Annual Reports – A wise investment?

Once the perceived cornerstone of investor communications, annual reports have taken a back seat to many other tools in recent years.  Nevertheless, “AR” preparation continues to occupy hundreds of hours of management time each year for the average mid and large capitalization company.

Is it worth the time? A quick answer is no, if you don’t use the report wisely. To me, wise use of the annual report means developing non-financial content that is insightful, detailed and makes your shareholders want to read every page.

Believe it or not, there are shareholders – institutional and retail – who do want to read your AR to understand your CEO’s vision and corporate values, discover how you help a customer meet a specific challenge and learn more about how your divisional executives are managing risk and adapting to change.

Unfortunately, those investors are often confronted with undifferentiated AR messaging, including platitude-filled, backward looking shareholders’ letters and end-to-end marketing sections that are rich in self-promotion and poor in communicating value.

ARs also have greater reach than one might imagine. AR content can be harvested to refresh your website and investor presentations, AR stories can spawn social media exchanges and your AR has the gravitas to colour and inform customer, employee and community perceptions.

Getting your public messaging straight through the AR process is also a great way to ensure your management team is on the same page with respect to strategy, opportunity and your corporate agenda.

There are many companies using their ARs wisely and perhaps yours is one of them. If not, with some creative forethought, it can be.

Here’s to an effective – and wise – 2012 AR process.