Aside from adhering to rigid regulatory standards, the primary obligation of an annual report is to provide existing and prospective stakeholders with information they can use to make informed investment decisions.
The financials component is a compulsory given (more about understanding and acting on this component can be found in CPA Australia’s recently revised A guide to understanding annual reports: Listed companies), but outside of this some organisations really struggle with their presentation.
Of course, not all have the budget or inclination to produce state-of-the-art publications that contend for accolades such as the Australasian Reporting Awards (ARA).
For the 2013 reporting period, Woodside Petroleum received the Report of the Year Award, with ARA judges pretty much summing up what constitutes a great annual report, remarking that Australia’s largest independent oil and gas company “had achieved its stated objectives of both meeting its compliance and governance obligations and providing stakeholders with easy-to-read information about the company’s operations and performance”.
They added: “This is a complete, well-balanced report: well structured, attractively presented and easy-to-understand.”
By implementing a few key processes, there is no reason why all companies should not be able to compile a transparent and user-friendly document that covers off all the key aspects of the entity’s performance.
Plan, proof and reap the rewards
The first mistake many make is to leave their run too late. Although there can be tangible benefits in appointing just one person to handle the document’s coordination (thereby avoiding the “too many chiefs” pitfall), belatedly realising that the reporting season has sneaked up and then asking one individual to start from scratch is not one of them.
It’s important to recognise that subsequent to the Global Reporting Initiative in 2000, organisations are expected to address a far wider spectrum of activities – the triple bottom line, TBL or 3BL – than they used to, and this can’t be properly achieved at the drop of a hat.
As such, advance planning the structure of a report is vital. Apart from the obligatory financial statements, organisations need to consider the corporate “story” they want to tell and which of their principals they want to tell it.
Creative use of “talking head” visuals is not only a good way to personalise an organisation, but a great means of communicating the challenges faced over the reporting period, efficiency achievements by different departments such as HR, IT, marketing and sales, as well as big picture items like M&A, improved corporate governance, sustainability and CSR.
The page count permitted for these different “chapters” could well be dictated by elements such as the stock you use, photography and printing costs. An increasingly explored alternative is to take the project online and provide hard copies only to those who specifically request them.
Although a smaller print run will result in higher per-unit print overheads, since the advent of the Australian Government’s Corporations Legislation Amendment (Simpler Regulatory System) Act 2007, there is an argument to suggest this is being more than offset by the ability to provide a much wider audience with all sorts of interactive material they can access anytime and anywhere.
The key here is to remember that if something is not good enough for print, it’s not good enough to be published online. Attention to minute company detail, the use of simple and understandable language and, above all, thorough proofreading, is essential.
The same scrutiny applied to company figures needs to apply to supporting copy. Obviously, whoever is charged with writing original – or sub-editing contributed – copy, needs to be on their grammatical game, but so too do the often numerous corporate principals that have to eventually review and sign-off on it.
It can be a convoluted and at times, frustrating and a seemingly never-ending process, but review deadlines have to be set, agreed on and adhered to.
This will avoid last-minute proofing changes, the ire caused if senior managers and directors are again forced to sign off on a substantial document and, more importantly, reputational and even legal damages if something happens to slip through the proverbial net.
6 ways to get it right the first time
• Plan well ahead of the reporting season
• Put in place a “set-in-stone” production timeline
• Review last year’s report and identify possible improvements
• Appoint a project leader
• Remember, it’s far more than a number crunch
• Revise and proof and proof again
Mark Phillips is a business writer who has assisted a number of organisations to compile their annual reports. In 2010 he consulted to Mission Australia, which was the recipient of that year’s annual Australian PwC Transparency Award (revenue greater than A$20 million).