Is the printed annual report on its way out?

Will the printed annual report become a thing of the past?

Corporate reporting makes the migration to online.

After his department won 2014 Report of the Year Award in the non-commercial sector of the recent Australasian Reporting Awards, the Auditor-General of New South Wales, Grant Hehir, said something telling.

“We hardly print documents anymore. We’re at the point where the majority of users don’t want a piece of paper – it’s a waste.”

Publishing annual reports online, he noted, is “less expensive and more user-friendly in that you can package it in a way where the user can determine how they dip into it”.

These are words that send shivers through contract publishers, traditional graphic designers and mailing houses. Producing glossy, printed annual reports is lucrative.

But is it sustainable?

Mass migration to online annual corporate reporting seems irreversible, and the reasons for this are many.

One of the biggest advantages of online over print is that web analytics software can track how content is used and read, allowing companies to see which areas and pages are most popular.

As a rule, experienced investors seek current and forward-looking information, whereas new investors are also interested in contextual and explanatory information.

Regardless, research by University Leipzig in Germany has found that 96 per cent of all investors use the web to gather information about a company they want to invest in, and the more experienced the investor, the more important a HTML report.

According to Viennese online reporting specialist nexxar, good online design means access to everyone: content that can potentially reach target groups previously excluded.

Further, interactive and multimedia elements more actively engage users, while direct links to corresponding content enhances usage. Effective navigation architecture can also aid orientation and information-searching and, of course, interactive charts make plain figures more engaging.

Most companies know this, which is why more are using QR codes in their printed annual reports in an attempt to drive stakeholders online. Some are even incorporating multiple codes, so that in addition to smartphones linking to the main report, they can access sections of specific interest, such as sustainability reporting.

The small screen

The jury is still out on whether the relatively small screens smartphones have are ideally suited for online reporting. According to nexxar, only 5 per cent of users in 2012 viewed an online annual report using a mobile device – still a significant increase over the 2 per cent seen in 2011.

Few might want to navigate hundreds of pages on a phone or even a tablet, but that might be missing the point. Online reports are rarely browsed linearly, page by page. Instead, they’re generally used selectively to search for information directly relevant to a recipient’s interests.

Nexxar believes responsive web design (RWD) will grow demand for platform-optimised reports, though whether mobile traffic is currently sufficient to make it mission-critical is debatable.

While they can hang around forever on the web, for most purposes, irrespective of format, by definition annual reports have a one-year lifespan.

A PDF is still the most ubiquitous format for online annual reports, and although certainly not the sexiest, it does have advantages in terms of affordability, ease of production and printing for offline reading. On a screen, however, despite navigational bookmarks and a search capability, a PDF does not provide the most rewarding reading experience.

One of the biggest advantages of online over print is that web analytics software can track how content is used and read, allowing companies to see which areas and pages are most popular. 

Far more reader-friendly are stand-alone HTML microsites, which through the use of audio, video and various interactive elements, can realise the full potential of desktop and tablet devices.

A downside is that because they are development-intensive, they’re also relatively expensive and not really conducive to printing.

However, as nexxar CEO and founder Thomas Rosenmayr emphasises: “If it can’t be found, it doesn’t exist.” While it’s true that PDFs can be search engine-optimised, they are indexed only once, whereas HTML reports are referenced hundreds of times, making them much easier to find.

Another plus is that depending on their search terms, users can be directed to specific parts of a report. But again, all this requires a lot of architectural input, such as cross-referencing with hyperlinks and astute tagging of HTML code.

And it is not without inherent risk.

Australia has had a continuous disclose regime for almost 20 years, with many companies lodging their annual results using the preliminary final result form, rather than waiting for the long, detailed financial statements to be completed. Indeed, they are required to release the results as soon as the information is available.

According to Brisbane-based accounting standards and external reporting expert David Hardidge, the important aspect to remember is that the information is based on systems that have been audited during the year, as well as other adjustments and accruals and detailed disclosures that will be audited.

