Investor communications has changed radically over the past few years with many European companies becoming far more adept at using a range of technologies. We believe that we are only on the cusp of even more radical change. Many investor communications professionals are now looking for ways to bring together their results, reporting, annual meetings, webcasts and other information into new models. They are, quite rightly, questioning the role of different parts of the mix as new ways to communicate emerge.
That said, many companies have also begun to question the frenetic push towards online solutions. Why produce a full online report if – based on detailed analytics – you realise that only a few readers are looking at a fraction of your content? Far better to focus on the areas of interest and produce all of the rest as a PDF download. Cheaper, too.
Over the last couple of years we have also seen a proliferation of reporting solutions that allow users to interact with charts, graphs and other bells and whistles. Many of these are templated approaches that slot into different companies' online reports. Want to compare a KPI with another KPI? Sure, no problem. But few people are actually asking why on earth readers want to compare a KPI with another KPI? And who would want to make the comparison in any case?
The next few pages take a look at some of the current leaders in investor communications in Europe. How they use a range of on- and off-line approaches to bring their stories alive for investors, analysts and other audiences.
L'Oréal www.loreal-finance.com/eng/
Investors, analysts and others wanting to check on L'Oréal's results or investor information are spoilt for choice. They can point their browser to a neat multimedia presentation (www.loreal-finance.com/eng), order a printed annual report, view it on the web, download all or parts of it as a PDF or immerse themselves in video. In each case, presentation is clear and stylish, while the content is detailed, cogent and accessible.
So what's the communications strategy behind the classy output? We talked to Thierry Prevot, L'Oréal's head of financial communications, to find out.
Prevot is acutely aware that his company's reporting material must serve an increasingly varied set of audiences. "In France even more than in the Anglo-Saxon world, the annual report and website are now dedicated to a much broader target audience than just investors and analysts," he says. "A UK or US report is much more focused on regulated content. French reports often only comprise less than 50 per cent regulated information, as opposed to 90 per cent as is often the case in the UK and US."
The rise of the internet has been a powerful catalyst for broadening the readership of L'Oréal's reporting information, Prevot adds. "Ten years ago, we were only producing the annual report in print, and you knew exactly who was reading it: 40,000 or 50,000 copies, targeting investors, analysts, individual shareholders, a few journalists and public officials. Today, thanks to the web, you may have one million visitors – students, employees… all kinds of people."
Have investors' and analysts' information requirements changed in recent years? Prevot says they have: "They need more of the story of the company – the light and colour of that story." This is why L'Oréal decided to create its new interactive, multimedia site. "It's a virtual promenade enabling visitors to discover what L'Oréal has been doing in each of our zones; what our R&D department has been working on; the main financial results, and so on. It's a kind of 3D approach designed to make it as easy as possible for visitors to find the key information they require, and to give a clear picture of how the group is structured."
Rio Tinto www.riotinto.com/annualreport2010/
Rio Tinto's report has been under review by the UK's Financial Reporting Review Panel (FRRP) for the past two years but we think they have made a really good job of it this time round. The FRRP questioned whether the previous year's report contained a 'fair review' of the business and a 'balanced and comprehensive analysis of the development and performance of the business during the year' – as required by the law.
This time round we think Rio Tinto is on the money. The strategy section is particularly worth a look with good linkage between vision, objectives and performance indicators. The mini case studies in the strategy section do a good job of highlighting how the strategy is being put into action. The whole report also tips a wink to the FRRP investigation, attempting to include a wider range of environmental indicators, social and community matters and reputational risk.
- KPI section includes relevance to strategic drivers, performance overview and definition.
- Risk management section split down into easy-to-access chunks.
- Sustainable development review includes goals, targets and performance to date.
Swiss Re www.swissre.com/annualreport/
This Swiss insurance company's annual report (available in print, pdf and HTML form) has a novel approach with an online flash summary, but it is also brimming with detailed, clear information on the market environment, sustainability, governance, strategy and other non-financial information. We talked to Susan Holliday, Swiss Re's director of IR, to discover the thought processes behind her reporting output.
