Annual Report Design

The changing face of annual report design in 2012

Copyright Rowland. 2012 - Annual Report Design

Post GFC and in the face of continuing financial uncertainty in Europe reflecting on investor confidence in Australia, the shape and form of the annual report design is changing.

Shareholders and potential investors alike are scrutinizing the contents of an annual report in more detail than ever before. The focus for content is shifting:

  • More information is expected on a company’s ability to survive these financially uncertain times. Accounting standards are calling for more regular assessments of asset values and much more focus is being placed on issues such as how a company will manage any further downturn.
  • Shareholders want more frequent releases of financial reporting to reflect the volatility of the environment companies find themselves in and nervous shareholders are also scrutinising any new investments more carefully.
  • Company information needs to be widely available in various formats to suit the different needs of reader’s chosen platform and also at the time they want to receive it.
  • Annual and interim reports need to become more user friendly and easier to access online and even on mobile devices.
  • Marketing and other non-financial information has become more important, reporting on the company’s approach to aspects such as disaster recovery procedures, sustainability issues and corporate & social responsibility.
  • Mike Lynn, vice president for investor relations at Woodside Petroleum, says: “Given the turmoil of recent times, we’ll see more companies paying greater attention to discussing their risks, their debt/funding situations and the outlook for their sectors”.

As designers and producers of annual reports we need to fully consider these changing needs and the format required by our clients and their shareholders. We must adapt the way we work and develop further skills in online and mobile technology and designing for these environments.

“The future of annual reports will be online,” says Hugh Devine, Westpac senior manager, investor relations. “With 25 per cent of our shareholders, all communications are online.” The online shareholder review can be sexier, more positive. This tends to satisfy their needs. There is more marketing information being included”.

It’s the ability of the medium to tell the corporate and investment story clearly and bring it to life in an online ‘experience’ for the key audience that is important. Online reports are produced as a fully interactive report much like a full website or, as a summary PDF flip book, but all should have unique content not necessarily shown in the printed report – and in a format that fully engages with the audience. With the increasing use of the iPad, an app may be considered, but understanding the audience is the most important aspect of your annual report design.

The actual way content is delivered is key. As technology becomes all-pervasive and bandwidth increases to every business and home environment, video will increasingly come into play to express a CEO’s plans for the future direct to his shareholders and stakeholders. Shareholders want to see who they are putting their faith in and a video can give a more accurate and immediate understanding of that person and the position he or she represents.

More regular updates of financial information will become the accepted way of reporting. Shareholders want more information and they want it more quickly and more often. Quarterly reports need to be encapsulated online in interactive mini-sites and even in video. Communication in the form of webcasts, podcasts and even social networks will increasingly be used to make information more widespread.

In any case information must offer insight. Annual reports need to categorise the information to the various institutional and retail investors to satisfy the individual needs of each reader group. What mum and dad investors require will be very different to a financial analyst of an institutional investor. They must all have their needs satisfied and an annual report design should be presented in a way to make it easier for everyone to find what they want.

All of these changes present challenges for the person responsible for producing the report, whether the key marketing officer or the company secretary.

  • Companies need to start early for effective annual report design – understand who the various groups are among their shareholders and understand what sort of information each group requires. Think from the outside in, not the traditional way of “what do we want to say”.
  • They also need to get organised. Gather financial information, written content and photography (photograph meetings, projects etc as they happen – it’s easier and more cost effective)
  • Brainstorm the message based on the target profile, a strong theme for the report will give the impact that is needed
  • Get the most use and value from your report – split the report into separate publications, such as a concise summary, annual report and financial report (that way you can use the concise summary and annual report to market your business)
  • Divide your budget based on your research of the audience’s preferred method of receiving the annual report.
  • Make your AR the launch of your strategy/marketing campaign for the financial year
  • Print enough concise summaries &/or make them available online, to distribute to staff (rather than providing every staff member with a full report) making them feel value
  • Produce a corporate profile/annual review to match the full report, again to provide consistency and reinforce key messages for the year
  • Amortise spend on photography for the report over the year and use the images to provide consistency across all marketing materials.

Companies must adapt to the changing needs of the shareholders and stakeholders or risk becoming perceived as a dinosaur!

Footnote: In a report published in the journal of consumer psychology by Claudia Townsend, 2 core studies were conducted around the design of annual reports with some interesting results:

In the general population study, respondents gave the product of a company with a more attractive annual report an average rating of 5.08 on a seven-point scale versus a rating of 4.79 for the product of a company with a less attractive annual report.

And more importantly, in the study involving experienced investors, in which participants were asked to rank companies based on how likely they would be to invest in those firms, the findings suggested that including an additional color throughout a firm’s annual report would have the same impact on an investor’s firm ranking as a 20 percent improvement in revenue from the previous year.

“The implications of these findings should point firms in the direction of good graphic designers,” added Townsend.  “After all, it is a lot easier to add color to a printed piece of paper than to add revenue to a company’s bottom line.”

Annual Report Design

Sources

Claudia Townsend research paper
http://www.sciencedirect.com/science/article/pii/S1057740810000677.

“A prettier AR makes investors value a company higher” – study from University of Miami School of Business
http://www.bus.miami.edu/news-and-media/recent-news/pretty-report-marketing-study.html

http://en.wikipedia.org/wiki/XBRL

http://www.companydirectors.com.au/

http://www.woodside.com.au/Pages/default.aspx

http://www.westpac.com.au/about-westpac/investor-centre/shareholder-information/