Power was good at explaining itself, then it got into financial difficulty. This has thrown mud into the accounts of the power adapter manufacturer, and leaves questions unanswered in the annual report.

Reading the report, it seems XP Power Ltd (LSE:XPP)’s problems stem only from factors outside its control. The chaotic supply of components as the global economy bounced back after the pandemic and weaker demand have had an impact.

But these events coincided with acquisitions, preparations to build a new factory, and a fine. The company was accumulating big financial commitments, when it could not rely on the business to earn enough money to pay for them.

Admitting mistakes is uncomfortable, but renegotiating bank covenants, raising funds from investors, and freezing investment is not business as usual. Historically, XP Power gains market share by investing when rivals cut back.

It is not fashionable, but I think shareholders deserve to know what XP Power could have done better, so that we can have confidence that next time it will.

Three books to get more out of an annual report

Of the finance books I read this year, three stand out. They all help us understand annual reports.

I have explained how The Business Model Navigator and The Crux helped shape my thoughts on business models and strategy respectively.

The third book is The Finance Book, a book about accounting for non-accountants.

Although not for investors specifically, the book is dedicated to understanding businesses through the numbers. Many of the examples are from listed firms. Greggs (LSE:GRG) comes up time and time again.

It is well organised and easy to dip into randomly for a five-minute knowledge top-up. I keep it on my desk for those moments when numbers in an annual report start swimming around in my eyes.

One for luck, or just because it is brilliant

The theme of the year is surely artificial intelligence (AI), and the potential impact on our lives.

We fear irrelevance, but artificial and natural intelligence are not the same. Perhaps many of us do not appreciate that fully because we have such a flimsy grasp on what intelligence is.

I am listening to the audiobook of Ways of Being. If you get the chance to curl up in front of an open fire this Christmastime, it is a great choice.

Ways of Being is a wild ride through artificial and natural intelligences. Sometimes crazy, sometimes random, always amazing, often insightful, it argues that we need both kinds.

Richard owns shares in Focusrite, FW Thorpe, Porvair and XP Power.

Richard Beddard is a freelance contributor and not a direct employee of interactive investor.  

More information about Richard’s investment philosophy.

Contact Richard Beddard by email: or on Twitter: @RichardBeddard

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