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FTSE 100 struggle to keep reports short

Average length of annual reports increases by another 10 pages

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Management at FTSE100 companies are still struggling to deliver concise reviews with report lengths increasing by another 10 pages this year, a new survey revealed on Wednesday.

The average report length has risen to 175 pages (up from 164 pages in 2009), with six reports weighing in at over 300 pages, according to Black Sun’s annual benchmarking review of FTSE 100 annual reports.

One finding that is likely to cause concerns to investors, analysts and other stakeholders was that a third of FTSE 100 companies failed to disclose non-financial KPIs and a third of the UK’s most successful plc are still struggling to align their chosen KPI to the business strategy.

Black Sun also found that only 25 percent of companies provide a detailed explanation of their risk management process. Companies need to pay more attention to ensuring that the risk factors they report on are principal factors, Black Sun, a corporate reporting consultancy, said.

On average, FTSE 100 companies disclose a high average of between 12 to 13 risks, with almost one in 10 companies listing over 20 risks.

However Black Sun found that there were “emerging signs” of better governance, clarity on strategy, and value creation as well as a greater link between financial and non-financial data, forward-looking areas where reporting has traditionally been weak.

Calls for companies to include more forward-looking data is creating “a major challenge” for UK plc and pushing up to the length of annual reports, Black Sun found.

In April the Financial Reporting Council, the watchdog for UK corporate governance, published a consultation document aimed debating how to ‘cut the clutter’ from annual reports.

The quality of the strategy narrative has however improved with 72 percent of FTSE 100 companies including a detailed discussion of their strategy in their narrative, and 24 percent providing a detailed description of their business model in their latest annual reports (up from only 12 percent in the previous year).

Sallie Pilot, Black Sun’s director of research, said, “This year the FTSE 100 has very much risen to the challenge of the new Code as well as a greater desire to demonstrate transparency to all stakeholders. We see many corporates working hard to tell the story as completely as possible, linking the different threads to make it more meaningful.”


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