Do glossy annual reports serve shareholders' interests?
The latest annual report from Barclays Bank is a sophisticated example of eight-colour printing (this entire magazine requires only four), and comes complete with beautifully laminated (ie expensively produced) cover. Yet this is as nothing compared to Arig Insurance's most recent offering, whose 'every page is (in the words of Barclays' corporate communications manager Katie Finn) interleaved with handvined tracing paper'. What purpose - other than keeping designers, copywriters and repro houses in business - do such elaborately produced documents serve? Are they an invaluable ingredient in the investor relations mix or simply a means of wasting shareholders' money?
Paul Cooper, assistant to the company secretary at mail-order retailer Great Universal Stores, subscribes to the money-burning theory. GUS is of course notoriously minimalist in its approach to investor relations. For many years the only photographs in its report were those on the front cover. 'We simply don't see the annual report as a great exercise in corporate communications,' explains Cooper. 'Ours comply with statutory requirements and that's as far as it goes. Our selling documents are our four million-odd catalogues.' He sees no reason for this to change. 'We've had no negative feedback from our shareholders, either in correspondence or at the AGM. It's really not a problem. A lot of our shareholders simply look at the report for the latest dividend figure - then throw it in the bin.'
But annual reports may not be for existing shareholders only. Analysts, potential investors, business partners and clients should all be as interested in the company's future strategy as in last year's results, argues Vanda Marlow, managing director of consultancy CGI which designs reports for Reuters and Lonrho among others. That's why fine crafting is so important, she insists, pointing to MORI's findings that 70% of analysts use annual reports for information. 'Annual reports fall into two halves. To some extent it would be all very well to send out photocopies of the half with the balance sheet and notes. It's the first half that gets across the strategy. Of course you could convey the information in an old-fashioned telex but it wouldn't engage the reader.'
Over at rival agency Michael Peters, account director Charles de Haan puts a slightly different spin on things. It all comes down in the end to whether managers see the annual report as an expense or an investment.
'The acid test of a good annual report is when (the company) has to call on the goodwill of shareholders. The reason for putting a lot of money into an investor relations programme is to build up goodwill and understanding.' There'll always come a time when it's needed.
What a company which buys the essential-communications-tool argument can expect to spend on a high-quality document depends largely on the print-run. Consultants like CGI will typically charge a £45,000 design fee irrespective of the print-run. However paper and printing costs are what principally dictate whether the document comes out at around £7 a time for 20,000 copies or about half that sum for 100,000. But whatever a public company does in the way of annual reports is likely to cost a fair sum of money. Marlow would be prepared do a 'cheapo' report at an all-in cost of under £2 (for the larger number). Even Gussie's 75,000 penny-plain jobs cost Cooper 'something a lot better than £1 a copy'.