Study criticises content of annual company reports

Swiss bank UBS got good marks for its annual report Keystone Archive

A study has criticised several of Switzerland’s top companies for producing lengthy annual reports that say very little.

This content was published on September 6, 2004

Consulting group Kirchhoff found that the reports by many Swiss firms failed to give a clear picture of their overall strategy and goals.

The study, carried out by the Swiss branch of the German consulting firm, examined the annual reports of 25 companies listed on the Swiss Market Index (SMI), which is made up of the country’s largest firms by market capitalisation.

“Several companies managed to produce reports of more than 100 pages without writing anything at all about their business activities and strategy,” said Kirchhoff Switzerland’s managing director, Petra Nix.

“The information requirements of their readers are simply ignored,” she added.

Top and bottom

The report focuses on the areas of financial disclosure and corporate information and awards each company marks ranging from six (very good) to one (unsatisfactory).

Geneva-based inspections group SGS fared worst, scoring just 2.1. Switzerland’s largest bank, UBS, came out on top with 4.9. The average score was 3.8.

The study found that the UBS annual report covered all key areas, in particular strategy, organisation, guiding values and corporate culture.

However, at a hefty 438 pages, Kirchhoff points out that the bank's report is anything but light reading material.

Top marks on the “efficiency” front went to the Basel-based specialty chemicals firm, Clariant.

In just 116 pages, readers are offered a “clear and transparent” overview of the company’s daily business activities and strategy.

Corporate information

Kirchhoff said the majority of “weaknesses” were in the field of corporate information, particularly in the way companies defined what they meant by “value orientation”.

The study found that around 75 per cent of SMI-listed companies wrote about value creation or mentioned increasing corporate value as an explicit goal – but then failed to give any details about the actual principles, concepts and key figures used to attain and measure these goals.

Only eight of the 25 companies devoted a specific chapter to the theme of strategy. In 40 per cent of cases, Kirchhoff found that the reader was left none the wiser with regard to the strategic direction of the companies concerned.

Overall, the two best-performing companies in the field of corporate information were UBS and the Swiss pharmaceutical giant, Novartis.

Standards of financial reporting were found to be “generally satisfactory”, with the best marks going to Clariant, food giant Nestlé and pharmaceutical firm Roche.

But the report also points to weaknesses in this area, particularly in the setting of quantitative goals and specific dates and deadlines.

swissinfo with agencies

Key facts

Top five companies from Kirchhoff’s report:

1. UBS: 4.88 (Financial disclosure: 4.8; corporate information: 5.0).
2. Clariant: 4.85 (5.5; 4.2).
3. Roche: 4.83 (5.3; 4.4).
4. Novartis: 4.80 (5.0; 4.6).
5. Nestlé: 4.75 (5.5; 4.0).

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In brief

Financial disclosure refers to reporting of corporate financial information, including financial performance and information about strategies and goals.

Corporate information refers to reporting of information such as business activities, market environment, corporate values and corporate governance.

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In compliance with the JTI standards

In compliance with the JTI standards

More: SWI certified by the Journalism Trust Initiative

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