As a company secretary its important that I read annual reports, either for learning more about potential clients, or simply to see what the trail-blazers are doing. The reasons companies (or any organisation for that matter) produce an annual report is varied, but with the potential cost outlay huge and employees attention diverted away from other work, why bother?
1. The statutory need. All quoted public limited companies (plc) are required to publish an annual report. Content of the report is regulated in law, principally the Companies Act and the Financial Reporting Council regulations. Plc annual reports have to be of similar content to allow investors to determine which companies to buy shares in and which to avoid.
2. Public relations. Some reports go beyond the investor audience and try to appeal to the general public. Take for example the annual reports of petroleum giants like BP or Shell, who have an uphill battle convincing consumers that they do anything other than pollute. The annual report can be used to bestow their corporate social responsibility (CSR) virtues to a degree that no TV advertising campaign could ever wish for.
3. Part of a marketing plan. If the report is led by the marketing department, then the annual report, in addition to reviewing the years performance, can be used to appeal to new markets and customer groups. Content can be specifically written to focus on product development or advancement into new territories. This is something that would be particularly attractive to new and vibrant businesses.
So you've decided an annual report would be good for business, what next?
It's about understanding the audience ... when writing an annual report the first place to start must be understanding who the report is primarily aimed at. In a public sector organisation such as an NHS Trust, this is likely to be the public, so plain language and promotion of clinical achievements is in order. However, in a publicly traded plc. such as Vodafone, content must focus on helping the investor understand the risks and rewards of continued investment. Obvious? You'd think so, but there's organisations out there who produce annual reports with no greater objective than doing so because everyone else is doing one.
Drawing the reader in ... I see many annual reports that are big on content and light on creativity. I understand why this happens; content requirements are divided up between directors and each wants to ensure they tick all their compliance boxes. The outcome is usually content overkill and repetition. The best annual reports are therefore the one's where directors supply facts and figures to a creative team, who then work their magic using words, graphics and photography. The board or executive teams involvement is limited to a final check over and sign-off.
On time, on budget ... An annual report should be delivered at the same time year-in, year-out. Plc's have a statutory six months in which to get the document out. Other organisations should have a similar deadline or risk the report content becoming irrelevant. Cost control is also important. Good photography is necessary but expensive, as is getting the wording of the copy absolutely spot-on. Such expense can be mitigated by integrating these costs with the wider marketing budget; so for example, the photography will also be used in your website and brochures for the next twelve months (as would the key messages). The appointment of a project manager to oversee and control the annual report project should therefore be a serious consideration.
Who are the trail-blazers?
If you want to be amongst the best, you need to know what they're up to. Reportwatch have produced their global top 300 annual reports 2010, which is a great source of solid practice and innovative ideas. In addition the UK Investor Relations Society has some good tips that can be applied to any organisations annual report, not just plc's.
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