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The Well-rounded Annual ReportThe Foundation's 1999 Survey of Corporate Annual ReportsPress Coverage |
Investment Week, 13th December 1999
Poor information record
By David McGrathAlmost all of the FTSE 100 companies are failing to provide meaningful information in their annual reports, according to the latest study by the Foundation for Performance Measurement.
The study found annual reports fail to inform on the issues that are the real drivers of future value or performance.
Ken Olisa, chairman of the Foundation of Performance Measurement, said: "Some performance topics are more relevant in certain companies than others but it is surprising that companies chose to place so little emphasis on subjects such as customer service, innovation, research and development, staff performance and learning, brand development, management and the supply chain relationship. These are among the drivers of future performance."
For example, 61 of the FTSE 100 companies failed to include any measure of customer service, 74 companies didn't use any innovation statistics and 75 neglected to add any figures for research and development.
Olisa said: "The annual reports still leave a lot to be desired if they are to be used by investors to make an informed judgement about the likely future performance of the company."
The results of the study also show that it is not current practice to publish targets.
The foundation identified a total of only 64 targets of any kind in all the annual reports out of a total of 20,000 performance measurement citations. This rose to 230 if companion documents, such as health and safety and environment reports, were included.
Only 13 of the FTSE 100 companies published a target for financial returns and only five of those were targets for shareholder value. Not one retail bank, retailer or telecoms company published a financial target.
None of the FTSE 100 reports provided a target of any kind for innovation, community relations, staff performance and learning, customer service or management.
Companies with the most comprehensive annual reports tended to be in the public or media spotlight, such as banks, oil groups, utilities, telecoms, chemicals and life sciences.
The Foundation ranked the usefulness of the annual reports of each company by giving scores for the number of topics mentioned and citations for various measures.
The highest scoring company was NatWest with 2,174 points, followed by Rio Tinto on 1,497 points and Scottish Power with 1,492.
Although NatWest was a clear winner with the most performance citations at 75%, none of those were targets.
Olisa added: "Their annual report was extremely comprehensive but only 31 out of 542 performance references were for non-financial topics.
"Overall the report mentioned only 10 of the 20 topics the Foundation was looking for."
Office support services group Hays was the worst performance with 60 points followed by AB Foods with 113 points and Securicor at 188 points.
Other poor performers included Marks and Spencer who ranked 95 out of the 100 companies, Railtrack and Thames Water in equal 82nd position and BSkyB at 77th.
The group found companion reports to be far more informative and readable than the annual reports they complemented.
Water - 10th December 1999
Top firms slammed over lack of data
FTSE 100 companies are providing poor information in their annual reports, according to new research by the Foundation for Performance Measurement.
Companies in the media spotlight tend to issue the most complete information, the FPM said, but the majority of utilities were ranked in the bottom half of its league table of informative annual reports.
'It is surprising that companies choose to place so little emphasis on subjects such as customer service, innovation, R&D, management and the supply chain relationship. These are among the drivers of future performance,' it said. 'Companies can be far more effective in communicating performance messages to shareholders and potential investors.'
Only 39% of FTSE 100 companies provided measures of customer service and only 25% offered information on innovation and R&D.
The report criticised companies for not publishing financial and other targets. Only 13 companies included financial targets and just five included targets for shareholder returns.
Scottish Power achieved the highest score among utility companies for the value of its annual report, ranking third overall. United Utilities was 21st and Severn Trent 31st. Thames Water was 83rd, just behind Railtrack. The Daily Mail came 72nd.
The Engineer, 10th December 1999Engineering annual reports could do better
Engineering companies' annual reports are among the worst for providing useful information to shareholders, according to a recent survey by the Foundation for Performance Measurement.
All six engineers in the FTSE-100 index appear in the bottom half of a table which rnaks information quantity and quality. The least informative report was that of British Aerospace (now BAE Systems), which came in 97th. Highest-ranked was Rolls-Royce, in 64th place.
Investors could be frightened away by a lack of information, FPM secretary Heather Chatwin warned. 'Small investors can't tell much from annual reports,' she said.
A lack of performance targets also makes it difficult to hold company directors to account, FPM said. Just one of the six engineering companies, Invensys, published any targets at all.
'You wounldn't get away with that in internal management reports,' Chatwin said.
Some companies may already be improving their reports. A spokesman for Smiths Industries (ranked 80th) said the FPM analysis was based on last year's report, while the 1999 report contained much more information. 'We are conscious of the need to give shareholders the best information we can,' he said.
