What is a an Annual Report?
An annual report is an in-depth and comprehensive overview of a business’s or an organization’s key moments and metrics from the last year. They are meant to provide shareholders, investors, donors, and various other interested parties with a rundown of the company’s overall performance and finances.
For public companies, periodic financial reports are required by law. But most of the annual reports you read contain an overview or summary in a more user friendly format in addition to the financial statements that is actually filed to the government. Registered non-profit organizations also have reporting requirements for tax purposes, but often create a more stylized and glossy annual report for their members and donors.
For private companies and organizations, annual reports are often distributed internally within the corporation or organization in an effort to keep all members of the team up to date with the business’s growth and changes.
Annual reports don’t look like boring financial statements these days. Take a look at the image above for some examples of publicly available annual reports.
How do you make a visual annual report?
We're not going to describe the parts of the annual report that are required, like the official forms and the financial statements. We'll leave that to the CFOs and lawyers. What we will walk you through is how to choose a narrative focus, what kind of metrics you should focus on, and the charts, infographics and visuals that will enhance the overall report.
1. Choose a narrative focus
Yes, an annual report is no different from any other form of communication--you need to define a story to focus your message. What is the focus for this year's report that you want to communicate to your readers? What are your company’s or organization’s key achievements and metrics? How will the story lead the reader to understand the future direction of the company/organization?
A typical company annual report will usually contain a message from the CEO/Chairman/President at the beginning of the report that sets the tone of the entire report. This is usually where the focus of the report is articulated, with the rest of the report reinforcing that message.
For example, in SalesForce's 2015 Annual Report, the focus is on analytics. The subtitle of the report is, “The Year of Analytics” and the first sentence emphasizes how important their Wave analytics product is to their customers.
The narrative focus could also be on a pattern or growth. For example, let's say your company has experienced record growth in the previous year. The story of how your company grew could be the focus narrative. Another example can be a change in direction, like a rebranding or an important acquisition like Mineral Technologies, Inc did in 2015, calling it the New MTI.
You could go a different route and make the focus narrative a reflection on past mistakes and steps your company/organization has taken to correct them. For example, in their 2014 Annual Report, Rackspace admitted to having "lost its way" and to mistakes in its strategic execution. They vowed to be "back on their game, back on the rise," and to refocus their efforts on customer support and double down on a segment of the market they are in.
Nonprofit organizations will probably want to focus more on the impact they made in the past year and goals moving forward. For example, take Red Cross Canada’s 2015 Annual Report: their narrative focused on community, connecting Red Cross Canada with Red Cross globally and shared both Canadian metrics and global metrics.
Another example is the Bill & Melinda Gates Foundation’s 2016 Annual Letter’s focus on the theme of superpowers. Their compelling story linked a trending pop culture theme to their foundation’s work.
2. Choose the right metrics
Once you’ve decided on your focus narrative, choose the key metrics that will support that narrative. These are the metrics that you want to focus on. The problem is, many key metrics are also pretty boring. The key metrics you choose to highlight should be easy to understand and presented in a creating and interesting way.
For example, Shopify’s 2015 Year in Review focused on the growing entrepreneurial market. To enforce this narrative, they emphasized the number of stores powered by Shopify and used a fun pictogram to illustrate the numbers.
Some businesses use complementary metrics to support their narrative. For example, Fitbit’s 2015 Financial Statement uses a narrative that focuses on two trends: one, how individuals are increasingly focused on health and fitness; and two, how connecting devices with mobile phones has become the preferred method to track and access health information. Fitbit uses two key business metrics--”Devices Sold” and “Paid Active Users”--to show how these two trends converge, with Fitbit being the solution that offers both.
Some companies even coin terms for their metrics to make them more interesting. For example, GrubHub’s 2015 Annual Report uses the key business metric “Daily Average Grubs” to measure the average number of orders they received per day. Their creative use of the term “Grubs” is just a way to connect the number of orders to their brand and story. It makes the metric a little less yawn-inducing.
Key metrics for a nonprofit organization will most likely focus on a problem and a solution. In the Bill & Melinda Gates Foundation’s 2016 Annual Letter, Bill Gates draws attention to the enormous weight of carbon emissions in the past year.
To demonstrate how his organization aims to solve the problem, he presents the problem and the solution in the form of a simple equation. This puts the problem into laymen’s terms and makes the big picture easy for anyone to understand.
In her letter, Melinda Gates draws attention to the wage gap between men and women globally. She does so by contrasting the amount of unpaid work men do in different parts of the world with the amount of unpaid work women do.
Aside from your key metrics, though, you will also need to include a number of required metrics. In most corporate annual reports, there are required metrics such as revenue, profit, number of clients, percentage of market share, etc.
