Well over half of ASX200 companies are now ‘cutting the clutter’ from their annual reports according to a KPMG study of financial reports to 30 June 2016. Immaterial information is being removed, reports re-structured, and presentation improved to benefit investors.
The survey found:
Substantial progress is also being made on the path to ‘integrated reporting’, although Australia is still behind many other countries, the study finds. But significant numbers of companies are using their reports to demonstrate, much more clearly than ever before, the drivers of long-term value creation, rather than just focusing on financial performance.
Nick Ridehalgh, KPMG Audit Partner said: “ Apart from so many organisations cutting the clutter, a good proportion have now shifted focus in their reporting to demonstrating long-term value creation - presenting their business models, strategies, risks performance and outlook. This is happening across all sectors. More companies are now using integrated reporting principles and some are producing full reports”.
Another area where many companies have been ‘de-cluttering’ their reports, and is also an area of keen interest, relates to executive remuneration.
Duncan McLennan, KPMG National Managing Partner - Audit, said: “While the average length of ASX200 Remuneration Reports has dropped by only one page this year (17 compared to 18 in 2015) our review shows that many companies are describing more clearly how key management personnel are remunerated in the short, medium, and long-term, including highlighting amounts ‘at risk’. They are specifically discussing how remuneration is linked to key strategic initiatives and re-ordering the disclosures to show a more practical and meaningful flow of information.”
He added: “It is entirely appropriate that metrics – both financial and non-financial – which clearly and demonstrably measure execution of a company’s strategy should form a key part of the basis on which executives are rewarded. That can include issues such as operational effectiveness, customer service experience or achievement of diversity targets – as long as the metrics chosen are core to the organisation’s stated strategy.”
Senior Communications Manager, KPMG
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We analyse ASX200 reporting trends for June 2016 reporting period, highlighting how organisations are progressing along the Reporting Continuum.