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As a veteran writer of more annual reports than I care to think about, I’m often asked how best to write one. I find it helps to keep in mind at all times the four basic questions below. Here I’m talking about companies traded on a stock market, though much of what I say relates equally to not-for-profit organisations.

What’s it for?

An annual report is primarily to show shareholders how their investment has been used, and to explain to prospective investors what the company is all about. Let’s not make too many bones about it – it’s a marketing document. So is it best to use well-chosen photographs, well thought-out graphics and clear language? Or reams of text written by the company lawyers?

Many annual report committees get drawn into making poor communications decisions simply through thinking the former option somehow means glossing over the facts. But all regulations or guidelines emphasise that an annual report needs a clear and engaging explanation of what the company does.

Who’s it for?

The institutional investor, city analyst and business editor will have received their presentations long before the annual report is published. So who’s it for, apart from smaller shareholders? Well, the flagship document is ideal for providing company information to existing and prospective employees, customers, suppliers and partner organisations, as well to as anyone else who takes an interest.

As many of the potential audience won’t necessarily know much about the company, reports need a professional writer who can offer the external perspective, and interpret internal jargon and knowledge clearly for such a wide audience. Sometimes people believe a company is so complex that an external writer will struggle to understand it. But if the senior management can’t explain the company’s proposition clearly to an outsider, then only a fool should invest in it.

What goes in it?

Here we get to the meat of what’s required. We need to explain clearly and succinctly the business case, whether for the business overall, or division, brand or product within it. We should follow a logical storyline.

Typically, this starts with details of the market the company operates in, what they sell, who buys it, why they buy and how they make their purchasing decisions. Plus details of competitive forces operating in the market, legislative and regulatory influences and similar.

Then we need to explain the strategy for operating within this market, followed by the skills and resources the company uses to pursue this strategy. Only after all this explanation should we include the results of the activity (though clearly we can have graphical highlights earlier). Then we need to touch on the outlook for the market and the company’s competitiveness within it. All of this means being open about any problems also (or challenges as they are now called).

Do my words tell the story?

Even if many reports follow all the advice above, the choice of words is where they seem to go horribly wrong. A fellow copywriter once started a presentation with “annual report readers are human, too”. It’s a sound piece of advice that’s worth remembering when writing any business communication. The investment sage Warren Buffet, when writing, imagines he’s talking to his sisters. About company reports, he says: “Too often, I’ve been unable to decipher just what is being said or, worse yet, had to conclude that nothing was being said.” His advice is to: “free yourself of impediments to effective communication…and you will be amazed at how much smarter your readers will think you have become.”

So what are those impediments? Well, how about:

I realise this final section is a list of what not to do, rather than what to do, but if you clear out all the sort of language in bold, you may be left with a reasonably interesting and informative story. Unfortunately in many current annual reports, you would be left with nothing.

This article first appeared on the blog at

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