Australian companies’ annual reports shorter but need improvement: KPMG

Aus companies’ annual reports need improvement

Australian companies’ annual reports are shorter than their global counterparts, and have ‘cut the clutter’ more successfully – but fall down on covering key issues like business strategy, customer retention and market share. These findings are revealed by KPMG’s international survey of business reporting by 270 companies in 16 countries, including 15 in Australia.

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One area of corporate reporting where Australian companies have not been able to reduce the page count is their remuneration reports, which the study showed took up a bigger proportion of annual reports’ volume, here than in most other countries

The main findings, from the companies reviewed, included:

  • Australian annual reports are 155 pages long on average compared to a global average of 204 pages 
  • Australian reports have 70 pages devoted to the financial statements, while others can extend to 140
  • Australian remuneration reports take up 28 percent of the overall annual report while globally the proportion is just 19 percent
  • Only 5 percent of Australian annual reports are devoted to addressing business strategy, compared to 14 percent globally
  • No Australian reports in the survey revealed how brand or market share was developing whereas 15 percent of overseas companies did
  • Only 14 percent of the Australian companies surveyed provided information on their longer-term business strategy (56 percent globally) 
  • No Australian reports included lead indicators on staff productivity, or labour relations outcomes (global 10 percent)

Duncan McLennan, KPMG National Managing Partner – Audit, said: “It is encouraging that Australian companies have performed relatively well in ‘cutting the clutter’ from the financial statements in their annual reports . They have worked hard to keep reports relevant and concise – but there is still room for improvement in the remuneration reports, which the survey showed are quite long by international standards.”

“However, there are some other areas where Australian companies reporting is trailing international best practice – the report shows we don’t perform well compared with global peers in explaining longer-term drivers of value such as use of non-financial resources. In particular, disclosures in respect of R&D, workforce efficiency, products and brand could be improved.

“Disclosures on operating performance and its link to strategy also lag overseas companies. Discussions of strategy tend to be patchy and relatively short-term in nature, and it appears there is not enough detail on the key aspects of the business model for investors to take a view of the company’s longer-term prospects.”

The report showed that there is now some evidence of interest among Australian investors in the move towards integrated reporting.

Duncan McLennan added: “Companies which are embracing better business reporting are connecting their business model strategies and KPIs more directly. Some empirical evidence is beginning to emerge of the benefits of integrated reports in relation to allocation of capital.”

Further information

Ian Welch
Senior Communications Manager, KPMG
T: 02 9335 7765 / 0400 818 891
E: iwelch@kpmg.com.au

KPMG’s Survey of Business Reporting 2016 – Room for improvement

Insight from reporting practice across the globe, including six must do's for improvement. Features Australian comparison with the global results.

 
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