Can you judge an annual report by its cover?

The cover of your annual report can be a vital part of your communication effort. Jarrad Comley surveyed all FTSE 100 and 250 reports to discover how IROs are approaching this mission.

The clock is ticking down to the introduction of the EU’s latest directive, which will see the Single Electronic Format begin to take effect in January 2020. It heralds a big change in the annual reporting landscape and I’m really interested in one potential side effect – whether reports will become less communicative.

My approach was simple. Download every report from the FTSE 100 and FTSE 250 and ask one question of each – does it have a message on the cover? If yes, is it a branded message or a performance message?

To clarify my categories: a ‘branded message’ is a phrase used in their brand, an extension of a campaign message, a description of the business, or a company tagline. In contrast, a ‘performance message’ is one that directly speaks to the contents of the report, acting as a summary of the year.

As I had gone to the effort to download 350 annual reports, I thought I’d also look for a few more indicators. Do they continue the cover message inside the report and use it as a structure, essentially proving the cover statement? Do they introduce their purpose in the opening pages, rather than embedded into the statements? And finally, how many reports still use photography?

FTSE 100 companies

Amongst the FTSE 100, 72% of companies put a message on their cover, whether it be about brand or performance. Of these 72 companies, 67 are using what I categorised as a branded theme. Things like EasyJet’s ‘The warmest welcome in the sky’ or Inmarsat’s ‘Enabling Connectivity’. These statements talk to the value of the company’s long-term brand strategy rather than last year’s historic performance. I think that 67% is significant. It says to me that companies want their stakeholders to think of them not only in the context of their numbers but as a brand, with a vision.

Only five companies opted to use their cover to describe the performance of the year which is an extremely small number given the report is essentially all about performance, but understandable if the document is seen as a record against the company’s long-term strategy rather than a snapshot of 2018. Having worked with clients to develop cover themes I also suspect that accurately reducing the complexities of an entire year into a pithy phrase is no longer worth the effort. It may also be the evolution in best practice reporting to recognise the needs of broader stakeholders – specifically non-financial audiences.

One indicator suggesting reports are already beginning to focus on compliance rather than a bespoke investment story is demonstrated by the fact that only 19 reports in the FTSE 100 set out a theme on the cover and used it to frame the story inside the report. Severn Trent’s ‘Wonderful on tap’ theme was one of the few reports where the title continued inside the book, establishing a framework to describe performance. Another was Ocado who used the cover line ‘Changing the way the world shops’ to explain their ‘Now is our time’ performance summary.

Once considered best practice in communicating a joined-up story, it now seems that narrative reporting, in an editorial storytelling sense, is an investment few companies want to make. Interestingly, even if 81% didn’t tell a themed story, imagery was still seen as an important feature to illustrate the business and add some additional visual stimulation. 90% of the FTSE 100 still use imagery, which means text-only reports remained very much in the minority in 2018. Finally, just 15 reports made any mention of their purpose in the opening pages. A handful spoke about it later in their reports, but I wanted to see who was using it as a leading message. It will be interesting to see how this number changes next year given the rise of ‘purpose’ on the corporate agenda.


FTSE 250 companies

So, how different is the picture amongst FTSE 250 reports? There’s an old assumption that their reports tend to be more communicative, with businesses using the document as a broader marketing tool a much as a record of the year. But is that really the case?

This year, we saw 43% (108 reports) of FTSE 250 companies declining to put any messaging on the cover (compared to 28% of the FTSE 100). That’s a pretty big proportion, although it’s slightly skewed by the number of funds that sit in the FTSE 250 who generally use a templated design approach – in 2018 they accounted for around 28 reports (11%).

Some 40% of FTSE 250 reports feature a branded message on their cover. That’s a significantly lower proportion compared to the FTSE 100 (where 67% feature a branded cover message). While 40% is still a decent proportion, it’s perhaps an indication that companies in this index aren’t actually using the report for general marketing purposes as assumed. Or maybe it’s simply down to the fact that FTSE 250 brands aren’t quite as well established.

Some 17% of FTSE 250 companies opted to use a performance related message on their covers (versus 5% in the FTSE 100). This may be another sign that the FTSE 250 prefer to use the report for its original purpose – talking about the year’s achievements. Another interpretation would be that there’s simply a lag in approach between the two indexes. However, digging a little bit deeper we see that only 4% of FTSE 250 reports set out a theme on the cover and follow it through into the report as a structural messaging device. That’s an incredibly low figure and may also be a reflection of lower budgets and less internal resource. Something all agencies know all too much about.

Looking at uses of imagery and purpose we see that 69% of the FTSE 250 feature imagery (lower than the FTSE 100 at 90%) and mentions of purpose also came in lower at 10% with only 26 reports mentioning it in the front of their reports. So, if we think about the decreased uses of themes, imagery and purpose, it again challenges that assumption that the FTSE 250 use their report for broader marketing uses. The exceptions being Derwent London, who clearly see their report as a key document to explain the unique value of their business, and Pets at Home who brilliantly leverage the personality of their brand. Of my list of leading FTSE 250 reports, many are businesses who physically make things, not just profits, so may still use this budget to update the image library.


FTSE 350 as a whole

Let’s make some overall observations looking at the FTSE 350 as a whole. To look at the FTSE 350 as a group and summarise I see a couple of key factors: firstly, very few companies commit to a performance statement on the cover which is interesting given these are documents that are all about performance and almost half of the FTSE 350 are using a brand-style message instead. This may be more a sign of apathy, than seeing the report as a key piece of brand communications. The other notable factor is that 40% have no message on the cover. This is a pretty big number and potentially a sign of things to come as reports possibly become more compliant, more text-heavy and probably more templated.


Can you judge a report by its cover? If you’re looking for guidance on performance, or a message to hold in the mind, then the answer is a resounding no – just 14% of FTSE 350 front covers reference performance. On the other hand, if you want the cover to explain what a company actually does then most do that job reasonably well simply through the use of imagery.

Some may say that trying to judge any book by one single page is a ridiculous exercise in the first place, but those who do commit to an idea on the cover set an expectation about its contents. Specifically, that a company knows itself and understand the journey they’re on. More practically, it’s prime real estate for capturing attention and setting the tone of the report… so companies shouldn’t waste this space.

It’s pretty safe to say that the reporting landscape is continually evolving but it feels like most reports sit in one of three distinct camps.

Firstly, there is a very small, elite group at the top who are still committed to telling a coherent and connected story through concept, content and design. I counted 10 reports in the FTSE 100 that I thought were truly excellent examples of this, the FTSE 250 had 26. Strangely this is identical at 10%. In the middle is a group who have pared back their books and focused less on storytelling and more on charts and graphs. These books are generally well designed, but you have to spend more time with them to really understand the context behind the graphics.

And finally, there is a surprisingly large group who… well… clearly have other priorities. I look forward to seeing how the landscape will evolve next year.

If you want to know where your company sits in this list, then please drop me an email and I’ll share my findings.

Jarrad Comley is a Partner and Executive Creative Director at MerchantCantos.

This article was originally published in Informed Magazine.

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