Annual reports becoming ‘de-cluttered’, KPMG finds | KPMG | AU

Annual reports becoming ‘de-cluttered’, KPMG survey finds

Annual reports becoming ‘de-cluttered’, KPMG finds

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.

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The survey found:

  • 117 ASX200 companies – up from 68 in 2015 – have ‘cut the clutter’ in their annual reports this year 
  • 107 companies – up from 55 a year ago – are now including accounting policies with the associated notes, making it easier for investors to assess them
  • 105 companies (54 in 2015) grouped notes to accounts into more logical categories
  • 61 companies (20 in 2015) have used call-out boxes highlighting key areas of investor interest while 14 (3 last year) included graphs or images to illuminate important points
  • The average financial report now has 31 notes and 56 pages – consistent with 2015 but a decrease from 35 and 61 respectively in 2014.

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.”

Further information

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

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