A third of FTSE 100 companies fail to meet shareholders’ calls for transparency
FTSE 100 companies lack confidence to commit to future financial projections following the crisis, a survey from analysis consultancy Metapraxis revealed.
Metapraxis has announced research revealing that the volume of forward-looking financial data included in annual report statements has decreased by a third since the Lehman crisis five years ago.
In the last financial year the volume of forward-looking information included in the statements of chairmen and chief executive officers (CEOs) experienced its sharpest decline to date and contracted by 24%, despite calls for more transparency on company performance.
Metapraxis examined the annual reports of FTSE 100 companies and measured the quantity of financial and non-financial data provided in the business reviews included in the statements of chairmen and CEOs. The fall in the quantity of forward-looking data was largely a result of significant reductions in the financial information provided by FTSE 100 companies in three sectors: telecoms (down by 85%), basic materials (down by 74%) and consumer goods (down by 43%).
Over the past six years the value of information given to shareholders has also declined, with the majority of statements consisting of predominantly historical data, the survey also showed.
However, Metapraxis said, as an increasing number of companies adopt the emerging integrated reporting standard, which provides information on manufactured capital, human capital, intellectual capital and social or relationship capital, a greater variety of information is appearing in annual statements.
Simon Bittlestone, managing director at Metapraxis, said: “With the economy starting to recover, it is important that FTSE 100 firms lead by example and start providing better information to shareholders.
“Despite an increase in historical and non-financial data reported, stakeholders are right to expect more forward-looking financial data from FTSE 100 boards in order to gain a strong understanding of how the business is likely to progress in the future.
Bittlestone also added that organisations need to improve management information to support better decision making.
Metapraxis analysed the statements of the chairmen and CEOs of FTSE 100 companies between the financial years of 2006 and 2012.