Trends in Annual Reporting

We often get asked by our clients about what the trends are in annual reporting. Sometimes I wonder why, because most actually stay on their conservative paths. But some brave few follow through and strive to find more effective ways to communicate with their shareholder base.

Some of the trends currently playing out have actually been quietly influencing reporting for a few years now, but others are quite new a little more radical.

The greatest shift is that because the structural rules are now so few, it has become possible to approach every company’s report with a blank sheet of paper and create a unique plan that is bespoke to the company’s situation, needs and philosophies rather than the straightjacket of what most companies still sense that an annual report should be, based on historical tradition.

Let’s whip through some of the more notable trends. 

Summary

1. First principles: It's about the Investor Brand, at its core. The report is merely a component in a much bigger strategic year-long communication plan, which in turn should be designed as part of a longer-term Investor Brand plan. All annual reporting decisions should align back to this touchstone and not be made in isolation.

2. Anything goes. Now that regulations no longer dictate a prescribed format, what each company does for their annual reporting depends on the company, its view of the world, its appetite for best practice communication, its register make-up, its size, what its peer group are doing - and most commonly, the proportion and influence of its retail shareholder base vs its institutional investor base. Because the legal requirements really only apply to the financials and compliance components, the opportunity for communicators is to approach how they choose to tell their investment story in many different ways.
3. Integrated Reporting (see in-depth blog lost on Integrated Reporting) is making traction and more New Zealand companies are actively exploring this to some degree. It requires a major change in thinking. But transparent reporting of all material issues, and their future effect on the company's longer-term outlook, are factors that will grow in importance and become more and more expected, whether labeled as integrated reporting or not.
4. Storytelling continues to mark the best practice reports - the back stories, the human impact, the strategies, the emotional connection. But not all companies agree that this approach is appropriate to them.
5. Online is important, but there are many ways to skin that cat. But the important point to register is that online is a 'pull' channel: people have to make the effort to go there for it to be effective.
6. The opt-in gap is a real one. The percentage of shareholders who opt in to receive a copy of the annual report averages around 10% of the shareholder base internationally. The company must decide whether the 'push' channel necessary to plug the 90% gap of unengaged shareholders is a viable one for them (i.e. a printed/mailed Shareholder Review/ Annual Report/ Newsletter), or whether that investment doesn’t provide a meaningful return.