Read an annual report, and you might be tempted to fall asleep.
Not me though.
No, annual reports excite me.
The misconception about boring annual reports
No kidding.
Many have the impression that annual reports are for compliance. But if you look at the West, owners like Warren Buffett of Berkshire Hathaway, and Jeff Bezos of Amazon have led the way on how best to communicate with their stakeholders through their yearly letters.
These have in turn driven shareholder loyalty, resulting in ever growing optimism amongst investors.
When I was 26, I started stealing my father’s mail to read the annual reports of the companies I didn’t own, so that I could learn more about the companies behind which he had parked thousands of his own dollars.
If you take a step back and think, annual reports are one of the few ways public companies communicate to the public about what’s happening in their company. We are not just talking about the large-cap, household names here, but the smaller ones.
Those that you don’t tend to hear very often.
Often, in Asia, we’ve come to see that stronger mid and small cap companies do not crave the limelight. All that they want is to run their companies, do the business they enjoy, rather than seeking the red carpet. That’s why a cursory Google search often does not reveal much.
This is where the Annual Report comes in. When you read them, you see the CEOs sharing their heart with their stakeholders. They share broad strokes about the state of the world economy, what they have seen in their own companies, and how they plan to move forward.
Trust me.
This is not just fancy corporate speak.
One of the best yearly letters comes from Avarga, where CEO Tong Ian wears his heart on his sleeve, sharing his honest view on the poor state of the economy, and how that has impacted his decisions at Avarga.
But you might wonder if writing such personal annual letters can map to the larger companies.
The Chairman and CEO’s message sets the tone with the Visionary Message
If you look at 2024’s winner of the Business Times Annual Report Awards, the large-cap winner was OCBC.
Their letters set the tone for the rest of the Annual Report.
Having read about 130 annual letters over the past 3 years as an investor, the best tend to be a combination of these 3 factors.
- Insights about the current state of affairs
- Highlights about how they have positioned their business for the current economy
- Sensing how the future will move
When we talk about insights, we are talking for that singular moment of insight that makes people think differently. It’s not just something that can be found off Google.
As you can see from Heroic Public Speaking’s template, the visionary insight is something that’s more related to ‘how to think’, rather than ‘how to do’.
OCBC set up the stage for the rest of the annual report with their focus on ‘One Group, One Brand’ on their 91st anniversary as a bank.
Some might say this is just corporate speak.
But as a customer of Great Eastern (OCBC’s insurance arm), a shareholder of OCBC, and a banking customer, I’ve come to see how much more unified the OCBC experience is compared to the rest of the banks I’ve used. For example, with DBS, their trading arm is called Vickers, whilst their Business Banking is called IDEAL.
It’s certainly non-ideal, as it can sometimes get confusing. Do you trade through DBS’ banking platform, or do you go to Vickers directly? (The answer? It’s faster to go directly to Vickers).
OCBC sets the tone with ‘One OCBC’
The result is a better pooling of our resources, enabling us to serve each and every customer
across multiple countries, with more products, and in a concerted manner.
The idea of One OCBC has thus permeated the rest of the annual report.
And this is how an annual report should be done.
- Set the theme
- Write a good Chairman letter
- Weave it into the rest of the report
Write the Annual Report like a book with chapter headings
If you wonder why we recommend you to write it like a book, it’s because it makes your annual report tight. People know where to look for each important point.
For example if you look at CSE Global’s annual report, which won the Business Times’ Best Annual Report for small-caps, you can quickly see that they started the cover page with the 3 business segments they are in – electrification, communications and automation.
They proceed to highlight each segment with the main point:
- Decades of growth
- Diverse ventures
- Forward focus
It shows the potential investor that might be reading why they should be investing in these companies.
It’s not just about the design, but the substance beneath the design
But if you look at OCBC’s design, it’s refreshingly simple. No big graphics, just a plain red and shaded white sail beneath.
Yet they still won the Business Times’ Award. How? Why?
Because they kept it simple.
The beauty of capturing the essence
Many Annual Reports try too hard to do too many things. That’s one thing you need to avoid with yours.
Making it less, not more, is vital – especially when there seems to be so much you can highlight after a year of progress.
For CSE Global, they showed the highlights of the year with the two textboxes at the bottom of each section header, allowing the reader to get the essence, even if they were skimming.
They built the annual report to skim
and built out the details in later parts.
Therefore, even if someone only had 5 minutes to flip through, they would get the essence of the annual report, which was about how CSE was growing from strength to strength in developing technology for key infrastructure projects like data centres.
Using a theme to weave through the report
Another way listed companies have caught the eye of judges is through using a central theme like TV to mimic. Food Empire won the prestigious Mercomm Awards this year, and one of the reasons was because of their innovative way of mimicking a TV programme through their annual report.
Find the better writers, not designers s
I want to put it to you that designers are easy to find.
But writers aren’t.
Whilst everyone might argue today that ChatGPT could quite easily write a good annual report, the annual report is at its heart a (very long) essay.
Good writers are able to structure the varieties of thought from the different departments that you will be liaising with to put together your annual report. They are able to tie together what design would fit the narrative.
Choose a better writer. It will make you a better report.
Interested to make your next award-winning annual report? You can talk to us too.