Company reports 'are little help to investors'
by Charles Batchelor
Find the original article by searching the FT's Global Archive (search for "Foundation for Performance Measurement"; new users will be requested to register)
Many of Britain's largest companies are failing to provide meaningful information on issues such as customer service, innovation and staff performance which are the real drivers of future value, according to a study.
Annual reports leave a lot to be desired if they are to be used by investors to make an informed judgment about likely performance, said the Foundation for Performance Measurement in its second annual review.
The highest-scoring company in a league table compiled by the foundation was NatWest, followed by RTZ - the resources group - Scottish Power, ICI and British Telecommunications.
The lowest-scoring company was Hays, the distributor, followed in ascending order by AB Foods, Securicor, BAe Systems and Asda.
"Some performance topics are more relevant in certain companies than others," said the foundation, which was established by Metapraxis, a business consultancy.
"But it is surprising that companies choose to place so little emphasis on subjects such as customer service, innovation, R&D, staff performance and learning, brand development, management and the supply chain relationship."
Sixty one of the FTSE 100 companies failed to include any measure of customer service, 74 failed to measure innovation and 75 did not measure R&D.
The companies providing the most performance data were in the public or media spotlight including those in the fields of chemicals and life sciences, mining and oil, retail banks, utilities and telecommunications.
Few companies published targets, including financial ones, the study showed.
Only 13 FTSE 100 companies released a target for financial returns, and only five of these were targets for shareholder value.
None of the retail banks, retailers or telecoms companies published a financial target.
Companion documents were often much more informative and readable than the typical annual report but companies did not draw attention to them, said the report. The Well Rounded Annual Report. Foundation for Performance Measurement, Hanover House, Coombe Road, Kingston upon Thames, Surrey KT2 7AH. Tel. 0181 541 1696. œ320+VAT.
The Evening Standard, 6th December 1999Footsie companies rapped for sketchy annual report info
NatWest, Bank of Scotland and Royal Bank of Scotland are among leading quoted companies who fail to provide investors with adequate information in their annual reports, it is claimed today.Bid target NatWest comes out as the most communicative of the FTSE 100 while its suitors, the two Scottish banks, rate 14th and 42nd in a list in which recruitment group Hays is bottom, behind Asda, British Aerospace, Securicor and Associated British Foods.
Yet even NatWest is slated for backsliding by the Foundation for Performance Measurement, which is backed by the Metapraxis consultancy group. The FPA seeks to offer investors more than internal historic, financial, numeric and short-term data. The NatWest annual report contains not a single target; only 31 of 542 performance references are for non-financial topics, and only half of the 20 performance topics the foundation looks for are there.
"This is particularly disappointing," said FPA chairman Ken Olisa. "NatWest was an early and enthusiastic supporter of measuring internal management reporting and has publicly endorsed the approach at many performance measurement conferences, including foundation events."
A total of 61 of the FTSE 100 companies fail to include any measure of customer service in annual reports while 74 omit a measure of innovation and 75 are silent on research and development. Other gaps in "enterprise information" include staff performance and learning, brand development, management and the supply chain relationship, not one report showing a target of any kind for these.
Only 64 targets of any kind were mentioned throughout the annual reports, only 13 of which publish a target for financial returns, and of these just five were for shareholder value. Not one retail bank, retailer or telecoms company publishes a financial target.
Such non-statutory information covers issues which are "real drivers of future value or performance," the FPA argues.
Companion documents such as environmental reports are often more informative than the annual report but many investors do not get to know of them because often they are not referred to in the annual report or pushed by investor or corporate relations departments.
West Lancashire Evening Gazette, 6th December 1999Top firms fail to disclose targets
Major blue chip companies are failing to provide shareholders with vital details on their future prospects, according to a new report.
The study, by research and campaigning group Foundation for Performance Measurement, found annual reports produced by the top FTSE-100 companies lacked many details which could help investors judge the likely future performance of a company.
Most provided little detail on research and development, customer service, innovation, management, brand development, staff performance and suppliers - all considered to be key drivers of a company's future performance.
The report also found that the top 100 stock market listed companies shied away from providing details on their performance targets.
Just 13 out of the 100 blue chip companies published a target for financial returns.
Not one retail bank, retailer or telecoms company published any financial targets, the report said.
Only two companies, Scottish Power and BT, published targets on customer service, while pharmaceuticals giant SmithKline Beecham was the only one to release a research and development target.
Overall, the companies that generally provided the most performance data were those in the public spotlight.
