Good reporting? Don’t think so.

At first, Dominic Jones (aka @irwebreport ) just mentioned an article for UK magazine “Communicate” today, on ”What does good reporting looks like.” Then, he said he “liked” it. Being Dominic and being Annual Reports one (THE) pet peeves I have, I thought I would like it as well. No quite. And since it takes more than 140 characters to disagree with Dominic, here it is:

The short version: they are asking too much from a single (and already tired) channel. The ideal report should communicate the entire story in a “joined-up story linking business model, markets, strategy, KPIs, risk and material CR issues.” No less.

The long version: If you go ahead and ask AR professionals (design, consulting, etc) what they think “good” report should contain, you are bound receive the “ideal” report. That’s not even that great, since the AR pros are not users of ARs to begin with, so their “ideal” report is probably something that only other AR pros will be able to recognize and appreciate. See that I not even implying that they have a hidden agenda or anything. It’s probably their best advice and they are, I’m quite sure, all very experienced and acomplished professionals. But the piece completely misses the point. 

Moreover, this “good/ideal report” approach dodges the fundamental question: what do you want from the report you are producing? The number of possible answers to this question is as large as the number of respondents, of course. Do you communicate on an ongoing basis, using several (or, at least, a few) channels and maintain a good level of engagement? Well, you report is going to look quite different from the one of a company that keeps it to herself for the entire year. As it probably should. 

It validates my own opinion (no surprizes here, really) that Annual Reports are an overglorified and overworked communication channel that has, in its current form, limited usefulness. 



18 Respostas para “Good reporting? Don’t think so.

  1. Dominic Jones

    Sorry you stayed up late to disagree because I actually agree. Far too much emphasis is put on the annual report — and usually all of the production effort is put into the wrong things (fancy pantsy feature stuff instead of the financial disclosures.)Design firms glorify annual reports. They typically blow their clients’ budgets on things no one cares about and which quickly become stale. They do this because ARs often are their only opportunity in web-based financial communications to demonstrate their design prowess and skill with Flash. Annual reports are good for their egos, but the results of their work typically are useless to anyone else.However, most of the people quoted in the Communicate Magazine piece I mentioned are not of this ilk. They know their stuff, and mostly they do good work, when their clients let them. Unfortunately, the article doesn’t include commentary from the world’s best online annual report producers, namely Nexxar. I like what Nexxar does because they’re not about design, whizzbang, branding or marketing. They produce reports for serious analysts and investors. They focus on making the financial statements, footnotes and MD&A as usable as possible. Their reports focus on user needs and support current shareholders as well as prospective investors, who will use annual reports throughout the year (perhaps for the lack of a suitable alternative).What Nexxar does is validated by a variety of research reports I have seen over the years on how investors use online annual reports. This research isn’t based only on opinion surveys or focus groups. Rather much is based on what investors actually do as evidenced in web server logs. These studies go back to 1999 and as recently as last year. They’re from academics, various vendors and my clients. And they all show basically the same things, with a few regional variations. People do use good online annual reports. They are used most intensely immediately after being posted, but they continue to attract people throughout the year. The early users are current shareholders and the long tail consists of prospects. But, you’re right, none of them give a damn about funky design or Flash.

  2. Luis Fernando Oliveira

    So I’ll have to continue to try and find a way to disagree with you, as I really liked your comment. Thanks!

  3. Maybe its inappropriate to join this discussion? But, I really liked what I read and thats not only because of the Kudos Dominic gave our work. I agree with both of you, that AR need to focus on what their original purpose is: its about REPORTING! And on the web (re)search, interactivity and how you can reuse the data are even more of a natural allies than offline. For me (and its a pitty Communicate Magazine still didn’t notice us) A good online report focus on how make data easily accessible for the users. Between 10-20% of users within our online reports enter a search term during their visit. In most of our reports the Financial Statements are the most visited page right after the welcome page (which everybody has to pass). And in all our reports Fin.Statements are one of the Top 3 hits. Also interesting well used: Excel Downloads and (on those reports we offer) our bespoken reports/subjects aproach. This statistic includes 23 online annual reports. Coming from this statistic I frankly do not understand how some vendors still offer what they call “hybrid report”: not including the most important part, the Financial Statements. Incorporating those as PDF is just missing the point but it is enough to be part of the game. In the last 2-3 years especially in the UK there has been a hugh fuss about online reporting and some companies just want to get those brownie point offering one on their website. As Luis points out its natural for an vendor to stand behind his product! True, but maybe I can explain a little bit where I come from. After studying business administration and a one year banking-traineeship I ended up as stock research analyst. There I realized the importance of manipulating data for analyst models. Lots of my collegues where retyping figures they found within ARs or Interims into their spreadsheets.Later I got the opportunity to setup something new with the best IT expert I ever met, who mercifully is my brother! This mix of knowledge and dedication still is our key driver. And our main problem is the lack of awareness of what is important within online reporting: It still is about reporting not showing-off! Thats one of the reasons why I decided to start tweeting last summer…

