What’s blossoming in the annual reports garden

Like rose growers investor relations teams introduce new online varieties each annual reporting season, but which are this year’s sturdiest stock, Scott Payton asks.

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Investor relations departments tend to take a conservative approach to most aspects of online communications. The format of many corporate IR sections has stayed fundamentally the same for years. But the annual report is one area where IR teams have been happy to experiment online. Indeed, digital innovation is more vigorous during the current annual reporting season than ever.
So, what are the latest trends in online annual reports? And, most importantly, which approaches are proving to be the most effective?

Who reads what

Effectiveness, of course, depends on the needs of the audience – or, rather, the report’s multiple audiences.

In our analysis for the FT Bowen Craggs Index of online effectiveness, we divide investor relations audiences into three groups.

Analysts and fund managers who already know the company

  • They want quick access to the latest financial results data above all else.
  • Analysts and fund managers researching the company
  • They are looking for background information about the business and its sector as well as results material.

Retail investors

  • They are likely to be older, to have more time, to appreciate attractive features in reporting material, but be unable to understand the jargon analysts are comfortable with.
  • For some companies, retail investors double-up as a large and important group of customers.

Investment professionals and retail investors also want different things from an annual report.

  • Crucially, professionals tend to want detailed data in a simple format, while retail investors are far more likely to appreciate high production values, editorial colour, video, animation and other bells and whistles.

In simple terms, this means that professionals tend to prefer a PDF version of the annual report, perhaps accompanied by downloadable Excel spreadsheets – which in turn means that an effective online annual report is likely to be one that focuses on serving retail investors.

An online report that tries to please both groups risks being too staid and technical for retail investors and/or or too light and frilly for professionals.

Flawed formats

  • Online annual reports have appeared in many forms over the past decade or so, including…
  • ‘Interactive/’page turner’ PDFs: cheap and quick to produce – but usually cumbersome and crude.
  • Flash-powered online reports: potentially aesthetically appealing – but useless for those who can’t run Flash software on their device.
  • Hybrid PDF/HTML reports: in theory, the best of both worlds – but in practice confusing and awkward to navigate.
  • An HTML annual report microsite: universally accessible – but expensive and time consuming to produce.
  • In 2013, two recent and growing trends stand out: the annual report as a tablet app; and the annual report as an online magazine.

Tablet app reports

German engineering and electronics group Siemens is among a growing band of companies to provide an iPad app version of the annual report. Its 2012 iPad report has three major strengths.

  • Because it is downloaded ahead of use, videos play instantly in high resolution, even when the user is offline.
  • Navigation, purpose-built for the iPad, is smooth and intuitive – more so than the web-based version of Siemens’ 2012 report, which employs an awkward ‘page turner’ PDF format alongside HTML content.
  • Everything looks sharp and appealing on the super-high-resolution iPad’s screen.

But there are also problems with the app approach.

  • At 582 MB, the iPad version of Siemens’ 2012 report is a large and thus potentially lengthy download.
  • Siemens, like many companies, does not offer an Android version of its iPad app report. Retail investors who don’t own one of Apple’s tablets are likely to feel left out.

Magazine reports

US medical devices and pharmaceuticals company Johnson & Johnson has an online annual report 2012 microsite that is striking in a variety of ways.

  • It employs responsive design techniques, which means that it automatically reconfigures its layout and navigation mechanisms to work and display well on all screen sizes, from smartphones via tablets to desktop PCs.
  • Its home page is set out like an online magazine, with sharply written headlines and reportage-style photographs to draw the visitor in.
  • It is full of video material, from the chairman’s introduction to appropriately short mini-documentaries on corporate responsibility initiatives and patients’ experiences using Johnson & Johnson products.
  • Johnson & Johnson’s online report is not perfect. Some content, such as a large static ‘infographic’, does not display well on a smartphone, despite the responsive design technology. The use of frames/always-viewable navigation menus increases the need for users to scroll down pages to read through text. And the navigation is a little confusing at times.

But there are substantial advantages, too. Unlike an iPad app, this annual report microsite is accessible to users of all online devices. And it has just as much video content and other engaging ‘rich media’ features as its iPad-app counterparts.

So how, if at all, does Johnson & Johnson cater for professional analysts and fund managers via its annual report magazine microsite? Click on ‘Financials’ in the main menu and you are taken to a page of links to results data and related ‘hard’ information in downloadable PDFs. Even at the cutting edge of online investor relations, some things, perhaps wisely, remain unchanged.

First published 03 April, 2013
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