Findings of our yearly analysis on the status of Online Annual Reports based on 567 mega-cap-corporates around the globe.
Since 2003 nexxar has been constantly researching how the biggest companies by market capitalisation worldwide prepare the content of their Annual Reports for online use. 567 companies represented by the equity indices of Austria, Canada, France, Germany, Italy, Japan, Scandinavia, Switzerland, the Netherlands, the UK, and the USA
The research distinguishes between three main approaches:
1. PDF => The Annual Report content is solely downloadable as a PDF, no other option is made available.
Enriched with bookmarks and crosslinks, this is certainly a cost-effective way of presentation. In actual fact PDFs (ie. portable document format) have been designed to print pages in portrait format and to not be viewed on landscape screens.
2. JPG (sometimes referred to as image based) => In addition to a PDF, the pages of the printed report are converted into JPG/images.
An HTML framework allows little more than just flipping through the gallery. Although often anounced on corporate websites to be an interactive Annual Report, this solution does not add value in comparison to a simple PDF. Sometimes these pictures shows are even worse as users cannot copy text or search through the report properly.
3. HTML => The content of the report is converted into Hypertext markup language (HTML).
HTML allows the user to copy/paste, search through the report, and use a varity of tools, thus enhancing the usability of a web based report. This is where online reporting starts to make sense and adds value in comparison to a print version. Since 2008, we have further investigated the split between full and hybrid HTML reports, where parts of the report e.g. the notes section is incorporated as a PDF for download.
What has changed in the methodology in comparison to previous years?
We have added the Japanese Topix Core-30 companies and we have extended our research of the German market to include the 30 TecDax companies. The data for these 60 additional companies has been considered for the past three years. Older data has been included ceteris paribus to be comparable with data of the other indices. Together with the change of compositions within indices, this leads to a different basement of our data in comparison to previous years.
Annual Reports formats online since 2003 – The long tail
In our 10th year of steadily monitoring the online reporting space we again see the continuation of the global HTML reporting shift! For the first time more companies are converting their Annual Report content into HTML (40,9%) rather than offering them solely as PDFs for download (39,2%). However, this encouraging trend towards high-quality, user-focused reporting has received a bitter blow: The rise of hybrid HTML reports. For cost reasons, a rising percentage of now 44,4% (2011: 35,7%) of all HTML reports do incorporate substantial parts of the Annual Report e.g. the notes section as a PDF. By skipping conversion into HTML, the users have to open PDF files if they are referred to the notes from the balance sheet. This might appear like a small inconvenience but in fact this has a major impact on the integrity of an Annual Report. Use a simple search query in a hybrid report to reveal why:
Searching for cash flow in the Aviva Annual Report 2011 delivers hits to the front (HTML) half not including the financial section where the term would be more relevant. The same applies for search engines, as they do not rank PDFs on the same level of importance as they do HTML.
To cope with this, some hybrid reports simply do not offer a search option:
e.g. see General Electric’s Online Annual Report 2011
By adding innovative navigation tools, nice videos and other interactive tools, these companies simply forget what an annual report is all about: it is about “Reporting”! Interactivity and engagement should not be traded against comprehensive offer of information.
This trend towards hybrid reporting is very much driven by the Anglo-American style of reporting. Whereas in the UK and USA 2 out of 3 HTML reports are hybrid, in Germany just one hybrid report can be found, compared to 44 full HTML reports at HDAX 110.
HTML reporting split by indices
The leading markets in HTML reporting remain the same: UK, USA, Netherlands, Scandinavia and Germany rank above average i.e. more than 40,9% share of HTML reports. From these leading markets only the Dutch have shown a further increase in 2012.
Whereas the HTML share of leaders appear to be stagnating, the lagging markets are catching up now. Canada and Italy already moved above 30% share, followed by Switzerland which has more than doubled its HTML share in the last two years (from 10% to now 27%). Interstingly, Japanese companies well known for their quick adoption of new technology, still form the bottom of our research results, although they are catching up quickly now!
If you are interested in a detailed benchmark analysis of how your online report measures up please contact me via Email.