  4. having being on the vendor side, my experience is that annual reports are often used by IROs to qualitatively judge their input, because tying a stock price into an IROs KPI is just cruel and unusual. Design agencies do not really understand the usability of annual reports, nor that it is a document to be re-purposed. Legions of print designers, pms and typesetters do not understand the direct relationship between the face financials and the (foot)notes, and do not design or build interfaces in print or online, accordingly.Some firms that begin to add Excel sheets, do a straight copy from the HTML resulting that Excel sees the figures as text, and cannot do calculations.I don’t think people expect a mini-Bloomberg terminal in HTML, but reports must be seen as working documents in which extraction and repurposing, even Cannibilisation, is Key.

  5. Luis Fernando Oliveira

    Great comments from both @thomasros and @derekabidinor . I shall post my own more substantial contribution this evening.

  6. Stefan Pettersson

    I agree 100 % with Luis that the annual report is overworked. The other day, I spoke to a user of annual reports about the move to online reporting. He said that it didn’t matter much to him, because he doesn’t read annual reports anyway… Well, it turned out that he usually reads the CEO comment (and the notes to the financial statements…), but others have told me the same thing. The information is “dead” as soon (or before) it is published. I also agree that many companies’ (and agencies’) ambitions are misguided. Often, the goal is to make the annual report relevant to basically everyone (employees, customers, suppliers, etc.). I believe that the annual report will become a more focused document. Why spend so much effort on describing the business landscape, strategy, business model, etc. once a year in the (static) annual report? These are the areas that the guy I met the other day didn’t care to read because it is “old information”. Why not use other channels to a greater extent to communicate this type of information, make it more dynamic and establish links to the annual report, which is more focused on activities during the year and performance? Obviously, there are regulations you need to adhere to, but there is significant flexibility. It would be very interesting to hear your thoughts on this.

  7. Thanks for sparking the discussion Luis,I think it is a timely and relevant subject for IR professionals.Expectedly, with a topic like this, many commentators will latch on to the particular side of the elephant that their work and professional experience exposes them to. This is both a caveat and a strong selling point for each view.I have great admiration for the online work that agencies like Nexxar and Investis produce and I am also a huge fan of the hard copy output of houses like Radley Yeldar and Merchant.My tendencies are agnostic as regards the form. The ultimate goal is to reach investors and educate them about the company in the period under review.However, I do have a few questions that I would like to throw into the ring:1) Are design and disclosure diametrically opposed? Reading some of the commentary, one may be misled to think so. I do not think that any one seriously thinks design is about glossy paper or photo-shopped images. 2) In some markets, like Nigeria’s, emphasis on an online version of the annual report may actually limit access for most shareholders who may not have access to extended Internet viewing or printing facilities. 3) Tipping off from (2) above, in markets like Nigeria, where report narration has not yet grown to full maturity, I would prefer to focus on the scope of subjects covered, their connectivity across the entire report and the presentation of the narrative. As with all learning, encouraging company executives to improve narration quality and presentation is far easier with the hard copy. Convincing them to do that and online reports all at the same time may be futile. Several of these companies do not even have their own corporate websites. One thing at a time. Imperfect but pragmatic.4) I think the effort of AR preparation is just as demanding on executives for online as for offline versions.5) I am afraid that sometimes I get the impression, false I hope, that the issue is being degraded to an either-or divide, which may not be very productive. I hope I am wrong here.I have just written a blog post on the subject titled ‘The Scorecard Aesthetic: Rethinking Annual Report Design’. The post may be read here: the post, I deliberately avoided covering online reporting for companies on the Nigerian Stock Exchange since that are not a first order priority or reality for these companies. For most developed market companies’ online reports, the bug issues are PDF reports, poor navigation, and download configurations and formats (what Derek Abdinor aptly refers as repurposing and extraction) . In markets like Nigeria, we are not even there yet. I preferred to start from the ground up.There is one issue I would like some of the commentators to expatiate on. For instance, Stefan Pettersson envisions a dynamic reporting culture to replace the current static practices. I would like to know more about how that would work in practice and the new demands that places on companies.I have been stimulated by all the intelligent and lively comments on this post and look forward to reading more soon.Once again, thank you for providing the match to light this debate among peers in this context.Obi Tabansi Onyeaso

