SAS says reports suffer from excess information

Research on the needs of users of annual reports has revealed that an overload of information is compromising design.

According to an in-depth study published last week by London consultancy SAS, there are signs that investor relations consultants and buy-side City analysts find annual reports less useful in their day-to-day roles.

According to SAS’s survey of analysts – entitled Corporate Reporting: a New Agenda? – almost half of the sample feel that the annual report as a business tool is ‘becoming less useful’ in terms of communicating relevant information effectively.

Because of the increase in mandatory compliance legislation, which requires public and limited companies to publish more information on ancillary business practices, analysts are becoming bogged down in information overload, the report suggests. In fact, a staggering 45 per cent of those surveyed say that the additional material had not made their investment decisions any easier at all.

‘Traditionally, the annual report has been about providing statutory information,’ says SAS managing director Jeremy Sice. ‘However, the recent rise in compliance legislation has forced companies to include more detail at the expense of clarity and quality.’

According to 53 per cent of respondents, ‘Companies are not open enough in their reporting.’ Respondents were also critical of the disingenuous tone adopted in many of the written elements of reports, which is generally perceived to be too overtly promotional and ‘PR-led’.

According to the survey, printed annual reports are still the preferred format for analysts in 83 per cent of cases, with 40 per cent using PDFs and 10 per cent using on-line documents. Eighty per cent say the annual report is as important as ever. The most read sections of annual reports are the financial information (according to 87.5 per cent of respondents), followed by the chairman’s statement.

In unprompted tests, the research revealed that analysts have four key objectives when using a set of reports and accounts to glean commercial information. The four areas of primary interest are: details on future business objectives; a measure of actual progress against these objectives; details of the business strategy; and the financial growth of the company.

The research canvassed the opinions of analysts from 40 buy-side institutions, which represent 40 per cent of the UK equities market, according to the report.


Annual report, financial and historical financials – 55%

Announcements and press releases – 30%

Background information – 30%

Presentations – 20%

Product information – 20%

Divisional information – 10%

Webcasts – 10%

Which part of the annual report do you use most?

Financials – 87.5%

Chairman’s statement – 67.5%

Remuneration and incentive scheme information – 17.5%

Operational review – 12.5%

Corporate governance – 5%

Ownership information – 5%

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