Annual report: Necessity, Explanation and Pride

It’s September, the nights are getting longer and the company’s figures are starting to take shape. In short, for many companies the annual report season has dawned again.

My colleague, Bart ter Steege from Jungle Minds, posed a question in an article a few weeks ago asking if you’re ready for the annual report season?. The article’s central question is: what degree of added value does the internet offer you to optimize the functions of an annual report, and which companies are doing a good job at it? 

The three functions of the annual report

Joost Steins Bisschop, Jungle Minds colleague and columnist at Het Financieele Dagblad, expresses it well: ‘The annual report has three basic functions: Necessity, Explanation and Pride.’ Necessity contains the legally required figures and accountability. Explanation offers clarification, elucidation and interpretation. And Pride offers information about the company, its people, success stories, new products, and is also the part of the report aimed at corporate branding. Whether you develop a print version or an online publication, the basic functions remain the same. 

Print & Internet = Printernet

A great deal has been said and written about the benefits of an online annual report. Does this mean that we no longer need to publish a print version? In any case, no one is obliged to publish a print version any more. In my opinion, the choice depends primarily on your target group and your budget. A large group of financial experts and shareholders still prefer to thoroughly read the annual reports in print rather than on screen. However, the internet can inspire new target groups, such as employees, job-seekers and clients to gather financial information.

If the online annual report is merely a website with a navigation structure, search function and identical information, then, in my opinion, it has little added value. So what does have added value? The best annual report is one offered offline and online, both of which cater for the three functions in their own way and reinforce each other. Not print only, not internet only, but printernet!

Necessity: online opportunities?

Necessity concerns legally required figures and accountability. Data, tables, graphs, texts – all verified by an accountant. This function will not vanish in the coming years. There’s even a serious chance that – due to the credit crisis – the call for transparency and unambiguousness in reporting will increase.

Internet’s added value?

• Transparency and comparison. Several years ago, XBRL  entered our vocabulary. XBRL essentially means that all financial information of companies has to be prepared according to fixed taxonomies (tags). This makes it possible to compare data across time and between companies. For several years now, this technology has been on the verge of breaking through, and it should be generally accepted within a few years. The credit crisis could accelerate this process since it has prompted more comparative and transparent reporting.
• Continual reporting. The Dutch company BlueFox is one of the few to publish a continuously developing annual report. As the year progresses, chapters are added on. When XBRL enters the scene, you could theoretically even turn to real-time reporting. Total transparency. But the main question is whether it will contribute to stability and confidence in the long term. 
• Separation of form & content. With the internet – unlike print – separating form and content is a simple technological feat. Once your database contains the correct data, you can basically do whatever you want with it. A table, a graph, selecting information – that’s all possible. See the Shell example below.

Shell annual report : separation of form and content. Select your own data and create tables, pie charts or line graphs yourself

Explanation: online opportunities

Explanation offers clarification, elucidation and interpretation. In my opinion, the internet is especially useful for attracting new target groups, such as employees, job-seekers and clients, and inspiring them to seek financial information. Not only in text format, but also by means of a relevant mixture of sound and image.

Internet’s added value?

• Video & animation. Video and animation have the capacity to present explanations and interpretations in an accessible and appealing way. Companies such as Danske Bank and Philips apply this in their annual reports in a highly effective way. The Philips annual report has an introduction video in which the CEO, Gerard Kleisterlee, presents the highlights in about five minutes – surrounded by splendidly animated graphics. And as the icing on the cake, Philips also has an ‘in-video linking’ application in which you can click onto background information in the video (see purple explanations below).

Philips annual report  : introduction video, with highlights and links

• Augmented reality.  This essentially means combining the physical and virtual worlds, frequently by mixing print and a mobile phone with a camera and internet access. Colleague and Managing Director of Jungle Minds, Geert-Jan Smits, wrote an article about the opportunities offered by augmented reality with appealing real-life examples. Would this be suitable for annual reports? I believe so. Imagine, you are reading a print version of an annual report and you can zoom in on a specific subject or chapter with your mobile phone and access background information through mobile internet and watch the video explanation (which was produced for the online annual report anyway). It might sound slightly ambitious right now, but it’s not unthinkable in 2015. 
• Service & support? If you order a product on the internet, you are offered support throughout the ordering procedure. Think of the following, for example: call me back, chat and contact forms. This is not something I have witnessed often in annual reports, but I do occasionally have a question that I may want to pose directly to the company concerned. Investor relations analysts might ask themselves: doesn’t this create a great deal of extra work, e.g. having to repeatedly address the same queries? That’s a good question. To prevent this, you can create a frequently asked questions (FAQs) page, organize online ‘question and answer sessions’ and, of course, be as clear as possible in the annual report itself.

Pride: online opportunities

Pride offers information about the company, its people, success stories, new products, and is also the part of the report aimed at corporate branding. In recent years, corporate websites appear to have put this function increasingly in the limelight. But does that also apply to the annual report?

Internet’s added value?

The annual report is a moment for reflection and looking ahead that recurs every year, but it’s also an opportunity to put your brand in the spotlight. As was the case with Explanation, here too it frequently concerns a combination of form (video/animation) and content. Philips makes subtle use of the central visual, as we saw above in the Gerard Kleisterlee example. The visual introduces with Pride a number of Philips employees and strategically important subjects (health care, energy efficiency). A click of the mouse opens a video player.

Philips: introduction visual that focuses attention on the company and its products

In conclusion, there are plenty of possibilities to produce a print and online annual report that both reinforce and complement each other. Printernet at its best. Often, trends and developments in the world of e-commerce appear to be good sources of inspiration. And Necessity, Explanation and Pride? They will persevere for a while longer...

There are no comments yet on this article

Post a comment

Your comment*

Name*


E-mail* (this will not be published)


Website


Anti-spam* (copy the characters)

Please fill in the required* information.