UK companies fall short on narrative reporting

UK business needs to improve its standard of narrative reporting according to
consultancy Radley Yeldar, who found that the country’s largest companies fall
short in this area.

The consultancy assessed December year-end annual reports from the FTSE 100
against narrative reporting based on the Accounting Standards Board’s reporting
statement on the operating and financial review (OFR).

Radley Yeldar found that only 7% of the companies produced high quality,
forward-looking information and 90% failed to define or clearly explain their
Key Performance Indicators (KPIs).

Cadbury Schweppes, Friends Provident, Rio Tinto, BG Group and GlaxoSmithKline
were found to have the best narrative reporting, but Richard Carpenter,
development director at Radley Yeldar, said examples such as these remained ‘few
and far between’.

‘Forward-looking information and KPIs remain a particular problem,
said Carpenter. ‘Hopefully, the DTI’s recent moves on director liability will
encourage companies to be a little bit more forthcoming about the future as they
see it.’

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