A revolution in report and accounts

Will there be such a thing as a specialist report & accounts printer in five years’, or 10 years’ time? The increasing use of the Internet for delivering this kind of information to shareholders, hastened still further by changes in legislation that now enable corporate organisations to offer an ‘opt in’ to a printed report instead of an ‘opt out’, makes the question a pertinent one. Or does it?

The market is certainly evolving, but it’s by no means clear that printed reports will disappear. One printer in that hot seat is Royle Corporate Print, and its MD Gary Mellish thinks the report & accounts sector in print has many years left.
“Companies still want to produce reports in a printed form, and it is still an effective communications tool. The environmental issues are a key factor. We’re using significant amounts of recycled papers from FSC and PEFC, and there is ISO 14001 and carbon neutral print as well, and all of those issues are important to clients,” says Mellish.

“So I still believe there’s quite some longevity in the report & accounts market, and certainly the design groups we speak to that focus on the smaller Plcs have not seen any impact in what they’re doing through the change in legislation. I don’t believe it will have a big impact. The report & accounts is still a key marketing piece too.”
Nevertheless, the annual report requirements of corporate organisations are certainly changing. Run lengths have been heading south for several years, although you could say that about most areas of print. The nature and format of the documents are also changing though.

“This year has been the year of the super summary,” states Ian Murdock, sales and marketing at Beacon Press, part of Pureprint Group, “First there was the full annual report; then the Summary of Financial Statements, which was a bit more marketing-oriented; now in addition there’s the super summary, which might be just a six or eight-page summary that goes to the bulk of the shareholders and points them to the web.”

The super summary has certainly come about since the legislation change last year, so its own impact and longevity is not yet known. Liz Grahame of The Printed Page, which specialises in managing report & accounts projects for blue chip clients points out:

“The super summary is usually a six-page, A5 document which saves money on postage, but it’s only started this year and we don’t really know what the feedback is from shareholders. They might say they want the usual colour document through the door.

“But companies are doing it because it saves money on postage and print, and they will perhaps do a corporate report at a later stage. Some companies have done a super summary alongside an annual review as a test, and next year they might do it as a replacement to the annual review.”

Mellish points out that even if print runs for full annual report documents are on the decline, companies are still required to print and post the ancillary documents such as notice of meeting and proxy voting forms, so there are still postal costs to accrue. He says that the opt in change has had some impact on the first six months of this year, but not so great an impact as might have been expected. It’s impossible to know in the longer term to what degree that impact might increase.

There are significant differences in the approach to producing a report & accounts document and its ancillaries according to the size of the corporate however. Anecdotally, it appears that the larger companies, those in the FTSE100, are actively embracing the Internet as a medium for delivering at least some of the information. The small and medium-sized organisations, however, have not taken that step yet, by and large.

“With FTSE100s and some of the larger FTSE250s there has been a huge fall in print runs – down to about a quarter in less than two years. Corporates have looked at the shareholder base and made decisions about who they want to communicate to and at what level,” says Murdock. “But as you go down to the smaller businesses, you see that print runs are being pretty static.”

Mellish says: “Sainsbury has really pushed web access for its report. It’s still producing quite a substantial report & accounts, but for two thirds of the shareholder base it’s not sending out any printed summary.”

Murdock sees 2008 as “a year of uncertainty” though, as companies assess the new dynamics of feeding annual reports and financial summaries to shareholders using the technology at their fingertips. He continues:

“In speaking to the design agencies about where it’s going to go, I don’t see any clarity in decision making yet. The web will be more of a focal point, but reporting agencies recognise that print is important; it provokes a reaction and an unavoidable one if you like, because it’s there on your doormat. The web does not; it’s passive and it’s limited. Corporates recognise that too and they need to assess what part of their stakeholder base they want to receive certain materials.”

Grahame says she believes that many companies have played safe this year as they consider the possibilities: “Many of them will realise that they have over-ordered, and when it comes to the project next year they will reduce the numbers printed.”
While no-one would argue that print runs for report & accounts are sliding in general, what has not really taken off yet is the use of digital print for a company’s most prestigious piece of print. There remain question marks over the cost effectiveness and the quality of digital print it seems, despite the potential for working to an on-demand model.

According to Mellish digital printing “would provide advantages to report & accounts, but customers have not really responded to it at the moment.” He says: “There’s not much incentive for them to look at it because it still has its limitations. Principally, it’s because it’s not cost effective for the print runs that we are involved in, but there are also still some quality issues outstanding.

“There’s a need for corporate colours in report & accounts work, and I can think of several we’ve been involved with recently where even if it was economical to print digital, we still would not have got the right colour result.

“Report & accounts on demand? Not at this point, but it could happen. It has not come from any client or design agency yet but two years from now it could be a different scenario, and it will be up to the print industry to respond.”

“We have talked to clients about printing digitally,” confirms Liz Grahame. “For small companies it’s fine but not for the FTSE companies. I have looked at some costing exercises and with the quality and the numbers they are producing, they were better off in the sheetfed litho area. We are seeing digital print used for proofing purposes though.”

An increasing pattern for Grahame however, and one that has changed noticeably in the last couple of years she says, has been the number of print management companies involved in report & accounts work. This can have implications for the choice of printer, as many print suppliers may tender for a job while the number of specialist annual report printers, offering the best levels of security and quality control, is comparatively small.

“I can give a recommendation but sometimes the client is looking to reduce costs and there are many printers out there,” Grahame says. “Most companies can put ink on paper but there is only a handful that are really report & accounts printers. It can be a bit of a battle getting the right printer, but it’s such a prestigious document that many clients will still pay for the right printer to do it.”

Prestigious indeed, and as long as corporate organisations continue to see a printed report & accounts document as such, that could be the key ingredient that ensures the ongoing existence of a viable market a decade from now for the suppliers that serve it.


• www.royle-print.co.uk
• www.beaconpress.co.uk
• www.theprintedpagelimited.com