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How To Write An Annual Report

Here is our guide to help you write your annual report, complete with industry-focused TOC's.
Bonus section: deep-dive on the executive summary.

An annual report is a comprehensive statement of the various activities and results in the past year of a company or organization. Apart from informing shareholders and investors, annual reports are also an opportunity for outreach. The document doesn't have to be merely financial and can include information that goes beyond business performance. Yet because an annual report is often a compliance requirement and might be perceived as inherently unappealing to the general public, producing the document can be a daunting task. We'll give you practical tips for writing annual reports, go over best practises and provide you with templates for various industries to help you not only tackle the task of writing your annual report, but also produce a more engaging document.

Introduction To Annual Reports

Establish a style guide:
This is especially important when various people are working on writing and editing the report. A style guide prescribes language and tone of voice, but also serves consistency with rules for date formats, capitalization of words, hyphenation, acronyms, branding, and spelling.
Determine the key messages upfront:
Don’t use the writing process to “discover” the message(s) you want to convey in your annual report! In turn, the message or narrative thread should drive your writing.
Finalize the structure:
Before you start writing the annual report, all stakeholders need to sign off on the structure, otherwise you’ll end up producing content that will be cut from the final draft.
Prepare a clear brief:
Avoid confusion about the scope of the project, roles and responsibilities by writing a clear brief for your annual report.
Plan in advance:
Writing your annual report is a long-term process that requires organization and project management skills, especially when you hire external contractors to take care of tasks such as design or printing.
Language:
Use simple sentences, active verbs, and keep jargon to a minimum. Avoid clichés, keep sentences and paragraphs short, and check your imagery: flowery language and metaphors make things vague, but if you use them, check that they’re in line with your brand.
Write in drafts:
Your annual report doesn’t have to be perfect from the beginning. Rather than trying to get it right in one go, work in three iterations. Your first draft is a rough sketch where you obtain clarity of which section goes where and how long each section will be, more or less. In the second draft, the coherent narrative takes shape. In the third draft, you clean up the writing before your have someone else check it.
Changes:
Employ a professional proofreader or editor to work through necessary changes cost-effectively and efficiently. Consider legal counsel for a compliance or regulation check.

Pro Tip

Best Practises For Annual Report Writing

Annual Report Executive Summary

Annual Report Templates

These are table of contents examples or suggestions on how to structure the annual report for various industries:

SMB: Small And Midsize Business

The U.S. Small Business Association

SBA

reports roughly 30 million small and midsize businesses in the United States. Their annual filing requirements vary based on the respective business structure and the state where they’re incorporated, but for many, annual reporting is required. Even without shareholder or investors, you can follow this suggested structure for an annual report for your small business and adapt it to fit your particular filing and compliance situation:

Letter or statement from the CEO
Executive Summary
Highlights of the past year
Company information
Optional: Stories, photos, and charts that construct a relatable narrative for investors.
Optional: Instead of targeting investors, a small business can address and inspire employees in a special section.
Financials:

Balance sheet: Listing the company's current financial condition including tangible and intangible assets, long-term liabilities of the business, and equity, the balance sheet is a snapshot of how the company is doing.
Income statement: Details on revenue and expenses to highlight profits and losses.
Cash flow statement: Here the focus is on liquidity generated and spent in the past year

Audit
: If necessary or appropriate, include an auditor's report on the company's financial situation. Such an audit can be done internally or externally.
Optional: Notes, appendix and clarification of financial statements.
Optional: Accounting policies.
Optional: A disclaimer about your forecast of expenses and revenue.

Nonprofit Organization / Non-Governmental Organization

A sample structure or table of contents for nonprofit and non-governmental organizations could look like this:

Welcome letter or personal introduction:
This is your opportunity to showcase your mission. Your supporters probably don’t think as much about your mission as you do, so repeating your mission statement throughout the report is acceptable. Demonstrate throughout the report how your organization embodies, pursues, and fulfills that statement.
Summary of highlights:
Select major accomplishments you want to showcase and keep it engaging, but concise to not lose the attention of your readers. Limit the number of highlights and make sure to be inclusive: ask different people in all parts of the organization for their personal picks. Ensure that the accomplishments in the summary are in line with your message and mission statement. If possible, find a theme (such as growth, support, hope, responsibility etc.) to unite the highlights. Clarity is key, so spell out how the highlights relate to the organization’s mission.
Financial information
Three stories of accomplishment:

The big picture
A personal touch
Example of past impact shaping the future

Donor list:
Depending on your organization, you can list donors, funders, volunteers, partners, sponsors, or association members.

