90% of S&P Global 100 Companies Fail Annual Report Usability Standards

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Only eight companies meet recommended basic requirements. Five meet advanced requirements. Usability has worsened over past three years.

Less than 10% of the world's 100 largest public companies are meeting basic usability requirements for their online annual reports to shareholders — and standards have worsened over the past three years.

These are the main findings of an in-depth comparison of the online annual reports of the S&P Global 100 Index companies, the world's highest profile listed companies. The study was conducted jointly by IR Web Report, an independent investor relations website evaluation firm, and GeBer Geschäftsberichte, a web production firm.

"Online usability of financial disclosures is essential for investors to easily stay informed about their investments in public company securities, particularly as companies begin to replace printed reports with Web versions. Yet the vast majority of these mega-cap companies are failing to meet an acceptable usability standard," said IR Web Report president Dominic Jones.


Out of the 100 large-cap companies in the study, only eight met all of the basic usability requirements for online annual reports. These requirements, recommended by the likes of the UK Investor Relations Society and the London Stock Exchange, meet the needs of investors who want to either view information online or download all or parts of the report for offline use or printing.

The basic requirements for online annual reports are:

  • Providing the entire report in navigable HTML for rapid online viewing and reference;
  • Offering full and segmented PDF files for printing and offline use; and,
  • Giving investors downloadable spreadsheets of financial tables in the report for easier data importing and analysis.

Companies in the study that met these basic usability requirements are (in alphabetical order): BASF AG; Bayer AG, DaimlerChrysler; Deutsche Bank, Deutsche Telekom, IBM, Microsoft Corp., and Royal Dutch Shell.

Deutsche Bank had the highest scoring online annual report package among the 100 companies in the study. The company's report was produced by GeBer Geschäftsberichte, however, IR Web Report provided the protocol, weighting and independently verified the criteria used to evaluate the reports.

"The eight companies meeting all the basic requirements deserve praise for making an effort to provide their online annual reports in formats that meet the varying needs of investors," said IR Web Report's Mr. Jones. "Clearly, these companies are trying to communicate their financial information effectively on the Web."

Another three companies narrowly missed meeting all of the basic usability requirements. These companies — Altria, General Electric and Repsol YPF — met all of the basic requirements except that they did not provide spreadsheet downloads of their financial statement data, a key requirement for analysts and other experienced users.


The researchers analyzed the HTML reports of all companies against an advanced set of 28 attributes. Only five companies' scores met a standard of 70% or higher on these more advanced requirements for viewing annual reports online.

Companies that met the advanced standard for their HTML reports are (in alphabetical order): Bayer AG, Deutsche Bank, IBM, General Electric, and Royal Dutch Shell. The precise criteria are available online at http://benchmark.geber.at/en. Companies are invited to use the criteria to assess their own online reports.

Royal Dutch Shell scored the highest overall against the HTML report criteria. Its HTML annual report includes an advanced search engine that enhances the report's value as an ongoing reference document while all financial tables are provided in HTML.

"The companies that passed the advanced criteria are providing the very best reports for online viewing and use. Their reports put information in easy reach of investors and enable researchers to quickly and easily retrieve specific information or browse the report for general interest," said Mr. Jones.


In addition to providing their annual reports in HTML for online browsing, companies should also provide their reports in a single PDF as well as in smaller PDF files of individual report sections. This makes it easier for investors to print or save a specific part of the report or to print out the entire report. It can also reduce the burden on investors when the report is not provided in HTML.

The survey found that 43% of the companies provided their reports in a single PDF as well as individual chapters in PDF. Another seven companies provided their reports only in sections in PDF but not in a single file, meaning that an investor wanting to print out or save the entire report must go through the time-consuming task of downloading several files.

It is important that companies not make the mistake of using PDF as a replacement for well-designed HTML reports. PDF is a printing format and while some companies try to improve the usability of PDF documents for online browsing by adding a bookmarks index, this does not improve usability sufficiently to replace HTML pages.


Expert IR website users require financial information in annual reports to be provided in a spreadsheet format. This allows them to import the data into spreadsheet programs to be analyzed and compared.

Without spreadsheets, these users may be forced to re-enter information from the report manually or by copying and pasting it from HTML or PDF, a time-consuming and error-prone process.

Only 15 of the 100 companies in the study provided their financials in Excel or other spreadsheet formats.