Blue chip firms slow to provide details
Major blue chip companies are failing to provide shareholders with vital details on their future prospeccts, according to a new report.
The study, by research and campaigning group Foundation for Performance Measurement, found annual reports produced by the top FTSE-100 companies lacked many details which could help investors judge the likely future performance of a company.
Most provided little detail on research and development, customer service, innovation, management, brand development, staff performance and suppliers - all considered to be key drivers of a company's future performance.
The report also found that the top 100 stock market listed companies shied away from providing details on their future performance targets.
Just 13 of the 100 blue chip companies published a target for financial returns and only five of those were targets for shareholder value.
Not one retail bank, retailer or telecoms company published any financial targets, the report said.
Top firm failings
Major blue chip firms are failing to provide shareholders with vital details on their future prospects, according to a new report.
Research and campaigning group Foundation for Performance Measurement said annual reports produced bu the top FTSE-100 companies lacked many details which could help investors judge likely future performance.
The report also found that the top 100 listed companies shied away from providing details on their future performance targets.
Just 13 published a target for financial returns and only five of those were targets for shareholder value. Not one retail bank, retailer or telecoms company published any financial targets, the report said.
Only two, Scottish Power and BT, published targets for customer service, while SmithKline Beecham was the only one to release a target for research and development.
Major blue chip companies are not providing shareholders with vital details, according to a study by research and campaigning group Foundation for Performance Measurement. It said annual reports from the top FTSE-100 companies often lacked information which could help investors judge future performance.
Secretive companies
are missing chances
by Robert Bruce
Click here to view the original article on The Times' web site.
The culture of financial reporting is a very peculiar one. To the outside world, companies might be expected to report a massive amount of information and report it very quickly, particularly when they are doing well. But the reality is that companies have always been extraordinarily reluctant to report useful information and astonishingly bad at publishing any information quickly.There are several reasons for this. The culture has always been against it. Companies feel that information is their bundle of secrets. Their goal is to publish the minimum rather than the maximum. Hence the long drawn-out processes to bring about adequate corporate governance reforms. Companies have to be treated like small children with carrots and sticks dangled or brandished at appropriate times. Hence, any decree on greater disclosure prompts the knee jerk reaction that companies' internal systems will be overwhelmed with the additional responsibilities. And also the almost universal cry that any disclosure of new information will simply give away their trade secrets to their competitors.
All this is nonsense. Any company that trumpets its allegiance to maximising shareholder value, and it is an almost universal cry, ought to be stuffing the airwaves with upgraded and increasingly detailed financial reporting information. And they should be doing it, riding on the Internet wave, faster and more frequently.
But they don't. This week sees publication of the annual survey of FTSE 100 companies by the Foundation for Performance Measurement. The survey, The Well-rounded Annual Report, starts from the sensible standpoint that companies would want, in these competitive and shareholder-value-driven days, to provide better and more useful information, particularly in the field of performance measurement. You can hardly go to a company presentation these days without being told that performance measurement is driving the company from within. You hear that today's competitive edge comes from precisely this field.
Yet the answer from the survey is that companies are simply not doing it. "It is surprising that companies choose to place so little emphasis on subjects such as customer service, innovation, R&D, staff performance and learning, brand development, management and the supply chain relationship," says the survey. "These are among the drivers of future performance."
However, the real problem is that the old culture in so many companies does not, in its heart of hearts, believe in this sort of thing. They still believe that issues like these, which are characterised as being "soft" issues, get in the way of real business, which is red in tooth and claw. And they will look at this survey and point out that the companies that are praised for being top of the league for providing performance measurement information. They will argue that being top of this particular league did not help NatWest, a bank whose woeful management performance has led to its current ignominious position. They will say that others in the top ten, such as RTZ, Sainsbury, Barclays, ICI and BT, are not honestly regarded as high-flying, highly rated companies in the current pantheon. And they would have a point.
However, if you sit down and think whether companies are going to create greater or lesser shareholder value on a long-term basis by telling people more or less about how they are doing, the question turns into a "no-brainer". Performance is what counts, and the world outside the company needs to be told about it comprehensively and often.
Accountancy Age, 2nd December 1999
Mysteries of the Footsie
FTSE-100 companies are failing to provide much meaningful information in their annual reports on issues which are the real drivers of future value or performance, according to the Foundation for Performance Measurement in its latest study The Well-rounded Annual Report, published today. Some 61 of the FTSE-100 companies failed to include any measure of customer service, 74 failed to include any measure of innovation and 75 failed to include any measure of research and development.