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Annual reports have become less cohesive

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And, despite the growing length and increased regulatory emphasis on producing cohesive reports, 71 per cent of companies are not showing up-front how they link matters such as company strategy, KPIs, business model, remuneration and financial statements.

Veronica Poole, Deloitte’s UK head of corporate reporting, said: “Companies have faced a lot of change in the last year with the introduction of the strategic report. We’re seeing businesses including more narrative, particularly around remuneration reports. 

“They also continue to provide voluntary disclosures where information is thought to be useful, such as net debt reconciliations and around tax governance. But, more could be done to produce clear and concise reports in order to ensure the most relevant information is presented to investors.”

Deloitte’s research also found that nearly half of companies applying the UK Corporate Governance Code are not fully compliant. The most common areas of non-compliance are around the independence of directors and the composition of audit committees. 

“Two-thirds of companies made the audit committee report a distinct section within the annual report, compared to only 45 per cent last year,” said Poole. “This reflects the greater profile being given to the audit committee’s stewardship and reporting responsibilities. The reporting of the significant issues considered by the audit committee coupled with auditors’ extended reporting provides investors with much greater insight about today’s listed companies, something that can only be a good thing.”

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