  8. Luis Fernando Oliveira

    I had this entire comment to post that I was writing in my head the entire day, as I say the comments everybody posted (pretty awesome discussing, imo.) Problem is, @stefanpetter did somehow post my opinion before. And he also wrote it better than I would. So, let me add to what Stefan said (and this is my own opinion, not his fault): people try to use “dead information” (do I love this image) to build a report that must be all and say all to everybody. And the information is dying as the document is being produced. Investors are concerned about context: where is this company coming from, where is it trying to go to, what are the conditions and the environment. Sit down to write it down for more than a few weeks and IT IS GONE.Now, I can appreciate the value of a snapshot of a moment in time, the state of the Co. at a given day of a given month of a given year. But you should not wait your Annual Report to make data accessible, or searchable, or downloadable. If data is already being properly treated, who cares if you produce a year-end snapshot or not? Really! If a company is providing this context throughout the year, the Annual Report could be just this regulatory obligation.

  9. Dominic Jones

    Luiz, you’re assuming that the audience is following you throughout the year. They’re not. Your biggest audience doesn’t even know your company exists. But when they do discover you, they’ll almost always turn to your company’s annual report because, well, there’s not much else on the typical IR website that can give them that snapshot quite like the annual report does. If there is content provided specifically for new visitors, great. But often there isn’t.Second point is that the structure of annual reports are well understood by investors, analysts, journalists and other researchers. If you’re one of these people and you need to look up a specific fact, it’s often easier to just go to the annual report and find it there. This is simply a factor of IR websites being so poorly designed. We can wax lyrical about what should be or we can focus on what is. Right now, a Nexxar-style online annual report is a big asset to an IR website. There’s simply nothing that compares.

  10. Luis Fernando Oliveira

    Not quite my assumption, Dominic (guess we finally disagree!) Of course you must have “entry points” for people that never heard of your company. And, of course, you could call this entry point an “Annual Report” if you want. My point is simply that is thing that we are discussing is a very different animal from the normal, usual document that we all grew accustomed to, And, man, very, very different from what the pros discussed on Communicate Magazine.

  11. Luis Fernando Oliveira

    @obionyeaso (please, tell me if Obi is a first name.) This discussion is fun, ain’t it? Let me tackle your questions: 1. Absolutely not, design and reporting go hand in hand. And I’m guilty as charged of using the term design loosely as a short for vacuous and pretentiously decorated report we see. You are absolutely right, disclosure is only to gain if accompanied by design;2. Of course you know Nigeria and I don’t. But I’m from a less developed market as well and I can tell you that, in Brazil, internet penetration already is very high, even among the poorest and broadband is growing by leaps and bounds. It may not be there yet, but I would advise you not to blink;3. Again, the bar may be low now, but companies placing these kinds of bets are doing at their own risk;4. Agree. And TOO demanding to too small a result, in my opinion;5. Yeah, I push it. That’s the fun of it. I sure will read your post (already on Instapaper).

  12. Dominic Jones

    Answering some of Obi’s questions:”1) Are design and disclosure diametrically opposed? Reading some of the commentary, one may be misled to think so. I do not think that any one seriously thinks design is about glossy paper or photo-shopped images.”No, they should support one another. The best disclosures are well designed. But there’s a big difference between information design and aesthetic design. Most annual report producers at design firms can’t read an income statement. They have no clue what’s important or what isn’t. So how can they possibly know how best to design the things for users. That, fundamentally, is the problem I was referring to. People who don’t know jack about the content or how it is used wasting their clients’ money on stuff no one cares about. And that’s more common than good information design.”2) In some markets, like Nigeria’s, emphasis on an online version of the annual report may actually limit access for most shareholders who may not have access to extended Internet viewing or printing facilities.”I don’t have a problem with well-designed printed reports. Printed annual reports to shareholders *can be* excellent communications and relationship tools. Unfortunately, companies have bought this “the information is old, no one reads them” argument and now think it’s ok to send their shareholders rubbish that’s either illegible or meaningless bumpf, all in the interests of saving money. Meanwhile, they have no other surefire way of communicating with their shareholders. Can you imagine anyone else in a marketing role in a corporation getting away with sending something like a 10-K wrap as the only contact they ever have with their stakeholders in a given year? They’d be fired. Yet, this is what more than half of NIRI’s members do. It boggles the mind.Online reports are used for different reasons than printed ones. They’re not marketing documents, they’re reference resources and alternatively a mediocre way for prospective investors to learn about a company they’re unfamiliar with. Before the web, printed reports also were reference documents, but now not so much.”4) I think the effort of AR preparation is just as demanding on executives for online as for offline versions.”An online report, if properly done, is at least twice as hard to produce than a printed one. There’s an extra dimension to think about and it should permeate everything in the report. Online reports shouldn’t be web versions of the printed document, they should be something completely unique.