To ensure that these key metrics aren’t overlooked by readers, place a Highlights section at the beginning of your report. In SalesForce’s 2015 Annual Report, the required metrics are shown in connection to the focus narrative of the report. This allows them to cover required information without interrupting their narrative.
3. Choose the best charts for your metrics
Once you know which metrics to display, the next step is to visualize them. How do you choose the best charts or visualizations?
The type of data you are visualizing will determine what type of chart you use. For example, to visualize percentages, a pictogram or icon chart are a fun way to do it. In a pictogram, the number of images represents units of measurement.
The percentage of height or a color represents the percentage or ratio of the data.
For basic comparisons of discrete data, like multiple choice answers, a bar or column chart work best. If you want to visualize a value that is an outlier, you can used an area-based chart like a bubble chart or tree map to emphasize the contrast, but only if one value is much larger than the others.
To show trends over time, a simple line chart is your go-to option. You could also use a bar chart as long as you aren’t including too many data points in a time series.
But there are also situations where it’s better to not use a chart at all. For example, to convey a single, important data point, it can be more impactful to simply write the number in big letters.
For a more in-depth look at how to visualize you data, read our article on How to Choose the Best Charts.
4. Design and style
The official annual report may be a series of financial statements and boring forms that are required by law, yet many companies have opted to include interesting infographic designs, photos and visualizations to enhance the story that are hidden behind the numbers.
One of the biggest challenges of annual reports is to have a balance between form and function. The function of the annual report is to communicate key metrics, financial numbers and activities to its stakeholders. Form has to follow function. The design and style must not overwhelm the function of an annual report.
Create an interesting and bold cover, title or visual for the report.
You want to grab the attention of readers and hold it. Because annual reports tend to be text-heavy, adding beautiful images will be a much-needed break from the text. It’s also a good opportunity to put faces to the work your company or organization does.
Consider the narrative focus of your report--are you focusing on the people your organization has helped? Are you focusing on technological innovations made by your company? Reflect the narrative focus in your design.
Flow, consistency and negative space.
It’s important for your content to flow, especially when your report consists of heavy text and data. Allow negative space between elements so that the viewer has time to process what they are seeing before going on to the next set of information.
Use a grid.
We strongly suggest using a grid to lay out your design, so that the elements of your design are properly aligned. A grid will ensure consistency from page to page while allowing you to alternate between different compositions, which keeps your report interesting. If you have multiple pages in one section of a report, play around with the layout on the same grid and alternate between the layouts from page to page.
Be mindful of principles of typography.
Use a maximum of three different fonts to ensure the text is interesting but not chaotic. A good way to simplify typography but still maintain a compelling design is to use different font weights and styles to create contrast and focal points on a page. For instance, try a bold header, an italicized caption and a regular weight body copy. In most cases the font used will be primarily black. It’s always a nice touch to use a medium-toned grey for complementary text, like subheaders.
Use high quality images.
Using low quality or pixelated images can make the report look amateur and poorly represents your company or organization. Images that are saved from the internet, depending on the dimensions of your report, should be on sized large to ensure they are not pixelated.
Contrast is appealing to the eyes. It creates a focus and also allows you to organize information by having a certain element more prominent than another. You can create contrast with colours, typography, images, shapes--any design element, really. For instance, if you wanted white text to stand out on the page, try adding a coloured background behind it.
Contrast flat shapes with white space to make the shapes pop from the page.
Follow a hierarchy of information.
A report might have an abundance of information of one page. It is up to you to determine which information you want to reader to read first. Creating a hierarchy of information is important because a reader should be able to navigate through the report and easily skim through the most important information. You can create hierarchy by altering the size of elements, the placement, shapes and color.
You can use size and color to indicate hierarchy. Place the most important important numbers and text in bigger font and in bright colors that contrast with the rest of the page.
5. Creating the Annual Report
If you’re not a designer by vocation and you’re feeling a bit intimidated by all of this, don’t worry. The process of creating an annual report can be made significantly easier by using a template. Luckily, there are places that offer infographic templates, like Venngage.
You can use graphic design programs like Photoshop and Illustrator, or even Word, to design your annual report, but those tools are considerably more complicated (and costly). Venngage offers a variety of different pre-made templates that you can customize to tell your story.
To create an annual report, all you have to do is select which template you would like to use. Then, you are free to customize it in any way you would like, including importing your own branding, images, links, and more.
Still not sure where to begin? Read this article on how to create an infographic in five easy steps.
Tell your company or organization’s story
An annual report is an opportunity to update stakeholders on your company’s achievements, highs and lows, and goals. The amount of care you put into your annual report will reflect the amount of care you put into your work in general. So have fun with the design and try to make your report memorable.
Want to make beautiful infographics? Sign up for Venngage.