APPROACH TO REPORTING CONTINUED This section analyses how companies are delivering their reports and how they are embracing online reporting as a means of enhancing their communications with stakeholders. Approach to reporting In the current world of sophisticated, two-way, 24/7 communications, companies must look to balance the information in the Annual Report, providing historical performance data, as well as communicating future opportunities and expectations for the business. In addition, stakeholders are becoming increasingly engaged in understanding companies’ strategies, performance, risks and governance procedures, so it is essential for these areas of the business story to be communicated clearly and succinctly. The Annual Report is traditionally regarded as the central communication document, which is an important means of building competitive advantage and differentiating a company from its peers. As such, it is also subject to substantial regulation and legislative demands, often seen as the driving factors behind the increasing length. This year the average length of reports has increased to 175 pages, with an average percentage of narrative content at 51%; which has remained relatively static over the past few years. Overall, we have seen that the majority of reports sit at a length of between 100-199 pages, with 6% of the FTSE 100 being over 300 pages. As much as the length of the Annual Report is often discussed, it is also interesting to look at the percentage of narrative content within the report as this can give an indication of the importance placed upon building a ‘story’ around the company’s strategy, character and performance. Somewhat unsurprisingly, the financial services companies are producing the longest reports, with an average of 239 pages, whilst the companies within the technology sector are producing the shortest reports, with an average of 63 pages per report. It could be argued that this is simply due to the fact that many of the financial services firms are listed on other exchanges and therefore have additional listing requirements to satisfy. Additionally, often within the financial services companies, the risk sections are extensive due to increased regulation in this area. In this instance we found that the basic materials sector, had the largest narrative content within the sample group with an average of 56% narrative in the report. Utilities had the smallest narrative content with an average of only 44%. Decreasing number of Annual Reviews When we started our research into the Annual Reporting of FTSE 100 companies in 2004, 60% of companies produced both an Annual Report and an Annual Review. Annual Reviews were designed to meet the needs of smaller shareholders and other stakeholders, with a clearer, more concise and often ‘holistic’ view of the business. With the default to e-comms, the obligation to send a hard copy report to all shareholders was eliminated, printed copies are now only sent to Figure 9.1 Figure 9.2 What is the average length of Annual Reports? Percentage of narrative content What is the breakdown of the length of Annual Reports? 141 108 48% 40% 151 151 51% 158 164 175 47% 48% 48% 51% ’04 ’05 ’06 ’07 ’08 ’09 ’10 • • • • • Less than 100 pages 100-199 pages 200-299 pages 300-399 pages 400 + pages 7% 69% 18% 2% 4% 32 © Black Sun Plc 2011 www.blacksunplc.com