The study found that almost 40% of companies published their online annual reports in formats that create significant burdens on investors to be able to access and use them.

One of the most significant problems is when companies provide their annual reports only in a single PDF file, known as PDF blobs. This practice makes it extremely difficult for many investors - particularly less web savvy ones - to navigate the report online and find information in it. PDF files require users to have a PDF reader installed, can take long to download, and may cause technical and usability problems for the user.

A recent traffic log study by academics Frank Hodge at the University of Washington department of accounting and Maarten Pronk at Tilburg University department of accounting and accountancy has found that most investors using online annual report information prefer to use HTML pages.

They analyzed data from the servers hosting annual report information of Netherlands-based Philips Electronics and found that 76.1% of users identifying themselves as non-professionals used the HTML version, with 61.4% using HTML exclusively and 14.7% using HTML in combination with PDF. Meanwhile, 59.2% of professionals used HTML pages, although they showed only slightly more preference for it than PDF.

Ironically, Philips was one of 24 study companies that published their most recent annual reports in one PDF file only. The Philips 2004 annual report is 219 pages.

"PDF annual reports are principally useful only for printing, and sometimes for offline reference for experienced users. But they are not usable for online browsing, which is how most individual investors want to view online annual report information. Firms that post their reports only in PDF ignore the needs and preferences of most of their report users and put people off reading the report," said Mr. Jones.


The study also found growing use of another document format that has poor usability. Image-based reports, which convert annual report pages to large digital images that make the text blurry, have been widely criticized by usability experts for being hard to use and inaccessible to users with disabilities.

In guidelines issued by the UK IR Society last December, companies are urged to avoid so-called "quick reports" due to their poor usability. The IRS guidelines are endorsed by the Institute of Chartered Accountants in England and Wales, the UK Department of Trade and Industry, the Association of Private Client Investment Managers and Stockbrokers (APCIMS) and the National Association of Pension Funds (NAPF), among others.

Despite this, the researchers found that two UK companies — Vodafone and HSBC — used image-based presentations for their annual reports. In total, 21 companies used the format. Of these, 13 also published PDF blobs.

French companies were the most likely to use image-based formats for their annual reports. Half of the 10 French companies used the format. In the U.S., nine of the 38 companies (24%) used image-based reports. Ironically, the main vendor of image-based reports to French companies is based in the UK, where image-based reports do not meet the requirements of laws barring the use of technologies that exclude access to people with disabilities.

"Image-based reports are attractive to companies because they are quick, cheap to produce and perceived as a step up from PDF blobs. However, they are extremely cumbersome to use both online and offline as they cannot meet many basic usability requirements of investors," said Mr. Jones. "Companies should stop using image-based reports and vendors should stop selling them, especially because there are better options available that cost the same and can be produced in the same amount of time."


Twenty-two per cent of companies in the study provided only highlights or a summary of their annual reports in HTML. Typically, companies provided the annual report narrative in HTML but offered the financial report only in PDF or in images.

This has the effect of making the important financial statements, notes and management's discussion harder to use than the less detailed information provided in the highlights or summary.

The study also found that US companies are becoming increasingly compliance focused in their annual report disclosures, with some providing their SEC 10-K annual reports in lieu of an annual report.

These filings, while comprehensive, are difficult to use because they are text-heavy, legalistic, lack basic information design attributes and follow a structure that most non-professional investors and employees are unfamiliar with.


Compared to surveys of a similar group of large-cap companies conducted by IR Web Report in prior years, there has been a sharp decline in the usability of online annual reports in the past three years.

For example, in 2002 just 12% of companies posted their annual reports in PDF blobs. In 2005, that number has doubled to 24%. Similarly, the number of companies using image-based reports has risen five-fold from 4% in 2002 to 21% in 2005.

"Instead of improving the usability of their reports, companies have gone backwards," said Mr. Jones. "This should be a concern for the investor relations community and regulators because a growing number of companies are beginning to replace printed annual reports with online versions. Investors, particularly long-term individual shareholders, need companies to properly publish their reports online so that there are no burdens to access and use."


Online since 2000, IR Web Report http://www.irwebreport.com is a subscriber service that evaluates the investor relations websites of more than 515 companies around the world and advises companies on global best practices.

IR Web Report is fully independent of all IR website design, hosting and content vendors to ensure the impartiality of its rankings and recommendations. Its research is paid for entirely by its public company members.


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