Avoid use of jargon and acronyms, at least without spelling them out the first time. Exclude day-to-day administrative details of the organization. Clearly state where people can donate, but too much fundraising talk has no place in your annual report. After all, you are reporting your past fundraising. For an association, the approach should be centered on members rather than donors. So instead of a donor list, you’d include at least a list of all members. You can also include examples of benefits to members in the form of accomplishments of the association.

Charity

The structure for an charity’s annual report is similar to a nonprofit organization, with slight differences:

Mission statement / vision statement
Summary of highlights
Overview of the charity:
Here you can give a brief summary of the history and talk about the charity, the people and the supporters.
Governance:
This will include legal information about the exact type of charity and the structure and management. You can include a report by the chairperson or CEO and state the objectives and activities as outlined in the chart.
Financials:
This section can include:

Treasurer’s report
Auditor’s statement or report
Financial statements

Other optional sections:

Acknowledgements
Call for contributions / action
Future outlook

Best Practices for a charity’s annual report include:

State the mission clearly and relate back to it when you outline and highlight the activities and achievementsState clearly the organization’s mission and relate the activities back to the mission throughout the report.
The information about the governance and structure of the charity should also reflect the mission.
Disclose the charity’s risks, issues and challenges in the context of the mission.
Avoid splintering your annual report into many mini-reports by your charity’s committees, if they exist. You can make these smaller reports available individually on the charity’s website.

Church

Welcome letter or personal introduction:
Words by a founding member, church body or pastor to address the audience and set the tone for the annual report.
Mission statement:
What are the objectives and activities of the church?
Overview:
The identity of the church and its members as well as the values and the calling of the church, followed by details on the structure, governance, and management
Stories of accomplishment
and the church's work, for example:

The big picture
The community
The mission and outreach
Charity work with a personal touch
Future outlook

Financials:
This section can include:

Statement of Financial Activities
Charity Balance Sheet
Cash Flow Statement
Notes to financial statements
Audit by committee or independent auditor

Callout:
In this section, you can list donors, funders, volunteers, partners, sponsors, or church members as well as provide a call to action, for example to donate, take part in church work, or become a member.

What Is An Annual Report?

The annual report is an integral part of compliance and reporting for a company or organization. The exact requirements may vary depending on the incorporation of the business or the registration of the organization, but the general approach is a year in review with specific focus on some aspects, such as financials, growth or performance. Typical contents of an annual report can include a corporate overview, reports from directors and auditors, a financial review and statements, and an overview of the corporate structure. Annual reports are aimed at shareholders and potential investors to provide an overview of the company and its activities, but may also account for how donations were spent in the case of a nonprofit organization. A company's registry often requires the filing of an annual report. A public company may also have to publish financial quarterly reports.

What Is The Purpose Of An Annual Report?

Annual reports have various distinct goals and purposes for a company, business, or organization:

Financials:
Statements and audits of the financials as well as financial performance and goals of a company can comprise the bulk content of an annual report. Projected and achieved revenue figures are part of this section. A company might also report expansion, growth, revenue increase plans, as well as a return-on-investment analysis or effectiveness study. A nonprofit organization might account for its spending, report donations and also project financial goals.
Achievements:
A year-in-review goes beyond financial numbers and annual reports often feature a mission statement and highlight past achievements, which could include research, investment in personnel of infrastructure, employee benefits, personal success stories, customer or user testimonials, or product launches. This section seeks to portray the company as an innovator and industry leader which attracts participation.
Promotion:
An annual report is an opportunity for marketing and public relations, either in a special section, or throughout the entire report. The goal is to attract new shareholders, excite existing investors, and raise brand awareness with the general public.
Compliance:
Companies produce annual reports even when they don’t have to because they want to benefit from the marketing and PR opportunities. Publicly traded companies and entities that fit certain other criteria have to file annual reports with the SEC, the US Securities and Exchange Commission. To avoid producing two different reports, these companies commonly produce one general report that meets the compliance standards.
Pro Tip
If your annual report has to meet certain compliance standards (such as the SEC Form 10-K for publicly traded companies), make the best use of your resources and only produce one report for your entire audience which includes the necessary information.

https://www.mememaker.net/meme/keep-calm-its-annual-report-time/

What Are Annual Report Formats?