  13. Thanks to both of you, Luis and Dominic, for weighing in on my questions,Perhaps Dominic’s observation that online annual reports can be ‘at least twice as hard to produce as a printed one’ may be another obstacle to widespread adoption. It does not just require willing executives at a public company, it also requires experienced web developers or else all we would have achieved is to the bad habits to a new medium. BTW, I found this South African site that hosts several online annual reports. Which makes me wonder if there is the possibility of online annual report templates being shelf sold by vendors, the way site templates are sold by , for example? Would that be a solution for adoption or not? At the risk of falling into the semanticist pool, is there not a big difference between ‘aesthetic’ and ‘cosmetic’. It appears that the distinction which Dominic draws between information design and aesthetic design equates aestheticism with cosmeticism. I would say there is a big difference. I deeply appreciate the time you both gave in responding to my questions.Thank you.Obi Tabansi Onyeaso

  14. Stefan Pettersson

    Perhaps the reason why so many people don´t read annual reports (online or printed) is their low quality. The annual report should give investors an opportunity to view the company through the eyes of management. Most don’t even come close. Usually, companies will spend a lot of time on the CEO comment, the business landscape and the strategy sections. But the links to the rest of the material is often very weak. There are no clear connections to important value drivers and key performance indicators. These are the links that investors want to understand. I like David Phillips’ views on this ( There is a lot companies can do to improve their printed reports. Dominic, I agree that a good printed annual report can be very useful. In Sweden though, more and more companies are dropping their printed reports. This trend is accelerating. Many have started sending out printed “annual reviews” instead (as a complement to the online report), something that many shareholders do not appreciate. I have commented on this here When companies move to online reporting, they will often also revamp their corporate website. Questions then arise as to the role of the annual report vis-à-vis the corporate website, including the IR section. It is very clear that the annual report is being reexamined. This is a slow development, but I think its importance will diminish.

  15. Stefan Pettersson

    I forget to mention that I also really like @Nexxar. Their approach to online reporting is spot on and I have learned a lot from them.

  16. @irwebreport @derekabdinor @stefanpetter @obionyeaso your thoughts on corporate reporting outshines most of what I read on this issue so far. This comprehensive, disruptive and thought-provoking discussion would adorn any R&D department of a financial reporting agency! Though I doubt such ideas are discussed in agencies into that detail at all. (Regrettably, also not at Nexxar).Looking at the views (currently 413) of this post, just after 2 days – even though its Sunday – this tells: “Annual Reports are a very hot topic!” Its a brand, almost everybody knows and thats its biggest asset. When checking out data on IR websites what can you rely on? Technically continous reporting on a website using XBRL shouldn’t be a problem. Implementing XBRL on all stages of your accounting, including your Auditor could easily include a gateway where you can update data seamless on your website right when its generated. Is that what you have in mind Luis? Lots of data, brand new and absolute pure. But I think this is not all corporate reporting is doing. There are more aspects involved than just publishing of data: Management needs to explain and justify what they have done and why figures turned out that way. In the way this is done readers also get a lot of additional information! Doing so takes lot of time and management attention, which makes it necessary to be planed periodical. I also like the aspect being able to check back what has been published on a specific time in the past. Of course continous reporting could offer a kind of frozen status of the past, though this seems anachronistic.I agree with you Stefan, the reexamination of the Annual Report is happening, but I doubt its importance will diminish.Thank you again for all your thoughts, which are very important for our work! Looking for more to come.

  17. Stefan Pettersson

    @ThomasRos I guess a more focused role might actually increase the importance of the annual report for investors. I really like the possibilities a web based report gives in terms of highlighting the linkages between critical information categories (business landscape, strategy, execution and performance). But most online reports don’t even make use of hyperlinks – I find that strange.

  18. Luis Fernando Oliveira

    @ThomasRos I guess that part of the problem I personally have with the AR is exactly what you’ve identified as the biggest asset: it’s a brand, and although is well known, it’s a lousy brand, waiting for a complete makeover. And this discussion has made this even clearer to me. No doubt that management to explain and discuss (not sure about justify) past results. But this not only can, but should be done on an ongoing basis, not in an arbitrary one year time frame. If your company operates in a sector that has a multi-year cycle, for example, why not use the cycle-to-cycle comparison?

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