Is innovative communication techniques needed in the annual report ? Agreeing Sid e Casey Lau Gloria Ho Hayley Cheng Hon Pok Man
Mar 27, 2015
Is innovative communication techniques
needed in the annual report ?
Agreeing SideCasey Lau
Gloria Ho
Hayley Cheng
Hon Pok Man
Agenda
Definition of Communication Technique
Objectives of Annual Report
Communication Problems
Recommendations
Summary
Conclusion
Definition of Communication Technique
Definition of Communication Technique
Format e.g. tables, charts, graphics
Layout e.g. comparative figure, 5-year-summary
Presentation skill e.g. grouping, high-lighting trends, summarizing, selection of content, creative visual effects.
Objectives of Annual Report
Objectives of Annual Report
Around the world, publicly traded companies publish annual financial reports in order to:
Inform and communicate objectively with shareholders, institutional investors, corporate bankers, and other potential investors about their performance, andFulfill the requirements of listing rules, and Promote their public image and allow the public to know more about them.
Objectives of Annual Report
HKSSAP 2:
“The primary objective of financial statements is to provide information that is useful to users for the purpose of assessing the financial position at a particular point in time and the performance and cash flows of an enterprise during a specified period of time and the stewardship of management during that period.”
Current Communication Problems in theAnnual Report
Information Overload
Dr. Meyer, professor of University of Flensbury
Information Overload sender provides more information than investors & readers are able to process
Information Overload
Quantitative Information Overload Size & number of information contained in annual
report waste of time
Qualitative Information Overload Complexity (e.g. use of jargons) & repetition (e.g.
Director’s Report, Segmental on hand Operations Review) of information in annual report hard to understand
Readability Problem
Findings (e.g. by Smith, Gibson, Schroeder) have consistently revealed that the annual reports are generally:At a reading ease level of difficult to very
difficult e.g. use jargonsBeyond the fluent comprehension skills of
about 90% of the adult population and 40% of the investor population.
Misunderstanding and wrong decision
Language BarrierAnnual reports are usually in English In Hong Kong, English is the second language
Use of jargons
Even though some annual reports are bilingual, since the education level of the majority of the public is not that high cause barrier to understanding.
[According to Govt’ stats, only 13% of the Hong Kong people have received tertiary education.]
Recommendations& Benefits
Recommendations2 main changes :(1) From a prospectus only
A package of : (A) Prospectus + (B) CD-Roms
(2) From scanned AR on the Internet Web-based Annual Report
New content component
New presentation technique :From narrative to visual
a tool to enhance Annual Reports’ understandability
Recommendations for CD-Rom
(A) CONTENT : From narrative disclosure of non- financial info. to visual & audio e.g. notice of AGM, directors’ report,
auditors’ report, etc.
** low reading ease, but a better predictor than financial Info.
video + power-point
Recommendations for CD-Rom
Sample of visual aids
Directors’ Report
Employees
Directors’ Bibliography
Directors’ Interest in Contract
NextPrevious
(A) CONTENT
(2) Voluntary disclosure : from prospectus to CD-Rom
Recommendations for CD-Rom
Recommendations for CD-Rom
(A) CONTENT
(3) Provides links as references
e.g. financial analyst website,
accounting-related references,
auditors’ information
hyperlink attached
(B) PRESENTATION TECHNIQUE
(1) Graphical presentation :
e.g. 5-year financial summary &
highlight
presented by animated
graphics, tables & charts in
colour
Recommendations for CD-Rom
Recommendations for CD-Rom
(1) Graphical presentation (con’t) :
Example
Benefits of CD-Rom
(1) Video + power-point : more understandable
listening VS reading
selective reading point-form & simple & shorter words
easier to absorb & more interesting within fluent comprehension
(2) Voluntary disclosure : Selective reading Less information overload in prospectus
(3) Links : As a supplementary aiding device
Benefits of CD-Rom
Benefits of CD-Rom
(4) Graphical presentation : solve language barrier problem
technical languages & terms assist unsophisticated users
comparative trend & figures displayed
summarize information focus comprehensive overview show big picture
(4) Graphical presentation : reading time more interesting cause animated &
visualized colour help highlight & reinforce
seize attention
Benefits of CD-Rom
Recommendations for AR
Remain what we have now;
having no big change, with jargon termsComply with mandatory requirements and
professional
+ a summary financial statement
- voluntary disclosure CD-Rom
Summary Financial Information Condensed Consolidated Statement of Earnings Condensed Consolidated Balance Sheet Condensed Consolidated Statement of Cash Flow
s Notes to Condensed Consolidated Financial State
ments Report of Independent Auditors and Accountants Selected Financial Data
In millions, except per share amounts 2000 1999 1998 1997 1996
Net revenue $48,782 $42,370 $39,419 $33,465 $31,613
Earnings from operations 3,889 3,688 3,399 3,405 2,926
Net earnings from continuingoperations
3,561 3,104 2,678 2,515 2,085
Net earnings per share, continuingoperations
Basic $1.80 $1.54 $1.29 $1.23 $1.02
Diluted 1.73 1.49 1.26 1.19 .99
Cash dividends declared pershare
.32 .32 .30 .26 .22
At year-end:
Assets-Continuing operations $34,009 $31,764 $28,624 $26,681 $22,934
Assets-Total 34,009 35,296 31,708 29,852 25,977
Long-term debt 3,402 1,764 2,063 3,158 2,579
Selected Financial Data
Benefits of AR
People feel more comfortable if there still a book hold on hand
Recommendations for web-based AR
Clear presentation of figures instead of copies of scanned AR Music, picturesReference links (e.g. comments from some analysts)Video clips of press conferencesInteractive design (e.g. Flash)Power searchGuided tour -> similar to MS office assistant
Benefits of web-based AR
Computer help generate more sophisticated information
More interesting to read
Selectively read the information wanted
More info. given (e.g. video clips, reference links)
Better quality of figures presentation
Summary
CD-ROM and internet help the reader analyze the meaning of the AR
Multimedia:
1. reduce information overload problem
2. Help lower-educated people
3. Promote the interest in reading AR
Summary
How the multimedia helps:
1. Use graphics, videos- understand meaning with an interest involved
2. No more words required:
reduce time to analyze the company
Summary
Why multimedia can help:
1. Evidence shows- people memorize images better than words.
2. Good relationship with the company, good images can be enhanced
Conclusion
Innovative communication technique:
improve decision making quality
Investors- more logical decision making
Multimedia- help investors understand the company better
Our decision
More innovative communication technique
should be used in the annual report!
~ The End ~
Thank You !