The use of visual aids (e.g. pictures, charts, schematics etc.) is a powerful way to convey key messages but it is important to get the balance right. In general, imagery should be relevant to the content and key messages of the annual report and accounts. Too many images may make the document too elaborate. Too few leave the document text heavy and unlikely to draw the reader in. Any photography should be captioned to explain its relevance.

Graphs, tables and charts should be used where possible to illustrate figures and these should be clearly labelled.

Here are some reports Comfi has made in order to illustrate this:

Front cover

While the design on the front cover should make someone want to pick up the report, it should also have a purpose. For example, use an image or strap line to illustrate a key strength or message.

Layout

Not all shareholders have time to review an annual report in detail; good use of bullets, short paragraphs, highlighted text, visual aides, graphics etc. that facilitate access to the information are to be encouraged. Most shareholders browse thorough the annual report, so critical information should be signposted, using quotes, boxed sections and colour to bring key messages to the reader’s attention. Font size should be easily readable, line lengths not too long with the text laid out in columns.

Here are 10 practical suggestions to help shareholders:

1. make sure contact details and web address are clearly visible in a logical place – e.g on the back cover. Provide a list of on-line links or other publications if necessary;
2. make sure the date on the front cover makes it clear which year end is being covered – e.g. 31 March 2011;
3. put company name and year end on the spine for easy reference when filed;
4. put company name and year end on every page in case individual pages are copied – particularly relevant when increasing use is made of online PDF copies;
5. make sure it is clear which section you are in;
6. make sure you adequately highlight the current year in text and tables;
7. don’t bind the invitation to the annual general meeting invitation and resolutions into the main report and accounts as shareholders may not notice it. If you do, make sure it is well signposted;
8. relevant reports and directors’ statements should be signed (and accompanied by photos where suitable) to demonstrate ownership and accountability;
9. differentiate the accounts section from the rest of the report so that readers can turn to it easily – e.g. use different colour, stock or a clear tabulation etc;
10. use dark tints sparingly as text can be difficult to read and impossible to photocopy.

According to a survey conducted by Forbes Magazine,  the printed annual report was rated top of 38 sources of information valued by investors . . . . . . while the web is the most used source of information for investors.

Readers don’t mind if they get it via the internet or via paper, the only thing we have to fear is . . boring reading.”

Start at the top. Begin the annual report with a letter or column from an organizational leader (chairman of the board, president or CEO). The executive’s message should provide an overview of the year’s activities and accomplishments. It should also summarize the financial performance in terms a general reader can understand. Where the chairman and the CEO have separate letters, divide out the messages. Consider a single letter ‘from the Chairman and the CEO’.

Studies suggest that readers consult as a priority the chairman’s letter! The most important elements of the story need to be in this section, including a reference to basic strategy. Strategy is the manifestation of the will of the managers, of their personality, values and aspirations.

Give credit where due. Include recognition for outstanding performance leadership and key staff members in for-profit organizations, or donors and volunteers in non-profit organizations.

Use a corporate message on the cover that increases the credibility of and interest in the company for the target groups. To produce a trustworthy perception and reputation that bolsters stakeholder support for the company, start the corporate story on the cover of the report.

Use a creative concept  with stopping power to strengthen your message and reputation. Use this on the cover and at the start of each chapter and use it as red line throughout the report.

• Make sure the key messages reflect the current and long-term concerns of analysts, shareholders, employees and other stakeholders as well as internal views and use this to guide the structure and content.
• Key financials, compared with the previous three or four years, and any other events that give the reader a quick summary of business performance should be communicated in one of the opening pages.
• As breadth and depth of management are considered key critical success factors by shareholders, biographies of the executive and non-executive directors are essential.
• Investors expect to find the detail on operational performance at divisional, market and geographic sector level in the annual report plus greater detail on financial performance.
• While a company has little choice as to the amount and type of financial information it has to disclose, it can determine what interpretation it presents to outside world, in particular ‘difficult’ material. Do not leave major items (falling cash flow, rising debt ratio) unexplained. It is vital to give the impression of being in financial control and not trying to sweep anything under the carpet.
• Do not use jargon or buzz words and uses either footnotes or a glossary if technical terms or acronyms need to be used.
• More generally, it is important to increase analysts’ understanding of what is driving sales, margins and costs. What are the five or six things your company has to get right in order to survive and prosper?
• As well as contact details for queries on dividends, share transfers, voting etc, the report should include a section that provides a history of the share price and dividend performance.
• In general, senior executive remuneration should be broken down into its fixed and variable components, with a reasonably detailed explanation of how the variable component is defined.
• The annual report should include an adequately full description of the key sustainability issues for the Group together with summary of key performance in these fields. Cross-references to other, more substantial materials, whether on-line or in other printed materials, should be included.