33 Don'ts - How NOT to use an annual report effectively?

by e.com
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  • Forget that the report COVER should be appealing, well-branded, inviting and work as a "book-opener"...
  • Don't keep the cover MESSAGE –or PROMISE. A turn-on that turns into a turn-off may not result into a page-turner. Pay special attention to the intro pages or section, but carry on further.
  • Do not feature the annual report on the IR homepage. Optimally, an AR might even have its own HOMEPAGE.
  • Publish a report just because it is mandatory. Reports as a NECESSARY EVIL don't give a thrill.
  • Publish the report more than 4-5 months after the fiscal year-end. DATED should not mean out of date.
  • Confuse QUANTITY with quality – or content with LENGTH. Reports longer than 200-300 pages in one book (printed or PDF) are often dumped by readers. No need to cut so many trees –whether on glossy paper or from the laser printer. Instead, find solutions: sum up, split among a few books/PDFs, link to supplementary online content...
  • Simply wrap a 10-K, 20-F or other IFRS only or GAAPish files. An AR fit for shelving rarely means one made for compelling reading.
  • Highlight EARNINGS but forget DIVIDEND. Don't laugh, many reports dare doing this.
  • Target potential INVESTORS and forget existing SHAREHOLDERS. Or vice versa.
  • Address the AR to financial investors only. Today's annual reports are also much read by large groups of other STAKEHOLDERS.
  • Forget key performance indicators. KPIs should not only be in but also be measurable, comparable, and consistent.
  • Make the report uncharted territory. Instead, CHART the course! Use infographics, graphs, charts, maps, diagrams...
  • Put too much emphasis -or too little- on EXCEPTIONAL items.
  • Use much corporate SPEAK, accounting JARGON, consulting LINGO.
    Speak in plain language, decode, make the AR intelligible.
  • Avoid the SHOTS. Stakeholders like to know and see who calls the shots, who is at the helm. Shoot (good) photos of the chief executive, the chairman, boards and executives.
  • Be low on lights. Highlights are the essence of reporting. A quick DASHBOARD is indispensable.
  • Focus on LAST YEAR only. The medium-term strategic perspective has become a major raison d'e?tre for annuals.
  • Leave all calculations and measures up to the reader? No, a good report should include as many RATIOS as possible.
  • Overemphasize a "4th QUARTER". This may just be another SECish fad for book-cooking or window-dressing. Prefer full cycle analysis.
  • Look back only. Looking FORWARD and getting an outlook and prospects is expected as much as last year results.
  • WRITE it by and for bookkeepers, accountants, auditors, lawyers, analysts. If each of them has to contribute, good copywriters and editors should polish up.
  • Rerun the same annuals' style and content year after year, with just the NUMBERS being changed...
  • ... Or change every year just to follow SUIT or fashions. And thus show a lack of consistency and character. An AR conveys a corporate message and ID.
  • Just COPY and PASTE a printed report on the web –or vice versa. Content may be the same online and in print, but the way to organize it may -or should- differ –and possibly bring extra value.
  • Appoint a famous DESIGN agency just because it is... famous. Big isn't always beautiful. Many come with an expensive template that dilutes clients' character. Search, compare, make a pitch.
  • Outsource the whole report process. An AR must not spin out of control.
  • Go for an entirely in-house approach. The NIH syndrome may prove harmful to reporting too.
  • Mix up creative reporting -which is good- with creative accounting -which can be very bad (remember Enron, a few banks, and more!)
  • Overlook READING facilities: contents, box, sidebars, index, glossary, tabs, search function, etc.
  • Report with fear. Cautionary statements are of course de rigueur (though there's no safe harbor anywhere) but report makers -the company- have to forecast, show ambitions, set targets.
  • Make the annual report DOWNLOADABLE in full only. Readers must get a chance to access each section, and, at best, to build up their "own" report.
  • Show the annual report to the CFO or CEO just before it goes to the printer. Highest placed officers should be involved at early stages.
  • Follow the crowd? No, follow reporting leaders and BEST practice!

List of Don'ts compiled by the e.com team of analysts, also based on external report specialists and analysts and investors' feedback.

Created 2010. Revised 2013, 2015.
© e.com - ReportWatch 2015.

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