Press Release: 30 JANUARY 2023
IT’S TIME TO CLOSE THE BOOK ON ANNUAL REPORTS’ NEVER-ENDING STORY
Quoted Companies Alliance Urges Overhaul as Average Length of Annual Report and Accounts Grows by 46% in Five Years
Average report is now 95,000 words – longer than George Orwell’s 1984 or Jane Austen’s Persuasion – and 173 pages
Some 5,800 words and nearly eight pages added every year because of new reporting requirements – with more to come
Unwanted growth symbolises excessive complexity weighing down the UK’s shrinking community of publicly-quoted companies
LONDON, January 30 2023 – PUBLIC COMPANY annual reports have ballooned in size by 46% in just five years, weighed down by new reporting requirements in areas such as remuneration and environmental, social and governance (ESG) matters, and a failure to rein in repetition.
The average report is adding 5,800 words and nearly eight pages every year, exceeding the length of many novels, new research from the Quoted Companies Alliance has found.
The organisation, which champions public markets and the small and mid-cap quoted companies that use them, is calling for an overhaul of current reporting demands and better guidance so that companies can save time and money while still making appropriate disclosures to investors and the wider stakeholder community.
“Transparency is vital for public companies – it is what gives investors the confidence to invest,” said James Ashton, Chief Executive of the Quoted Companies Alliance.
“But more disclosure does not mean better disclosure. The UK must be able to grow companies in the public arena without growing annual reports too.
“These door-stopper documents are another example of corporate complexity that must be reduced so the obvious upsides of listed life are not obscured for expanding, entrepreneurial businesses.”
At 147,000 words or 237 pages, the average FTSE 100 annual report is longer than epic novels such as A Tale of Two Cities and One Hundred Years of Solitude. It is growing by 8,400 words or almost nine pages a year.
Among mid-sized companies, those listed on the Main Market with valuations in the £250m-£750m range, the average annual report comprises 94,000 words and is growing at 6,100 words or nine pages a year.
But the greatest percentage growth is being borne by companies likely to have the least resources. A cross-section of Alternative Investment Market (AIM) constituents with valuations of less than £250m showed reports have grown by 51% in five years – that’s 3,000 words or six pages added every year.
So even members of London’s dedicated growth market with its more flexible regulatory requirements are producing a document of 44,000 words – longer than The Lion, The Witch and The Wardrobe.
The QCA is calling on the Department for Business, Energy and Industrial Strategy (BEIS) and Financial Reporting Council (FRC):
- To conduct a wholesale review of corporate reporting requirements with the aim of embedding clarity and concision to benefit companies and their investors;
- To better guide companies about what information must be included in these reports, what can be disclosed elsewhere, what can be junked – and a robust template to frame it all;
- To consider how to streamline reports and automate some aspects of their preparation.
“The perfect annual report should be true, fair and succinct, offering reassurance, insight and clarity to all stakeholders,” James Ashton added.
“But we risk turning them into vast, hard-to-navigate data dumps. It’s time to close the book on these never-ending stories.”
– Ends –
Notes to the Editors:
The survey measured word lengths and paginations of 100* annual reports in each of three categories: FTSE 100, mid-cap Main Market (£250m-750m market value) and small-cap Alternative Investment Market (less than £250m).
*only 98 out of 100 FTSE 100 companies had a five-year record as a public company.
For further Information including a copy of the report please contact:
Communications Officer, The Quoted Companies Alliance
DD: 020 7397 8140
About The QCA
The Quoted Companies Alliance champions the UK’s community of 1000+ small and mid-sized publicly traded businesses and the firms that advise them.
We believe the public markets can be the best place for companies to source the funds to grow, operate transparently and distribute wealth, fairly.
The QCA seeks to inform policy in dialogue with regulators and government, showcase the latest thinking on leadership, investment, technology and governance through our events and research, and to provide a forum to share good practice among members, who are quoted on the Main Market, AIM and the Aquis Stock Exchange.
For more information, please visit www.theqca.com
- A small or mid-sized public company is typically burdened with an extra £500,000 of costs compared to a similar-sized private company, including growing audit fees
- Public companies are three times more likely to invest in research and development than private companies.
- The two million UK workers who hold shares or options through a staff scheme are highly likely to be employed by a quoted company.
- The London market is declining by at least one public company per week.
(Sources: QCA research, Frontier Economics, Employee Share Ownership Centre, QCA/Hardman & Co)