In the world of report and accounts production, R&A could just as well stand for ‘reliable and accurate’ as that’s exactly what printers who operate in this space need to be.
Although in one respect a set of report and accounts could be viewed as just another variant of a corporate brochure, it’s the strictures around the immovable deadlines involved that underpin everything surrounding the production process for those involved in this field.
The documents produced for listed companies must meet the mailing deadline ahead of a PLC’s AGM, no matter how many late changes are made.
David May, managing director of Woolwich-based Empress Litho, likens this particular print speciality to a 1980s BBC game show involving extreme problem-solving that became something of a cult hit.
“You need to have complete control of everything from beginning to end. It makes me think of that old TV show Now Get Out of That. Annual reports are a bit like that,” he says.
“Many printers look at it longingly and think they should get into this market. But you’ve got to know what you’re doing and have the right mindset, otherwise you can end up in a world of trouble.”
Alison Branch, managing director at Park Communications in Beckton, is in agreement that R&A work requires a very specific set of capabilities and way of working. “You have to be able to produce very quickly and be sure to get it right. This type of work requires good project management and understanding of mailing. You are dealing with registrars and sometimes there will be late changes. You have to be fast and flexible, and secure.”
Keeping a calm head, then, is crucial. Talk to any printer of annual reports and they’ll have tales of last-minute changes, and even the scrapping of entire print runs with the arrival of a harried corporate officer clutching a revised set of figures.
One print boss recounts how a job had been approved, plated and half of it printed when there was a ‘stop the presses’ moment involving content that had to be changed there and then.
For the seasoned pro, this is all part of the job. May says: “I’ve always done annual reports so I know no different. My motto is ‘we’ll worry about it when it happens’.”
Steve Palmer, sales director at Geoff Neal Group in west London, also cites the ‘trust factor’ as being crucial. “There is still a need for specialists in this field. Trust and reputation are vital, clients want to know the skill set is there. They want to know that you’ve got the ability to handle things like last-minute changes – it can’t just be a pure workflow type of setup,” he says.
Another important part of the overall package is for the printco to have suitable facilities for hosting what could be a large client delegation when it comes to signing off the final job. “We probably do 35-40 of the FTSE 100 report and accounts, probably more than anyone else,” says Pureprint Group director Richard Owers. “You need to be flexible, with 24-hour operation, high-quality production and good quality control. You also need good customer facilities. People will come down and pass on press and you could have half a dozen to 10 people arrive to do all the checking.”
Run lengths down, paginations up
While some print bosses might indeed, as May asserts, look covetously at this part of the market, it’s also a sector that is much, much smaller than it once was in terms of volumes. At one time PLCs were required to send a printed R&A to all shareholders, resulting in some huge orders. Groups such as the privatised British Gas, as was, would require a print run of web offset proportions to meet this requirement.
But changes to legislation over recent decades have reduced and then removed the requirement for businesses to send printed report to all shareholders. The Companies Act of 2006 means the onus is now on shareholders to actively request the full printed document. “That Act allows companies to provide shareholders with an electronic rather than printed report as default,” explains Tim Black, joint managing director at Black & Callow in London.
This reduction in run lengths has resulted in some work migrating from sheetfed to digital presses. Typical sheetfed print runs could be in the region of 2,000-5,000 nowadays, while digital covers the shorter run length requirements.
Speaking to an array of financial print specialists one thing everyone agrees on is the fact that while print runs have gone down, paginations have increased.
“I’ve personally been involved with the report and accounts market for 40 years. The principal change is the reduction in volumes. Alongside that, there’s been an increase in content,” says CPI Colour sales director Gary Mellish.
“There is more reporting on CSR, governance and remuneration. And more companies are adopting best practice in terms of reporting.”
Analysing these reports and establishing what best practice looks like involves a host of related activities. Corporate communications specialist Radley Yeldar has been doing just that for more than 30 years and works with a raft of blue-chip clients on their reporting methodologies.
The firm’s latest ‘how does it stack up’ research on annual reports reveals that there is “still a firm commitment to the report as a main communication tool, working alongside the corporate website, setting out the company’s investment case and bringing together different departments and teams”.
“Each client should be taking the decision about how they produce annual reports on its merits. What is the purpose of the report? Who are they trying to reach and why? Once we have established that we can decide where it is best to use digital media, social media, print or a combination,” explains executive director and head of investor engagement Dean Radley.
“There is still an appetite to have printed material, it is still a key part of communications. While it won’t necessarily be mailed out to all shareholders it has a place with a company’s stakeholders overall, such as the supply chain and potential customers, and as a supplement to other materials.”
And while the main focus is understandably on the major players on London’s stock exchange, the FTSE 100 and 350, there’s a host of companies on the AIM market and also major charities where the annual R&A represents an important marker.
“It has a much wider reach and is read by employees and partners. And for organisations such as NGOs there is more scrutiny and the report has a bigger reputational part to play,” he adds.
Mark Carey, production director at corporate communications agency Design Portfolio, points out that it is also worth noting that an annual report is one of the rare opportunities when a communications piece will be approved by a company’s entire board.
The firm supports a wide range of businesses ranging from the AIM market to the FTSE 350, and typically handles around 100 report and accounts every year.
“Companies are using it more and more as a marketing tool because it’s the one time of year you can get the whole board to sign off on something. It can have more life as a marketing piece rather than as a pure financial document,” he says.
