Almost a third, 71%, of surveyed UK listed companies are not showing up-front how they link matters such as company strategy, KPIs, business model, remuneration and financial statements in their annual report, according to the latest report by Deloitte UK.
Annual report insights 2014: Providing a clear steer surveyed 100 UK listed companies and the firm’s national head of accounting Veronica Poole said companies have started linking parts of the financial statements.
"However, very few completely embrace the concept. In a good example of linkage you would be looking for a company to be able to articulate from the summary to the end where things are and how the business model and objectives translate to strategy and into the results and where will you find that in the financials."
Poole summarised the findings by saying UK companies are very much on a "journey" and that "a lot of companies are also still experimenting with corporate reporting".
"The UK has a really enabling environment for that. We also have a raft of new requirements coming in all at once and there is a lot for companies to digest and adjust their ways of thinking," she said.
Poole also emphasised that the compliance pressure is not going to ease off on companies and she said she believes the changes are needed for investors and business for building their trust and credibility.
"We need to rebuild trust in businesses and financial statements," she said highlighting communication as a key way of doing so.
The increase in compliance is also the most likely reason for the average page increase of annual reports as well as increased quality, according to Poole. Deloitte’s research found the average page count has gone up 10 pages in the past year to an average 132 pages.
Lack of female leaders
Deloitte UK’s report also revealed that 85% of all company directors are male, despite nearly three quarters of companies having at least on woman on their board.
"The overall number of female directors remains low, only rising from 13% last year to 15% this year, but 73% of companies have a woman on the board compared to 69% last year," she said. "There is still a need to boost the number of female directors on UK boards. It will be interesting to see how organisations tackle this issue, in particular, not just by appointing women to non-executive directorships but also to executive positions."