Annual reports have various distinct goals and purposes for a company, business, or organization:

Printed Annual Reports:
Traditionally, an annual report is a glossy and high-end print product distributed to shareholders, regulators, members of the press, and figures selected for marketing and PR reasons. The production and distribution of a high-quality print product is also a cost factor that has to be figured into the overall budget.
Electronic Annual Reports:
The advantage of a print production is that companies and organizations can simply re-use the document and make their annual report available in electronic format, for example as a PDF download on their website. This version can also be distributed through email and other digital means.
Interactive Online Annual Reports:
With this format, readers can browse and view an annual report just like a website. Graphs and charts can be animated or interactive, and there is the possibility of embedding videos and other multimedia material. You can precisely track reach and engagement with digital online annual reports and brand and design the it just like the website of your company or organization.
Pro Tip
An online, interactive annual report is a cost-effective opportunity to use your reporting to drive engagement and get the best results from making your report available to a broad audience.

What To Include

We’ll also include detailed structural suggestions for annual reports in various industries or sectors in the next section. A fundamental overview of the business of the past year is a common integral element of annual reports. Depending on your business, company or organization, you might have to or want to include the following sections:

Chairperson’s statement or letter:
The CEO, the primary owner or the chairperson usually addresses readers with an introduction in the form of a letter or personal statement. This might highlight the most significant developments as snapshots, include brief details of company initiatives, and give a brief summary of the financials–sort of like a teaser of what’s to come. This part commonly also focuses on the challenges, achievements, and growth.
Business profile:
In this section, you can profile your company or organization with a mission statement, and details on the corporate office, the board, the team or the employees. You can highlight your products or services which are the main revenue drivers, provide an analysis of the market, the competition, or the risk factors, and profile both the investors or donors you have and the ones you are looking for.
Financials:
Regulation and compliance will largely dictate what to include in this section, but unlike in other sections of your annual report, there is no room for storytelling, embellishing, or flowery language. Transparency, accuracy, and thorough reporting are key here. The absolute numbers speak about the company’s performance to investors, shareholders and stakeholders, regulators, employees, and the general public. Readers will get a complete picture of the profit and loss of the past year, the revenue and its division into earnings retained, investment, and operational expenses, and the company’s shares. A typical sequence in this section could be: income statement, balance sheet, equity statement, cash flow statement, and shareholder information with earnings per share. Consolidated statements can be followed with longer, in-detail explanations of the financials.
Auditor’s Report:
An audit of the financial situation and the spending can be split into the reporting of an audit committee and the reporting of an independent auditor or auditing body. Some companies include the former in their business profile, and the latter as part of the financial statements.
Other sections:
Depending on your company, other sections can be a director’s report, accounting policies, general policies, stories, image material, and details about other activities not related to the business, such as corporate social and environmental responsibility reports.

Annual Report Writing

Produce A Brief

In a brief, you outline the aims, objectives, and milestones of the production of your annual report in a comprehensive, yet succinct way. You'll work on the brief first to request cost estimates and have a reference document during the production process.

The brief for your annual report helps you establish what is required and where you want to go. Circling the brief among all decision-makers and stakeholders gets everyone on the same page. The more specific you can be in the brief, the better the estimates for production time and costs will be. In your brief, you should communicate the following:

Format of your finished annual report and specifications for a printed product, if necessary, such as size and quantity.
Expectations for internal and external contributors. This includes length of requested texts, design standards, style questions, and timelines.
Specifications for deliverables that define the schedule, data, and format for contributors.

Compose your brief clearly to avoid conflict based on miscommunication or misunderstanding. Have decision-makers and stakeholders sign off on your written brief. If submissions diverge from the specifications, the document will serve as a base for compromise or clarification. An outline for your brief could look like this:

Background information or mission statement
Concepts and deliverables
Timing / deadlines
Objectives of the annual report
Key messages of the annual report
Short description of the brand, personality, and audience
Writing, style, and design specifications
Pro Tip
Write the brief for your annual report before you or anyone starts work on the actual report. Compose a clear annual report brief to avoid conflict, because conflict often stems from misunderstanding or miscommunication. Clarity helps everyone fulfill their roles during production.