“It is important that users of annual reports know what has been audited and what has not,” he says.

“That certainly becomes far more difficult with the information being online and users linking from unaudited areas of a company ‘telling its story’, and then possibly moving to audited financial results.”

Some companies, unwilling or unable to invest in developing a microsite, have turned to a “flipbook”, where a mouse is used to turn pages, emulating the experience of reading a book.

Although less expensive than a microsite, it’s still far more costly than a PDF and well short on some of Adobe Acrobat’s practical advantages.

Whatever the case, best practice dictates online annual reports need to be more than just repurposed print documents.

All hail the hybrid

One option is to cater to different audiences by publishing content in a hybrid format.

One option is to cater to different audiences by publishing content in a hybrid format

One option is to cater to different audiences by publishing content in a hybrid format; for example, HTML for the front section and financial statements as a downloadable PDF.

The international trend among some companies to “bells and whistles” online annual reporting is certainly a far cry from the financials statutorily required to be made available to shareholders.

In Australia, this is information that has to be lodged with the Australian Securities Exchange (ASX) and Australian Securities and Investments Commission (ASIC).

Although some annuals do include HTML versions of financials, Hardidge says in Australia having anything in the statutory minimum that is not in a print-like format (PDF) – for example, embedded video – makes it difficult for it to be stored and perhaps retrieved by future investors. As a result, documents tend to be static, “point in time” shots.

“This goes against the online medium, where there is a desire for the information to be regularly updated,” Hardidge says.

“As a company undergoes changes, such as expansions and reorganisations, an online annual report can be updated.”

Interactive annual reports may be a great way to bring companies to life, but that is only part of what can be achieved, he maintains.

“Users of annual reports need to be able to make their own analysis of a company’s performance,” Hardidge says.

“This is usually done by using the financial report to undertake some sort of ratio and trend analysis. Having a company tell you it made a $10 million profit and that it was a really good result is one thing. Making up your mind based on your own analysis is another.

“With printed financial reports, or those using electronic paper [such as a PDF], you usually have to retype the data into a spreadsheet, taking time and increasing the risk of error, or purchasing programs to help. There is a technology available, XBRL [eXtensible Business Reporting Language, known as interactive data in the US], to allow financial data to be ‘tagged’ like using barcodes, and then to extract that data.”

Unfortunately, while available on a voluntary basis, he says it is still not widely used in Australia.

Although organisations are under no obligation to do more than meet the reporting requirements of the Corporations Act 2001, Hardidge believes there is now an expectation for listed companies to do more.

“I would like to see more focus on XBRL,” he says.

“Of the 10 largest stock exchanges in the world, as at January 2014 five had XBRL projects implemented or in progress. It just seems antiquated that in Australia we cannot automatically extract financial data from financial reports electronically.”

Nonetheless, Hardidge believes a growing number of companies will inevitably migrate to the richness of the online medium.

How effective they are, he says, will depend on why some websites are more successful than others. Enabling feedback from users is a key, but it seems that in Australia greater use of interactive data is an imperative.

10 tips for trending online

  1. Ensure consistent branding across all corporate livery, with a link to the annual report on the company’s home page
  2. Search engine optimisation (SEO) and XBRL
  3. Responsive web design to provide optimal viewing, regardless of device
  4. Cross-linking of related content (a brief overview, for example, linking to more in-depth information, including PDF and Excel downloads for financials)
  5. Use analytics to identify key areas of reader interest
  6. Clearly segment content
  7. Provide the richest reader experience possible through video (perhaps an introduction from the CEO) and other interactive tools, and consider new search features such as find-as-you-type
  8. Be realistic about the time (and money) it will take to build and review an online report
  9. If you’re still printing hard copies, incorporate QR codes to wean stakeholders off print and drive traffic online
  10. Remember that what works in print may not online: Graphics and typography must be suitable for the web

October 2021
October 2021

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