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Is innovative communication techniques needed in the annual report ? Agreeing Side Casey Lau Gloria Ho Hayley Cheng Hon Pok Man.

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Presentation on theme: "Is innovative communication techniques needed in the annual report ? Agreeing Side Casey Lau Gloria Ho Hayley Cheng Hon Pok Man."— Presentation transcript:

1 Is innovative communication techniques needed in the annual report ? Agreeing Side Casey Lau Gloria Ho Hayley Cheng Hon Pok Man

2 Agenda Definition of Communication Technique Objectives of Annual Report Communication Problems Recommendations Summary Conclusion

3 Definition of Communication Technique

4 Format e.g. tables, charts, graphics Layout e.g. comparative figure, 5-year- summary Presentation skill e.g. grouping, high- lighting trends, summarizing, selection of content, creative visual effects.

5 Objectives of Annual Report

6 Around the world, publicly traded companies publish annual financial reports in order to: Inform and communicate objectively with shareholders, institutional investors, corporate bankers, and other potential investors about their performance, and Fulfill the requirements of listing rules, and Promote their public image and allow the public to know more about them.

7 Objectives of Annual Report HKSSAP 2: The primary objective of financial statements is to provide information that is useful to users for the purpose of assessing the financial position at a particular point in time and the performance and cash flows of an enterprise during a specified period of time and the stewardship of management during that period.

8 Current Communication Problems in the Annual Report

9 Information Overload Dr. Meyer, professor of University of Flensbury Information Overload sender provides more information than investors & readers are able to process

10 Information Overload Quantitative Information Overload Size & number of information contained in annual report waste of time Qualitative Information Overload Complexity (e.g. use of jargons) & repetition (e.g. Director s Report, Segmental on hand Operations Review) of information in annual report hard to understand

11 Readability Problem Findings (e.g. by Smith, Gibson, Schroeder) have consistently revealed that the annual reports are generally: At a reading ease level of difficult to very difficult e.g. use jargons Beyond the fluent comprehension skills of about 90% of the adult population and 40% of the investor population. Misunderstanding and wrong decision

12 Language Barrier Annual reports are usually in English In Hong Kong, English is the second language Use of jargons Even though some annual reports are bilingual, since the education level of the majority of the public is not that high cause barrier to understanding. [According to Govt stats, only 13% of the Hong Kong people have received tertiary education.]

13 Recommendations & Benefits

14 Recommendations 2 main changes : (1)From a prospectus only A package of : (A)Prospectus + (B)CD-Roms (2)From scanned AR on the Internet Web-based Annual Report

15 New content component New presentation technique : From narrative to visual a tool to enhance Annual Reports understandability Recommendations for CD-Rom

16 (A) CONTENT : From narrative disclosure of non- financial info. to visual & audio e.g. notice of AGM, directors report, auditors report, etc. ** low reading ease, but a better predictor than financial Info. video + power-point Recommendations for CD-Rom

17 Sample of visual aids Directors Report Employees Directors Bibliography Directors Interest in Contract NextPrevious

18 (A) CONTENT (2) Voluntary disclosure : from prospectus to CD-Rom Recommendations for CD-Rom

19 (A) CONTENT (3)Provides links as references e.g. financial analyst website, accounting-related references, auditors information hyperlink attached

20 (B) PRESENTATION TECHNIQUE (1) Graphical presentation : e.g. 5-year financial summary & highlight presented by animated graphics, tables & charts in colour Recommendations for CD-Rom

21 (1) Graphical presentation (con t) : Example

22 Benefits of CD-Rom (1)Video + power-point : more understandable listening VS reading s elective reading point-form & simple & shorter words easier to absorb & more interesting within fluent comprehension

23 (2) Voluntary disclosure : Selective reading Less information overload in prospectus (3) Links : As a supplementary aiding device Benefits of CD-Rom

24 (4)Graphical presentation : solve language barrier problem technical languages & terms assist unsophisticated users comparative trend & figures displayed summarize information focus comprehensive overview show big picture

25 (4) Graphical presentation : reading time more interesting cause animated & visualized colour help highlight & reinforce seize attention Benefits of CD-Rom

26 Recommendations for AR Remain what we have now; having no big change, with jargon terms Comply with mandatory requirements and professional + a summary financial statement - voluntary disclosure CD-Rom

27 Summary Financial Information Condensed Consolidated Statement of Earnings Condensed Consolidated Balance Sheet Condensed Consolidated Statement of Cash Flows Condensed Consolidated Statement of Cash Flows Notes to Condensed Consolidated Financial Statements Report of Independent Auditors and Accountants Selected Financial Data

28 In millions, except per share amounts20001999199819971996 Net revenue $48,782$42,370$39,419$33,465$31,613 Earnings from operations3,8893,6883,3993,4052,926 Net earnings from continuing operations 3,5613,1042,6782,5152,085 Net earnings per share, continuing operations Basic$1.80$1.54$1.29$1.23$1.02 Diluted1.731.491.261.19.99 Cash dividends declared per share. At year-end: Assets-Continuing operations$34,009$31,764$28,624$26,681$22,934 Assets-Total34,00935,29631,70829,85225,977 Long-term debt3,4021,7642,0633,1582,579 Selected Financial Data

29 Benefits of AR People feel more comfortable if there still a book hold on hand

30 Recommendations for web-based AR Clear presentation of figures instead of copies of scanned AR Music, pictures Reference links (e.g. comments from some analysts) Video clips of press conferences Interactive design (e.g. Flash) Power search Guided tour -> similar to MS office assistant

31 Benefits of web-based AR Computer help generate more sophisticated information More interesting to read Selectively read the information wanted More info. given (e.g. video clips, reference links) Better quality of figures presentation

32 Summary CD-ROM and internet help the reader analyze the meaning of the AR Multimedia: 1. reduce information overload problem 2. Help lower-educated people 3. Promote the interest in reading AR

33 Summary How the multimedia helps: 1. Use graphics, videos- understand meaning with an interest involved 2. No more words required: reduce time to analyze the company

34 Summary Why multimedia can help: 1. Evidence shows- people memorize images better than words. 2. Good relationship with the company, good images can be enhanced

35 Conclusion Innovative communication technique: improve decision making quality Investors- more logical decision making Multimedia- help investors understand the company better

36 Our decision More innovative communication technique should be used in the annual report!

37 ~ The End ~ Thank You !

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