Preparing an effective annual report - effectively

Preparing an effective annual report - effectively Marjorie Anderson FPRIA Dr Ron J Knight FPRIA Principals Anderson Knight Pty Ltd Suite 1, Level 1, 44 Bridge Street, Sydney

An annual report . . . Records the status of an organisation at a point in time – the end of the financial year • Financial status – assets and liabilities • Performance status • Achievements – with respect to objectives • Financial performance for the year • Sources and use of funds • Profit or loss

Why prepare an annual report? • Must do! – It’s a statutory requirement. • To be accountable to stakeholders for funds collected, funds used - and funds retained • To describe past activities of the organisation and its current situation • To identify future prospects, describe future plans and set performance objectives for the next year.

When to prepare an annual report? • Generally prescribed by statutory regulations • An annual report must be prepared and distributed to ‘shareholders’ or ‘members’ prior to an annual general meeting - within a prescribed period after the financial year ends. • Meeting the prescribed report distribution deadline adds pressure to the process!

Changes in Annual Reporting • Traditionally – reports were printed and mailed • Increasingly – reports are being distributed electronically by CD, DVD and Internet (website) • Listed companies can now provide electronic reports electronically via the Internet as a default – hard copies are provided by request only. (Simpler Regulatory System Bill 2007) • Electronic reporting by other organisations is increasing – subject to regulatory requirements – but hard copy reports are still necessary.

Print vs Electronic Reports • The two mediums are very different • Simply making a pdf version of a report and posting it on a website ignores all the navigation and easy access benefits of the electronic technology • On-line reports need to be designed to be easy to read on screen – i.e. small amounts of succinct copy with images and white space in screen-size sections • On-line reports need to be structured like a website with navigation buttons to move directly from place to place. This is an additional expense.

Print is still the mainstay of reporting- but for how long? • For large organisations with large numbers of shareholders the cost benefits of electronic reporting (and eliminating print production and mailing costs) are very large • (e.g. Telstra has more than 1.2 million shareholders) • But most serious readers still want to receive a hard copy – and do not want to have to print their own copy!

For small organisations . . . • While there may be cost benefits in posting an annual report electronically it may not be effective from a communication perspective. • The potential reach of the electronic report is small. Only those who have a strong interest will actually click onto and through a report. • A proper navigation system would help. • A hard copy report is more likely to be picked up and looked through - at least quickly.

This presentation . . . We will focus on the process of preparing content and arranging production of a hard copy report. Most of this work involves managing people, and managing content and presentation of the material in an agreed format – for management approval The processes for preparing a printed and an electronic report have much in common except for the final production and distribution steps.

Print reports have been changing tooReports are a formal requirement . . . but they don’t have to be too formal! • From staid traditional detailed (many pages of financial information) and boring . . . • To concise reports – that provide a short summary-style overview of the company’s operations and financial statements that make information much more accessible • To a magazine-style format – with many colourful images and brief chatty content to maximise interest and make the material easy to read and easy to understand.

Structure of an annual report There are two main parts: • Descriptive material – ‘public relations’ • Explanation and discussion of the organisation’s activities, performance and future prospects • Financial performance – CFO • Profit and loss statement – or operating statement • Statement of cash flows • Balance sheet • Explanatory notes – in conformity with standards.

PREPARING AN ANNUAL REPORT – TIME LINE

Plan content & formatRefer to the last report as a guide! Technical Specifications • Page size and orientation – portrait or landscape • Number of pages – multiples of four • Printing in full colour / spot colour / B & W • Text light (white space) or text heavy • Number of images • Quality and colour of paper.

Plan content & format Structure of Content • Index – for navigation - (plus a glossary of terms) • Overview – in the opening pages • Purpose, objectives, performance highlights • Review of operations or activities • Introduce with Chairman’s and CEO’s reports • Include statements about sustainability and CSR • Management • Governance, key people and personnel matters • Financial performance – (plus auditor’s report!)

Plan content & format • Identify the main communication objective (or objectives) for the report i.e. What are the important messages? • Helps establish an overall theme to guide the designer in establishing a look and feel. • Helps select the images for illustration - particularly the image for the front cover.

