How to write an outstanding annual report

Here’s the good news: an annual report doesn’t have to be a dry, boring list of numbers and corporate jargon. This document offers an excellent opportunity for a company to stand out from their competition.

With the right amount of thought, preparation and good-quality writing, your company’s annual report can (and should) represent what’s great about the place you work and the work you do.

So, where to start? Luckily, we’re here to help.

What is an annual report?

An annual report describes a company’s performance over the previous financial year. It also provides a window into your company’s culture and brand, as well as the people who work there and why the business is special.

Essentially, the document should be a one-stop-shop showcase of the company’s performance and operations. Its core aim is to inform stakeholders and build their trust.

Many companies approach their annual report strategically, aiming to stand out from their competition and win over their target audiences with a compelling narrative. And many employ the latest in digital technology and graphic design to create reports that are innovative in both their design and content.

The information in the report should allow shareholders to assess the company, its current situation and its potential future. There are legal requirements for what should be included and many regulations on financial reporting. A UK-listed company’s report usually includes the following:

1. 1. A strategic report, which allows companies to tell their story. Officially, this section shows how the directors performed their duty to promote the company’s success that year. It should include information about a company’s strategy, objectives and business model.

1. 1. A corporate governance section, which explains how the company’s operations support the achievement of its objectives. This section includes a directors’ report, corporate governance report and committee reports.

1. Financial statements, which include policies and implementation, amounts awarded to directors, and audited financial statements such as balance sheets, income statements and cash flow.

What are the rules?

There are frequent regulatory changes which affect the annual report, and it’s important that you understand the up-to-date requirements for an annual report at your particular company and location. Your company’s legal and accounting teams will be able to guide you on this.

Publicly listed companies in the UK must produce a report for their shareholders at the end of each financial year. There are various rules that must be followed around the content and distribution of a UK annual report, like mandatory sections to include and certain groups who must receive a copy.

These rules are determined by strategic report regulations and the UK corporate governance code, and you can find helpful information on this through the Financial Reporting Council.

Other types of companies and organisations outside of the UK may also have to produce annual reports, depending on their size, location, tax status and local laws, which can vary according to country or state.

Who writes the annual report?

Who writes a company’s annual report varies depending on lots of factors, including the size of the company. There are a few options and each requires planning and project management:

1. 1. Outsource: Some companies choose to outsource their annual reports to specialist agencies. In those cases, there’ll often be an in-house project manager to coordinate with the internal teams who’ll be providing the core material, such as the secretarial, finance, legal and investor relations teams.

1. 1. Teamwork: Many companies have their own in-house writing and design team(s) who would likely take a big role in content writing. For the more specialist aspects of the report’s content, annual reports are often a team effort. Experts from across a company will provide their unique insights for things like notes on the accounts and the vision for the company’s future.

1. One person: In some smaller companies, one person might collate and draft all the content before presenting it to their stakeholders for review.

The UK also has laws which cover the content sign-off process after the report’s content is finished. As noted in section 414(1) of the Companies Act 2006, ‘[a] company’s annual accounts must be approved by the board of directors and signed on behalf of the board by a director of the company.’

No matter how your company approaches the writing process and how many individuals contribute content, do your best to end up with a unified style and voice.

This will probably mean ensuring that your company has an up-to-date and comprehensive style and tone of voice guide, an eagle-eyed proofreader, and an agreed approach to creating clear, accessible writing throughout.

How to prepare

An annual report can be a huge, complex document which requires input from a wide range of people. Work begins long before the content-gathering phase; often it’s something you’ll be thinking about all year round. Preparation is crucial to do your best work and ensure a well-rounded document.

Overview of the process

To help kick off your planning, here’s a high-level look at the steps you’ll need to follow to create the annual report:

1. Work out your timeline and plan content
2. Establish your structure and make a page plan
3. Write a list of contributors and gather content
4. Write and collate
5. Check the draft and send for review
6. Allow for multiple rounds of feedback
7. Finalise content and send for design
8. Proofread and check everything
9. Get sign-off from the board of directors

And here are some further things you’ll want to do in advance:

Consider imagery: Another element to think about well ahead of writing the report is photography.

Work closely with your communications and/or marketing teams to ensure that the annual report is considered all year round. This can mean something like ensuring that significant events are photographed and the images are collated with information for captions. This will make your life much easier in annual report season.

Assess your competition: Look at what your competitors are doing and find examples of excellent annual reports. This will provide inspiration and enable you to help your company stand out from the competition.

Know your audience: Keeping the audience in mind is a big step in how to make your annual report interesting. Your demographic will depend on the work your company does.