Location, location, location
Talking to those steeped in this particular specialty and the same handful of printing company names come up time and again. Unsurprisingly, most of them are either in, or within easy reach of London, and financial specialists such as Black & Callow, Donnelley Financial and Merrill that often handle the specialist typesetting and pre-press functions involved are also located in the capital.
“It’s a rapidly-growing business for us and we’ve seen more than 20% growth year-on-year,” says Tim Black. “We print some of them ourselves and we also do a lot of work with Park Communications. We’ve known them for years and know they have the right setup and certifications. But ultimately we will work with whoever the client wants in terms of printers.”
It is stating the obvious to say that corporate print requirements exist beyond the boundaries of the M25. Kevin Creechan, managing director at Glasgow-based J Thomson Colour Printers, says the company has been involved in this area of work for many years. “It accounts for around 10% of business at J Thomson and we do a lot of work for Scottish headquartered companies,” he says. “In report and accounts work you are dealing with project management rather than just another print job. To be trusted is more important than just a price-driven thing. We have never failed to deliver.”
And in England’s second city, corporate reporting specialist Jones & Palmer has been printing for more than a century. However, there has been a distinct shift in the way the Birmingham business operates over the past decade.
“We’ve been in print for 112 years now and it’s changing faster than ever. The last few years have seen our print manufacturing cost attribution fall below 50%, yet nearly all of our clients still take print. The reality is that increasingly we have to add further value through content consultancy, design, photography, video and online development. The most important being consultancy,” says director Steven Tolley.
“Nearly 20% of our staff are what we would call consultants (10 years ago this would have been zero), all are graduates and have some qualifications in business, governance, sustainability or investor relations so we can better advise on document content. We have several MBAs in the business and others are working towards advanced business degrees,” he adds.
Sheffield’s ProCo effectively inherited a presence in the R&A market when the firm acquired Concept Communications, based in Stansted, four years ago. “It’s a significant part of our business in terms of our ability to do it to scale and flex our capabilities,” says ProCo managing director Giles Bowes. “We’re quite proud that we can offer a boutique service there, and the ability to buzz into London with proofs and scamps works really well. Runs of 500 to 1,000 are the sweet spot for us.”
Some companies, such as Bristol’s Hampton Printing, get involved with R&A projects on a more ad hoc basis. “We don’t actively pursue this type of work, it comes our way,” says managing director Mike Malpas, citing the firm’s expertise in producing ultra-high-quality print as a key factor for some specifiers.
As in so many other areas of print, turnaround times in the world of R&A are increasingly compressed. And the market still operates in two distinct busy seasons: March to April for companies with a December year-end, and May/June for clients with a year-end of 31 March.
Achieving the right look and feel for an annual report can be a tricky balancing act. If the client company has been having a tough time in terms of business performance, it would be inappropriate to have a flashy R&A covered in glitzy finishes. At the same time, the document needs to adequately reflect a company’s standing, and its brand and values.
“In general, I would say reports have become more straightforward, and clients are not wanting to make it look expensive,” says Park’s Alison Branch. “They will add things if it helps to communicate the key messages or aid navigation, such as short pages or tabs, or a 6pp or 8pp cover.
“The environmental aspect is important so they will be looking for someone who can produce to a standard and carry an imprint,” she adds.
Dean Radley says that if companies are looking to save money, they also don’t want to look cheap. “We sometimes hear that conversation, clients want their report to be deliberately not ostentatious, perhaps using less colour to make the point they are saving money. But the following year they usually put the colour back in. Bearing in mind that nowadays print runs are shorter so the cost difference is negligible,” he says.
“So the question will be ‘how can I save money in a wise and prudent way’. Perhaps we might use fold-outs to communicate something that needs more space, such as a business plan. If clients see a practical reason to do something, they’re open-minded.”
Richard Owers at Pureprint also cites the importance of environmental acccreditations. “Most companies want to put something in there to show they are conscious of the impacts. Before the 2008 crash we were using lots of top grades of recycled paper, and we still do that but people became more cost-conscious after 2008. FSC is just as strong a message with the right imprint.”
He says having the capability to produce a mixture of finishes, such as 50 copies with wire binding in addition to the main print run, is also a popular specification.
Postage costs being what they are, pack weight is also extremely important, notes David May: “For some clients that’s a key consideration and they will look at the thresholds,” he says. “I have also noticed another environmental awareness trend in that all our reports were sent out in envelopes, not one was polybagged this year.”
Understandably, the digital delivery of corporate reports using online media channels has grown enormously and offers an immediacy that print cannot match. However, the user-friendly nature of print means it is likely to have an enduring place in corporate communications for many years to come, even in the light of upcoming changes to the way European companies on regulated markets are required to report. From 1 January 2020 firms will need to report electronically in the same way, using the standard European Single Electronic Format (ESEF).
“It’s quite a material change and likely to cause quite a bit of disruption in two-to-three years’ time. I think it’s actually quite interesting. Some companies are likely to say they will meet electronic filing compliance but will continue to do a printed report. Others, might ditch it altogether. In our view that would be a mistake,” says Radley.
“We went to a client pitch recently that was all about digital delivery of content. The client noticed a printed report we’d taken with us, which was on a nice paper stock with soft touch lamination, and picked it up and hugged and kissed it! I struggle to envisage a world even in five years’ time where we’re not printing them. I think it’s an essential tool. Reporting suites will be more customised and printers’ ability to respond to those requirements will be key to success.”
Being a trusted provider and having effective ways to handle what looks likely to be a long tail of demand should keep the presses turning on this seasonal speciality for a few years yet.