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Blog : BOARD TALK

Decline In Financial Data Provided In Annual Reports

Posted on April 3, 2013 at 8:25 AM

Does less financial data automatically assume less transparency ? If so, we are in trouble. On the other hand, it could be that more is known, but less is shared- which is even worse.


Chairmen and CEOs in the FTSE100 provided seven percent less financial data and eight percent less forward-looking financial data in annual statements over the last five years. 

 

Metapraxis, the business analysis company has examined the annual reports of FTSE 100 companies and measured the quantity of financial and non-financial data provided by chairmen and chief executive officer (CEO) statements over a five year-period.


It records a fall in the quantity of financial data, largely a result of significant reductions in the information provided by FTSE 100 companies in the technology sector (down by 74 percent) and utilities industry (down by 47 percent).


No one seems very comfortable with future projections either - the amount of forward-looking data in annual statements also decreased by 81 percent in the healthcare industry and 52 percent in the telecommunication sector.


As for technology - it was the only sector not to include any forward-looking financial information in annual statements.


Simon Bittlestone, Metapraxis MD, says: “It is reasonable for shareholders to expect clear, forward-looking information from the directors responsible for managing the business.......those companies that are not comfortable providing their shareholders with forward-looking financial information often have poor internal management information and little visibility of future performance, creating a lack of transparency and also an underlying anxiety amongst shareholders that management may not be in control.” 


Indeed. The need for better communication is still grossly undervalued.


 



Categories: Communication, Transparency, Shareholders