Shareholders' group calls for company reports to be made shorter
The length of companies' annual reports should be be made far shorter and their structure fundamentally changed, according to the Association of Investment Companies (AIC).
The length of companies' annual reports should be be made far shorter and their structure fundamentally changed, according to the Association of Investment Companies (AIC).
12:02PM GMT 16 Dec 2011
The investment trust industry's trade body wants to see annual reports split into two parts: a strategic report no longer than 12 pages and a comprehensive supplementary report, which would be available online.
This change would produce "higher-quality, user-friendly reports which better meet the needs of shareholders", according to the AIC.
With FTSE 350 companies annual reports and accounts averaging 135 pages, the AIC says the measures would also reduce waste and end the huge postal bills sending out reports entail.
Ian Sayers, AIC director general, said: “Today’s annual reports are so long and detailed that investors cannot see the wood for the trees.
"Key information about the business is lost in pages and pages of detail. This complexity harms rather than helps market understanding. A new approach could encourage disclosures which highlight key information which is of real use to investors."
Under the AIC's recommendations to the Department of Business, Innovation and Skills, the short strategic report would provide an overview of what the company does and how it has performed in the year.
That would be broken down into sections covering: strategy and business model; company performance; principal risks and uncertainties; key performance indicators; key financial information; and a consistency report from auditors
There would also be details of where to obtain the supplementary report on the internet.
The longer report which would be available as a print copy on request and would detail corporate governance, remuneration information, company law disclosures, environmental and social information and financial statements.
"Our approach would mean that the vast majority of investors with less interest in the detail will receive a report they may read and absorb, instead of a tome which does nothing but fill the recycling bin," the AIC said.
The AIC, which has 344 members with assets of £77bn, said its recommendations would not allow companies to hide information and as the full statements would still be available on the internet.
The proposals won support from the UK Shareholders' Association.
Brian Peart, the association's national vice-chairman, said: "The first three pages of a report are what I look at most: the chairman or chief executive's statement and the summary financials.
"I don't want a lot of unnecessary stuff that's just for the board. I want to read about the financial capabilities of the company and whether it's successful or not."
