• New legislation sees companies cutting out summary reports
• Majority of largest companies not taking advantage of new legislation to properly communicate online

Private investors are getting a raw deal under the new corporate reporting legislation in the Companies Act, according to research we have recently undertaken.

This is the first year that companies have been able to default to online shareholder communications. Many larger companies have taken the opportunity to cut out their more communicative summary printed reports – but only a few have significantly upgraded their online reports as a result.

Our analysis of the newly released reports in the FTSE 100 shows that the number of summary financial statements produced by FTSE 100 companies has fallen by almost a third over the past year (from 63% last year to 45% this time around).

“In the past, annual reviews and summary financial statements have been considered a cost-effective way to communicate, particularly for those companies with a large retail shareholder base”, comments Richard Carpenter, development director at Radley Yeldar. “With the new legislation now in place, many companies are choosing to direct these shareholders online instead. But relatively few online reports have significantly improved as a result. Companies are still viewing this as a chance to save budgets rather than to communicate properly online.”

HTML (web-page) reports have greater navigation and usability than PDF reports. Yet Radley Yeldar’s research finds almost one in five (19%) of Britain’s largest companies continue to provide their online report in PDF format only. The number of companies providing a full HTML version of their report has increased to 46% from 32% - but only a few of those are really taking advantage of the web to communicate with shareholders.

Just 11% of the FTSE 100 include multimedia content such as video statements or audio files, while even fewer (5%) provide interactive charts or diagrams. That said, almost half (47%) do provide links to additional, related content beyond the annual report – usually on the company’s corporate website.

Carpenter continues, “It’s all well and good for companies to direct shareholders online rather than publishing an annual review, but the online experience should equal – if not better – the ease of reading the printed document. At the moment, it often doesn’t.”

We assessed each of the online reports using a range of criteria and ranked them accordingly. The criteria included the type of report, its navigation, and features such as search options, Excel downloads, and multimedia. Here are the top 10:

1 Royal Dutch Shell
2 Aviva
3 AstraZeneca
4 Legal & General Group
5 3i Group
6 Capita Group
7 Centrica
8 Sainsbury (J)
9 Rexam
10 British American Tobacco

We also assessed the narrative content of the reports according to criteria derived from the Accounting Standards Board’s Reporting Statement on the Operating & Financial Review. These criteria included strategic content, marketplace discussion and the inclusion of key performance indicators (KPIs). The top 10 are listed below:


1 Land Securities
2 National Grid
3 ITV
4 Aviva
5 Capita Group
6 Anglo American
7= Centrica
7= Standard Chartered
8 AstraZeneca
9= BAE Systems
9= Marks & Spencer
10= Rexam
10= Wolseley




Editor’s notes:

1. Radley Yeldar’s latest version of ‘Narrative reporting content in the FTSE 100: How does it stack up?’ looks at the narrative content and online presentation of annual reports published since June 2007, including the newly-released December year-ends. It features an in-depth analysis of each report.

2. Radley Yeldar is a corporate communications consultancy offering a range of specialist services including brand identity, corporate reporting and corporate responsibility, digital media, internal communication, marketing communications, moving image and online investor relations. Radley Yeldar’s clients include giants such as Aviva, Pearson, Capita and HMV, as well as much-valued smaller organisations such as the Institute of Practitioners in Advertising (IPA).