Requirements differ PROFESSIONAL ASSOCIATION • Accountable to members for • Funds collected and appropriate use of funds • Providing satisfactory services to members. CHARITABLE ORGANISATION • Accountable to sponsors, donors, members & volunteers for funds raised and used • To make a difference - for the cause Explain how people in need are now better off.

Assigning writing tasks An annual report has several authors . . . • A WIP statement identifying ‘who is to do what by when’ is required to manage them. • Some will respond well – others will be ‘slow’ • Provide guidelines - to make their (and your) task easier – you have to edit their copy! • Specify the topic and number of words required • Indicate (suggest) a basic writing style. • Set deadlines and follow-up relentlessly!

Agree design concepts • Unless there is an existing arrangement approach three graphic designers for quotes and concepts (for three sample pages) • Provide designers with a brief • Technical specifications • Purpose, objective or theme • Your own design ideas – collect examples • Review designers’ ideas with management, make modifications and select design/appoint designer.

Obtain/select illustrations • Discuss image requirements with the designer • Review images you collected during the year as potential illustrations • Seek images from other sources • Arrange photography – as required • Consider the use of charts and diagrams to illustrate performance or changes.

Collect and collate all material Putting it all together . . . • Edit material for accuracy, context (relevance), consistency, correctness and readability (The report must be internally consistent.) • Gain approvals from individual authors • Assemble the material - text and images - as a single document – including the financials • The more it looks like the final report the more seriously people will treat it.

Management approval- to submit material to the designer The more work done by management at this stage the fewer the changes required later. This will: • Lower the cost of author’s corrections! • Reduce time delays significantly • Reduce stress and make life more pleasant for you! BUT . . . some changes are inevitable as more people look at the report – and more carefully. – e.g. directors, lawyers, auditors.

Design - to finished art • Provide material to the designer in the designer’s preferred format • With a colour laser printer a designer can produce a draft that looks like the final report. • Your task is to proofread the whole draft to: • Make sure everything is there and in the right place • Check for accuracy and consistency – again! • Have corrections made – for a version for ‘approval’.

Management approval- of ready to print material • Report content has to be approved by the auditors and may also need solicitor’s approval • Time may be lost and additional costs incurred at this stage due to a flurry of late changes. • Managers do not focus on content in detail until ‘the book’ becomes a reality and the deadline for production is closing in! • Again . . . Your task is to keep ‘diplomatically’ reminding to expedite the approval process.

Management approval- of ready to print material • Have the graphic designer make changes as required • Then proofread to check • everything has been done as required • no errors have been introduced in the process of making changes • Thoroughly proofread the final material! • Get final sign-off approval by management!

Printing / production • Earlier you will have obtained quotes from printers and have selected a printer who can do your job when you need to have it done. • Obtain a printer’s proof to check everything is OK – particularly colours! • Get management approval for that – then print!

Distribution • Mailing to a database of members or other stakeholders – or emailing the URL for an electronic report. • Involves maintaining an up-to-date database – the key to the success of any organisation. • Sending the printed reports along with Notice of AGM and proxy forms (as appropriate) to a mailing house for distribution by mail. • OR – Arrange to do the mailing in-house.

What next . . . • Many of the people who work on preparing annual reports for large organisations will go on holiday – to recover - before starting work on the next annual report. • Many organisations enter their report in the Australasian Reporting Awards to try for an Award – and more importantly to have the opportunity to get feedback on the strengths and weaknesses of their reporting.

ARA 2008 Awards NFPs & Charities – a few examples Chairman’s Award for Best First Time Entry Winner: MonashLink Community Health Service Communication (Not-for-Profit) Winner: St Vincents Melbourne Finalists: CAST Co-operative Research; Guide Dogs; Scope General Category Silver: The Deaf Society of New South Wales Bronze: Uniting Care Moreland Hall

SUMMARY Preparing an annual report requires: • A good understanding of the organisation and key managers • Good planning – of your time and others • Project management and diplomacy skills – to get people to do things on time • Attention to detail – proofreading! • Persistence - to get people to do things on time!

PREPARING AN ANNUAL REPORT – TIME LINE

Preparing an effective annual report - effectively