Time and again this magazine covers studies which suggest that the printed annual report remains one of the key sources for the financial community the world over. This month we consider the issue in depth in our survey.
Most IR officers seem to recognize the importance of the annual report and devote huge amounts of time and effort to producing the document. More than often it’s a cross-department affair with all hands to the wheel as deadlines approach. Senior executives spend a good deal of time reviewing the copy. And large chunks of communication budgets are eaten up.
Most listed companies have firm ideas about who they are talking to in the annual report. In the main, the financial community is cited as the key audience – the growth in the inclusion of shareholder value references over the last couple of years bears witness to this. Sure, companies may also use the annual report as a wider marketing and information tool for other stakeholders but analysts, fund managers and retail investors are usually at the top of their thoughts in preparing the document.
That being the case, why do so many companies continue to get the annual report so wrong? Checking through a pile of this year’s reports – even from some of the world’s leading companies – makes for some sorry reading. Bland copy is generally the order of the day; the bulk of it completely retrospective in nature, rehashing information already in the public domain. Finding a report which truly communicates a company’s vision and strategy is a hard task.
Speaking to a few in the business of producing reports sheds some light on the matter. Fear is a central issue: the fear of pushing the boundaries too far and facing the consequent wrath of the CEO or other board members. It’s a fear expressed by IROs, IR advisors, design consultants and copy writers. And it’s a direct result of the fear of many senior executives that the annual report may just give away a little too much. ‘Fudging the issues,’ is how one copy writer described his experiences with many boards of directors.
Of course, one person’s giving away too much may be another person’s attempt to communicate. It depends which side of the fence you are on. If the printed annual report is to survive and prosper in today’s online world, then perhaps it’s time a few more people had the courage to face up to their fear of communicating. Those who have shaken off the phobia find it easier to make friends in the financial community.