Although an annual report is primarily aimed at existing shareholders, it’s also a useful way to attract new investors, advertise the company’s products or services, and even entice future employees. While you’re preparing and writing your annual report, make sure you focus on the needs of these audiences.

If your company has an international audience, you might want to consider translation into other languages, and printing and distribution to the relevant markets.

Writing the report

Since there are strict regulations around the financial and corporate governance sections, the bulk of your more creative writing work will be in the strategic report. So that’s what we’ll focus on here.

The strategic report reflects the board’s view of the company to the shareholders and provides context for the financial details elsewhere in the annual report. The writing here should be clear, concise, in plain English and presented without bias. The general tone should be forward-looking and in line with your company’s voice.

There are no specific rules on the structure of a strategic report, as it should reflect the company and the content of the report itself. Each company’s requirements may differ depending on size, type and location. However, many companies take an approach like this:

1. Opening statements

An annual report may open with a chairperson’s and/or CEO’s statement. These are written in the voice of the individual (and may be ghostwritten for them) and are often accompanied by a professional photograph of that person.

The written content addresses the shareholders and provides a summary of the details to come: significant headlines from the past year, a brief overview of the financials, challenges and successes, and potential future growth.

Although this section comes at the beginning, you might find it easiest to write it last. By that point, you will have gathered all the strategic report content and can summarise it into the introductory letter. If you’re writing in another person’s voice, it’s doubly important to get their sign-off.

2. Business overview

This section explains what your company does and is key to showcasing the company – your opportunity to tell your company’s story. It should contain an overview of the company, including its vision, culture and mission statement. It should also include information on the company’s:

• products or services
• business model
• directors (details on them and their duties)
• markets
• strategy
• trends
• investor profiles
• competitors
• non-financial key performance indicators
• potential risk factors.

And it’s a great idea to include case studies and any highlights from the year here.

This is the section which will hopefully be the easiest to collate and update, as it’s information that should be available in your website, brochures, reports and other public-facing materials.

3. Financial review

The financial section presents a comprehensive analysis of the business’s performance over the financial year and its position at the close. It should refer to and explain the figures included in the financial statements.

This section will be an important focus for your stakeholders, so clarity and honesty are very important. Make sure all data is backed up with sources. And be sure to communicate a strong understanding of your company’s strategy and key performance indicators, and find ways to present data in engaging, visual ways, paired with impactful quotes.

4. Disclosures

There are frequent emerging trends in corporate disclosure. These may come from changes in regulations or simply in the expectations of readers. (And, as before, even actual rules may apply only to certain types or sizes of companies.) What goes into a strategic report will also need to shift to align with these wider changes.

It’s a good idea to investigate and include any newly emerged focus areas in corporate reporting, such as:

• sustainability
• anti-corruption
• anti-bribery
• environmental impact
• gender diversity of employees and directors
• social and community issues
• human rights issues.

Finally, finish with a strong call to action: what do you want your audience to do when they finish reading this report? Consider your audience again, and whether you want them to invest, apply, donate … anything!

Common challenges with writing annual reports

As we’ve noted, writing an annual report can be daunting. It’s a large document with lots of rules and regulations behind it, and it can have a big impact on the future of the company and its shareholders.

Here are some common challenges and how to tackle them:

1. 1. Multiple contributors: working with large numbers of contributors is tricky, and it’s important to put your project management hat on. Make sure you identify and alert your contributors ahead of time, issue clear briefs and deadlines, and ensure a consistent style despite lots of authors.

1. 1. Version control: multiple authors and rounds of feedback mean multiple versions of the document. It’s important that one person keeps a tight oversight on version control to ensure no work is lost and nothing slips through the net.

1. 1. Lots of rules and regulations: this one can be intimidating, especially when you’re faced with technical jargon or even actual laws instead of a simple search result to answer your question. Don’t be afraid to ask the experts: your company’s legal team are there to help.

1. Lack of planning: As we’ve said, preparation is key to success. If this year was a bit of a rush or mistakes were made, make sure you debrief and learn from what happened, so you don’t repeat the same problems next year. And if in doubt, start early!

Creating a stand-out annual report

Although some annual reports can be dry documents full of financial tables, yours doesn’t have to be.

Remember this is an opportunity to show shareholders and future colleagues why you care about the work your company does.

Good preparation is your greatest ally here. Beyond that, you’ll need to enlist the help of colleagues across your company, maintain your in-house style and engage your creativity. That way, you can ensure your company’s annual report stands out from the crowd, with excellent writing from start to finish.

We’ve helped both individuals and teams with their annual reports through our one-to-one coaching and in-company training. If you’d like our help with writing your own, just get in touch.

Image credit: SvetaZiO / Shutterstock