Tenable or tangential?
Black Sun launched the findings of its latest research into FTSE 100 corporate reporting trends last Thursday at a corporate reporting seminar held at the company’s new premises in Fulham Palace. While it is now clearer what companies are required to report (with the implementation of the Companies Act 2006, the introduction of the Disclosure and Transparency Rules and the additional requirements of the Enhanced Business Review), Black Sun’s “Q and A” session afterwards revealed that reporting transparently is by no means a “straight forward” process. With over 50 guests - including representatives from companies, investor, legal and accounting bodies and the media – attending, a number of corporate representatives admitted that their company still find it difficult to disclose forward looking information, confirming Black Sun’s latest research findings which identify forward looking information as one of the most challenging reporting areas.
Similarly, a number of attendees found the widening gap between best and worst practice particularly perplexing, raising the following questions: Is the corporate reporting community on its own “best practice” tangent? Do companies know what investors really want? To what extent will the schism between best and worst practice reporting affect investor relations?
Despite this widening gap, however, Black Sun’s research finds that best practice benchmarks continue to improve year-on-year. The areas that have been most challenging in the past for companies – risk, KPI reporting and forward looking information continue to be the most challenging but also show the greatest improvement with greater depth and transparency in reporting.
“We are seeing top end reports taking more time and dedicating more resources to their corporate reporting strategies to improve their levels of disclosure, whereas bottom end reports seem to be using old reporting models from previous years that do not stack up against the new reporting regime.” Commented Black Sun’s Director of Corporate Reporting Sallie Cooke Pilot.
Other key findings from the research include:
- The number of companies disclosing KPIs has more than tripled since 2004, with only 19% in 2005 and 77% in 2007.
- The most frequently reported financial KPIs are profit and share related, and the most common non-financial metrics reported are employee and environment related.
- The average number of risks disclosed is 13.
- 75% of companies detail how risks are managed, compared with only 54% in 2006.
- The number of companies producing Annual Reviews has drop to 42% from last year; however there are still only 59% of companies producing html versions of their report.
Black Sun’s Complete 100: Another year of moving forward? is available now. If you would like to request a copy of the full report please email: corporate [email protected].