How To Write The Executive Summary

The executive summary formally presents the main points of your annual report in a clear and concise way. A typical length would be one to two pages. The purpose is to give readers an idea of what's to come as well as present the most important facts right up front, because anyone who doesn't plan on reading the full report will at least glance at the executive summary. Writing the executive summary requires more effort than just copying and pasting important facts from the report. That approach will just lead to a jumbled summary where many pieces of information appear out of context and are therefore useless to the reader. It should be a given that you can only summarize a finished annual report, so unless you have your final draft in front of you, this task will have to wait. When you're ready, ask yourself these questions:

Who is your audience? This will help you decide what critical information readers need. Make the story you tell in your annual report resonate with them.
What is the objective of the summary? It serves the function of summarizing, but in addition, what do you need the audience to understand? What reaction should they have, what action should they take?
What is the outcome? The executive summary should also list conclusions or recommendations based on the past year on which you are reporting. What changes are necessary, what actions will the business take in the future? What are the benefits of the achievements, which improvement will the company reap from implemented solutions? Don't make the reader guess or work to find out about the future course of the company or organization.
How will you impress? Of course your executive summary should be able to stand out and give all the important details even for those who decide to skip the rest of the report. But ideally, it is able to draw the audience in and make them read on. Don't inflate numbers, invent facts or dress up the truth, of course, but carefully consider how you shape your message and organize your summary.

Format For The Executive Summary

For a small or midsize business, you can consider combining the personal letter and the summary. This is especially useful when your report is short in length and you’re not sure if you need a personal letter at all. That way, you can have a personal introduction to the entire report and a guide by the CEO through the most important information presented in the report. Regardless of style and approach to the summary, here are a few tips on how to structure and format it:

Order of appearance:
Apart from opening lines, you’ll have to decide if your summary follows the exact structure of your report as laid out in the table of contents, or if you organize it differently and establish a varying level of importance. In both cases, you can use subheadings to introduce sections and use bullet points as well as enough space to make the summary visually appealing and accessible to scanning.
Length:
When your summary reaches a length of two pages or beyond, it arguably stops being a summary and becomes an outright introduction. Be brief but comprehensive. Do a sketch where you describe each necessary section in just one word, then elaborate to three words, then a whole sentence. Sometimes a flow or coherence is better for the executive summary than giving a complete overview of the annual report.
Tone of voice:
The executive summary is formal and not casual and should match your target audience in tone of voice. Yet it’s neither the time nor place to get into technical jargon, lengthy definitions, and presentation of information that is only accessible with background information, expertise, or in-depth knowledge of the subject matter. Avoid acronyms and data that couldn’T stand for itself.

Any changes to the report require at least a check if not an update of the executive summary to ensure information remains relevant and consistent.
Organize the summary either matching the table of contents or in the order of importance.
Check for jargon, technical terms, filler words, and superfluous acronyms.
Use active voice and direct language.
Sparsely present precise and factual data from the report as highlights.
Check to remove redundant information, repetitions, clichés, buzzwords, unnecessary phrases, and mixed messages.
Use bullet points, subheadings and tables where appropriate to structure information.
Format for readability and leave enough space.
Check to include the most relevant information but remove anything not supported by the full report from the executive summary.
Changes to headlines or sections of the report need to be reflected in the summary.
Edit for brevity.
Use test readers to verify that the summary stands alone to support your objectives.

Checklist For Your Annual Report Executive Summary

Your Company Info
Your Elevator Pitch
The Problem You Are Solving
Your Solution
Your Target Audience
Your Competitive Analysis
Your Financials: Budget
Your Financials: Revenue
Your Financials: Funding
Your Financials: Pricing
Your Corporate Strategy
Your Support Plan
Your Leadership And Team
Your Partners Or Donors

Pro Tip

Although some companies use a relative formula for the executive summary of their annual report where the summary is a percentage of the total length, we recommend a hard limit of two pages maximum. You’ll force yourself to be succinct and precise and avoid that readers even skip your lengthy summary!