In an age of instant electronic information and analysis, the annual report is a charming anachronism. Those individual investors who do still buy and hold a stock for more than a year are likely the same who track the company's fortunes so closely. They'll find few details of use in the document's pages. And because reports are often released months after fiscal year-end, the data contained therein is just a bureaucratic formality.
Nevertheless, mandating that companies file a final, audited account of the previous year's business is an important principle. Of course, in the United States, Sarbanes-Oxley legislation means many corporations dwell on their 10-K forms–and leave it at that. In Canada, companies still have greater leeway to present the facts. Perhaps that's why Canadian companies seem so adept at turning mere regulatory compliance into messaging opportunities.
Consider the global Annual Report on Annual Reports, published by e.com of Belgium. Telus Corp.'s 2005 edition placed first among an international ranking of 300 companies. Noted strengths included its financial and performance reporting, financial review and management discussion and examination of strategy and outlook. It wasn't alone in its exemplary disclosure, either. Eighteen Canadian companies made the ranking, five of them with at least an A-, and in the separate Financial Sector Top 50 ranking, BMO Financial won out, and no fewer than seven other firms also represented this country.
Of course, when accolades are published in a report that is itself lacking clarity, polished prose or even decent copy editing (one subhead reads: “An A-Z list of best – and not as good – practice [sic] on corporate responsibility and sustainability reporting”), one might question the merits of the judging. But hearty congratulations to Telus, BMO Financial and the other Canadian companies for the recognition–even if it may be worth less, in this day of digital documents, than the paper their annual reports are so quaintly printed on.