Holliday divides the reporting challenge into two parts. "There's what you have to do for legal reasons, for auditors and so on. Then there's what you choose to put in," she says. Investor and analyst feedback plays a major role in shaping the latter category of material, Holliday adds. "If people comment that something is particularly useful, we keep it in. If they ask for something new, we try to accommodate it where it's reasonable."
For example, the Swiss Re investor relations team has been receiving a lot of questions about debt-related issues from fixed-income investors. "So we decided to set up a fixed-income area on our website, which pulls together all the relevant debt information from throughout the annual report into one place," Holliday says.
How have Swiss Re's investors' and analysts' needs and expectations changed in recent years? "They want more information and disclosure because of what's happened in the market," Holliday says, referring to the global financial and economic crisis.
As well as debt instruments, Holliday's audiences have also become more interested in off-balance-sheet liabilities. In turn, investors' demand for sustainability-related information on issues such as carbon emissions has "taken a back seat", Holliday says. "But some of the big picture topics like risk, governance and executive compensation are now probably of more interest than ever."
On the digital front, Holliday and her team have launched podcasts in the last few years as well as video summaries of quarterly results, presented by the CFO.
A former sell-side analyst, Holliday is aware of the growing need to make digital content easily accessible on mobile devices. "As an analyst I remember getting very annoyed when people used to send things out as attachments that I could not read on my BlackBerry. So you need to get the key points out on the front page of a message."
These days, the printed annual report is only sent out by Swiss Re on request. "While there is still a demand for print, people are undoubtedly using the web more," Holliday says.
BASF www.report.basf.com/2010/en/servicepages/welcome.html
Clearly articulated market information and long-term business goals; seamlessly integrated social, economic and environmental reporting; and highly effective use of interactive web tools cement this chemicals company's position in the top tier of the European reporting league table.
The HTML version of the company's annual report offers a range of lessons for other firms looking to optimise their online reporting.
- Word clouds to help you find the most popular element of the report.
- Use of interactive animated charts and tables to help tell the financial story.
- Use of bold text, clear design and intuitive layout to draw visitors' attention to headline information.
- Clear signposts within the online annual report to more detailed information (on sustainability, for example) elsewhere on the website.
SEB www.sebgroup.com/pow/wcp/sebgroup.asp
Extensive, authoritative and well-rounded non-financial reporting sets this Swedish bank's annual review apart from the crowd. The document offers a wealth of information about SEB's focus on customers and how it tailors its approach to different audiences. Interviews with customers also help to give an impression of openness, while at the same time providing readers useful contextual information about the company's business.
- Worth a look for the 'At a glance' section alone, SEB shows how its operating income is split by geography.
- Insights into customer behaviour pepper the document, giving a good alternative view of the business. SEB is also more open than many about how the financial crisis impacted its business.
Ladbrokes ladbrokes-annual-report-2010.production.investis.com/
Europe's largest betting and gaming group uses six critical success factors as the basis of its reporting – developing each to show how it will realise its strategic ambition. It also takes a plain-speaking approach to the CEO statement, using a Q&A format with the new chief executive, Richard Glynn. This visually striking report illustrates how design and typography can be used to help tell a company's story while reinforcing its brand. The report is extremely user-friendly, with the intelligently organised 'At a glance' page providing readers with an excellent overview of the company's activities and performance.
'This visually striking report illustrates how design and typography can be used to help tell a company's story while reinforcing its brand.'
Philips www.annualreport2010.philips.com/
The online version of this Dutch healthcare and technology company's annual report provides a powerful case for using video to help tell the company story. Here, video footage is not just a 'bolt-on' to text and images: it is the primary medium for communicating the company's top-line results. The CEO and CFO provide a clear, confident video summary of performance and strategy on the home page of the online report. Elsewhere, CEOs of specific areas of Philips' business – healthcare, consumer lifestyle and so on – offer further video summaries of the business, its strategy and its results. Production values are extremely high, executives look comfortable in front of the camera, leaving visitors feeling impressed as well as informed.
- One of the best examples of video as part of a reporting and results story in the new batch of 2010 reports.
Online reporting: what are the trends?