Annual reports keep growing, but how useful is the information?
8 October 2014
- Reports increase by 10 pages to 132 pages year on year;
- Just one-third of companies demonstrate up-front linkage and cohesiveness in their reports;
- Nearly three-quarters of companies have at least one woman on their board, but 85% of all company directors are male.
Annual reports are getting longer with the average length now standing at 132 pages (2013: 122), finds new research from Deloitte.
Annual report insights 2014: Providing a clear steer found that despite the growing length and increased regulatory emphasis on producing cohesive reports, 71% of companies are not showing up-front how they link matters such as company strategy, KPIs, business model, remuneration and financial statements.
Veronica Poole, Deloitte’s UK head of corporate reporting, said: “Companies have faced a lot of change in the last year with the introduction of the strategic report. We’re seeing businesses including more narrative, particularly around remuneration reports. They also continue to provide voluntary disclosures where information is thought to be useful, such as net debt reconciliations and around tax governance. But, more could be done to produce clear and concise reports in order to ensure the most relevant information is presented to investors.”
Deloitte’s research also found that nearly half (43%) of companies applying the UK Corporate Governance Code are not fully compliant. The most common areas of non-compliance are around the independence of directors and the composition of audit committees. However, boards are making some, albeit slow, progress with getting women into the boardroom and audit committee reporting has improved considerably in terms of quality of insight.
Poole added: “The overall number of female directors remains low, only rising from 13% last year to 15% this year, but 73% of companies have a woman on the board compared to 69% last year. There is still a need to boost the number of female directors on UK boards. It will be interesting to see how organisations tackle this issue, in particular, not just by appointing women to non-executive directorships but also to executive positions.”
“Two-thirds of companies made the audit committee report a distinct section within the annual report, compared to only 45% last year. This reflects the greater profile being given to the audit committee’s stewardship and reporting responsibilities. The reporting of the significant issues considered by the audit committee coupled with auditors’ extended reporting provides investors with much greater insight about today’s listed companies, something that can only be a good thing.”
About the survey
The annual reports of 100 UK listed companies were surveyed to determine current practice. This sample excluded investment trusts due to their specialised nature. The overall sample is, as far as possible, consistent with that used in last year’s survey. As a result of takeovers, mergers, de-listings and changes in the market capitalisations over the last 12 months, the sample could not be identical. Replacements and additional reports were selected evenly across the two size sub-categories analysed.
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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