The Annual Report has Come of Age
The universally accepted definition of an annual report is as follows: ‘An annual report is a comprehensive report on a company’s activities throughout the preceding year. Annual reports are intended to give shareholders and other interested people information about the company’s activities and financial performance.’
The earliest example of a published annual report is thought to be that of an American company, U.S. Steel whose report in 1903 was certified by Price, Waterhouse & Co. for financial accuracy. Over a century later this yearly statement is a legal requirement for most small and large companies worldwide.
Basic Components of an Annual Report
An annual report is released at the end of a company’s financial year which can either be March 31st or December 31st. The statutory components of the annual report may differ based on whether the company is listed or unlisted, and other industry specific regulations. For listed entities the statutory disclosures are illustrated below.
Annual reports used to be staid, dull documents, prepared mainly to meet financial industry requirements. Today however they have morphed into highly creative, visually attractive publications which can hold their own on a coffee table or book shelf.
Additionally, a comprehensive, well designed annual report can serve a wider purpose than its original intention. It can function as a promotional tool, as a hand out to the media and as a backgrounder for potential clients and investors.
Many companies place great importance on their Corporate Social Responsibility (CSR) programmes and devote a section of their annual report to outline their achievements
A sustainability report is a report published by a company about the economic, environmental and social impacts caused by its everyday activities. Such report also presents the organisation’s values and governance model, and demonstrates the link between its strategy and its commitment to a sustainable global economy. Reporting guidelines and frameworks include the Global Reporting Initiative, Integrated Reporting, the Dow Jones Sustainability Index, the Sustainability Accounting Standards Board, and the CDP. The GRI Sustainability Reporting Guidelines/Standards are a leading benchmark for sustainability reporting, and so is the Integrated Reporting Framework.
Global Reporting Initiative (GRI)
The GRI is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption. The most recent of GRI reporting framework is the GRI Standards, launched in October 2016. Developed by the Global Sustainability Standards Board (GSSB), the GRI Standards are the first global standards for sustainability reporting and are a free public good. In contrast to the earlier reporting frameworks, the GRI Standards have a modular structure, making them easier to update and adapt.
The International Integrated Reporting Framework
An integrated report is a concise communication about how an organisation’s strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term. It means the integrated representation of a company’s performance in terms of both financial and other value relevant information. Integrated Reporting provides greater context for performance data, clarifies how value relevant information fits into operations or a business, and may help make company decision making more long-term.
The New Look Annual Report
Whereas in the past an annual report consisted mainly of text and financial data, presented in a straightforward manner, today we witness an impressive transformation of this erstwhile tedious but obligatory yearly documentation. For instance, great care and expense is taken with photos of board members and management staff, a theme is usually developed in advance and design teams spend hours creating top notch charts, graphics and original art work to illustrate the content.
Where the budget is generous some companies will splurge on specially designed envelopes or cases. High quality paper and glossy or novel eye catching covers have become the norm. Current trends include recycled paper, compostable paper, inclusion of a CDrom, digital versions and no doubt trends will continue to evolve.
While the visual aspect of the annual report is important, the text is of primary concern. Professional writers are tasked with compiling the copy and the editing and proof reading process is stringent.
What has placed the annual report in a category of its own is the competitive nature of the publication today. Annual report competitions resulting in highly sought after awards are much anticipated yearly events, where banks and large corporates vie year after year to add more trophies to their collection.
Design companies may rarely get due credit but the success of a winning annual report lies in the many hours of team work that goes into the production of a winner.