Writing an annual report - no pain, no gain

It's annual report writing time again - a daunting task for many of us.

If planned and handled properly, it's a fun task to do.
Before starting to write an annual report, there are several questions that must be answered.

On which stock exchange is the company listed?
Each stock exchange has its own rules.
The NASDAQ has more stringent requirements than the AIM (London Stock Exchange).Stock exchanges are on the merger & takeover warpath, which will influence the requirements of the absorbed stock exchange.

Who is responsible for what?
In general, it’s the CFO that coordinates the writing of the annual report, not in the least since the majority of its contents consist of financials.
In some companies, this task is outsourced or is given to corporate communications to handle.

An annual report is a team effort:

• The CFO is responsible for the financials (based on the accountant reports);
• The chairman and CEO are responsible for the business overview;
• The CEO is responsible for description of products, markets and operations;
• The lawyer and nomad (nominated advisor)/broker are responsible for the overall content and final check that the report complies with the stock exchange rules and regulations;
• Corporate Communications is responsible for production.

What is the goal of the annual report?
Does the company produce it because it’s mandatory or does the company also want to use it as a marketing tool?
Is the main audience investors and the financial community or also prospects, potential partners and the public in general?
Does the annual report serve as a "crisis management" tool, dealing with bad news/bad results?

What is the timeline?
Producing an annual report requires a strict time plan.
All stock exchanges have a strict due date.
The required filing dates vary by country.
Most U.S. and European companies have a year-end filing date of December 31, and their Annual Reports tend to be filed between April 1 and June 30.
Japanese companies tend to file their report during the month of July, and Australian companies file starting September 15th.
Working backwards, closing files and printing takes about 2 weeks.
A healthy internal deadline is therefore at least one month before the due date.
It’s finalizing the text part that is time consuming, since the different executives have to sign off on their part.
From experience, it will take about 3 months to get all the text written and approved.

How should the annual report look?
The annual report should reflect the company.
For industrial companies, it should look serious and reflect their business.
A good example is the annual report of MAN, a leading European motor vehicle, engine and mechanical engineering group with annual sales of around €13 billion.
A company active in the telecom field can be funkier.
An example is Adamind, a provider of software that enables mobile multimedia content and converged communications services.
Depending on the budget and industry, companies can opt for having the financial pages in black and white and only the text pages (with graphs and illustrations) in color.

What should be inside the annual report?
The average annual report has several sections, some of them mandatory (depending on the stock exchange), others customary.

General part

• Highlights – it gives a snapshot of the financial situation of the past year(s)
• Directors, Secretary, and Advisors
• Chairman’s statement – it covers changing developments, goals achieved/missed, actions taken and industry conditions
• CEO’s statement – it covers the financials, deals, milestones
• Marketing part- covers products, markets. (not mandatory)
• Corporate Governance Statement – it covers the broad, committees, internal control, going concern, relations with shareholders
• Directors’ report – included biographies
• US analysts like to see a stock price overview, consisting of stock symbol, high/low history and price/dividend trends (not mandatory)

Financial part

• Independent Auditor’s Report/ CPA Opinion Letter – consists of a one-page letter from the external accountant/CPA to the shareholders
• Consolidated income statements
• Consolidated balance sheets
• Statement of changes in equity
• Consolidated statements of cash flows
• Notes to the consolidated financial statements
• Appendices – consisting of list of group companies, brands, patents etc. (not mandatory)
  Shareholder information – consists of the contact details

Final Steps
Once the annual report is ready it must be sent out to the stock exchange (to meet the deadline) and shareholders.
It must also be published in pdf form on the corporate website.
Printed copies should be available for any interested party to receive upon request.

It's finished and you can relax -until the next annual report!

The Don Imus Marketing Mix-Up

Apart from Knut, the Berlin polar bear cub, the whole world has been mesmerized by Don Imus’ spectacular fall from grace.
For those of you who missed it: Don Imus was the CBS Radio talk-show host of “Imus in the Morning”.

He was once named one of the 25 Most Influential People in America by Time magazine and a member of the National Broadcasters Hall of Fame.
His trademark was a combination of discussions about politics and culture, mixed with crude and vulgar humor.

In short, he was one of the first “shock jocks”. Insulting people was part of his show.

Even his corporate sponsors were not exempt.

During an interview with former General Electric CEO Jack Welch and his wife-unit Suzy Wetlaufer about their book “Winning”, Imus referred to Suzy as "been around more times than a fan belt."

Why did his guests put up with it?

Simple – to quote Jack Welch: "we have a book to sell and Imus is great for selling books."

Tim Russert, James Carville, Chris Dodd, John Kerry and John McCain – they all used "Imus in the Morning” to promote their books or ideas.

The Imus show was a marketing dream; supported by the crème de la crème of Corporate America. The top 10 advertisers combined spent nearly $3-million (GM spent $691,700; Sprint Nextel $363,000).

In short, shock jocks like Imus are irresistible since they attract so many loyal viewers and listeners. Corporate sponsors generate optimal ROI on their ad dollars.
Therefore, ex-heroine addict and former alcoholic 66-year-old Imus was what his employers and sponsors loved best – a money making machine.

But once a shock jockey moves from what the public sees as shockingly funny to indecent/unacceptable, the story ends.
Imus’ remarks on the looks of the Rutgers women's basketball team brought about his downfall. Ironically enough, this middle-aged Caucasian macho borrowed words from the less-than-half-his-age hip-hop moguls.
His racial insult created a public stir. Outraged listeners and celebrities started an international debate on all major news channels.
But that was not what brought down Imus. His fate was determined by the show’s sponsors (American Express Co., General Motors Corp., Procter & Gamble Co., Staples Inc.) pulling their advertising from the show.

Don Imus created a lot of inconvenience for his ex-sponsors.

The undesired publicity blocked a highly-profitable advertising channel, which leaves them with the challenge where to advertise to reach such a wide audience.
From a marketing standpoint, we have to admire the Imus Marketing Model.
His marketing mix consisted of:

• Generating millions of ad revenue for his employer CBS radio.
• Providing employer MSNBC with three hours of cheap programming.
• Providing celebrities with a platform to tout their books and ideas.
• Providing politicians with free airtime to push their agenda.
• fundraising for his charities.
• Promoting his wife’s green causes.
• Promoting his own merchandise (cookbooks, foods, cleaning products)

It looks now that all of the above suffered, including his wife Deirdre Imus, who saw her book tour cancelled by Simon & Schuster (the publisher of her book "Green This!") .
But will this spell the end of Imus?
Not likely – satellite radio (Sirius or XM) might offer him a sweet deal, especially since his apology was accepted by the Rutgers’ team.
On the pecuniary side of things, Imus could be entitled to compensation CBS Radio.
He only recently closed a new five-year, $ 50 million contract.
And although he didn’t have a contract with cable network MSNBC, there was a licensing deal between MSNBC with CBS.

Personally, I wouldn’t be surprised if he already started penning his autobiography “from fame to shame” or something similar – and if anybody knows how to market it, it’s Imus himself!