Annual reports, then and now

By D.C. Ranatunga

Working on a coffee table book to mark 50 years of Sri Lanka’s leading finance company, Central Finance, on the invitation of Chairman Stanley Wanigasekera (I had served under him for several years at CTC earlier), we started looking for information about the early years of the operations. We thought the annual reports would be the best source. We did find some early reports but they were confined to just a couple of pages carrying only the accounts.

The very first document we traced was titled ‘Trading and Profit and Loss Account for period 5 December 1957 to 31 December 1958’. The page also had an ‘Appropriation Account’ and ‘Balance Sheet as at 31 December 1958’. These three tables plus the Auditors’ Report (just eight lines) were all in one page with the signatures of five directors and the secretary.

These were hardly helpful for our purpose since the coffee table book was going to be a reader-friendly document sans figures.

My involvement with annual reports began in the early 1970s when I moved over to Ceylon Tobacco (CTC) to handle communications – both marketing and corporate. My first assignment was to produce the annual report – then termed ‘Annual Report & Accounts’.

The Finance Director was John Whitworth, an Englishman who was meticulous in his work and it was a treat working with him. Figures were not my forte having even skipped doing arithmetic for the SSC – Senior School Certificate, which was equivalent of the present GCE O level. (It was the early days of calculators and after adding up the figures using a calculator, Whitworth would faithfully do the additions the way we learnt at school – obviously he didn’t trust the calculator!)

In addition to the accounts, there was a Chairman’s Review summing up the year’s operations, details about the company – Corporate Information as it came to be known later – and detailed Notes on Accounts with a one-page Auditors’ Report certifying the accounts. The Notice of Meeting indicating the date, place and agenda of the Annual General Meeting also got a prominent place.

We introduced a feature highlighting an activity or a significant happening during the year. I remember the first such feature in a CTC annual report was about the role of the employees. ‘People – our most valuable asset’ was the title used. Grants, CTC’s advertising agency at the time, did a simple design and M.D. Gunasena printed the report.

Those were the days when the letters CSR were unknown though many private sector companies were concerned about the community and were involved with community development activities without much fanfare. These came to be featured in the annual report.

Recently, I was working on a book to commemorate Sampath Bank’s 25th anniversary. The annual reports were a most valuable source to gather information of the early days and the bank’s progress over the years. The annual reviews by founder Chairman N.U. Jayawardena were extremely well written with a wealth of information. In addition to the Chairman’s review, the General Manager had written an operational review.

The introduction of the annual competition for annual reports by the Institute of Chartered Accountants of Sri Lanka (ICASL) was a motivational factor for the companies to take more interest. The quality of financial reporting has improved with high standards being maintained. Mandatory and voluntary disclosures reflect the organisation’s commitment to transparency. Stakeholders get a deep insight into the company’s operations.

In addition to the detailed information, the presentation has improved tremendously. Photographs and profiles of the directors and senior management covering several pages have become a regular feature. The sizes of the photographs keep increasing.

Specialist agencies have come up to design annual reports. Q&E advertising agency set up a separate arm – Smart Media, which has become ‘The Annual Report Company’. Copyline is another.

All this meant an escalation of production and printing costs. The document became a bulky affair, printed on heavy gauge paper and board in anything from four to five or six colours (earlier it was a simple black and white or a two-colour publication). The banks seem to be the most keen to have lavish publications. Using a catchy title is another development. Just to quote two examples. This year’s Commercial Bank report is titled ‘Miles Ahead’. It’s a 334 page document. Sampath Bank’s report is 284 pages and is titled ‘riding the wave’.

With the rising postal rates, posting the report to hundreds – if not thousands – of shareholders in a single company (Sampath Bank, for example, has a massive shareholder base of over 17,000) is another huge cost.

Meanwhile, the companies have found an alternative with the Annual Report being made available in CD format. It is also loaded into the company website. As to how many shareholders care to have a look at the CD or the website is another matter. Those who are really interested would still do it. The shareholders have a choice – either to get a printed copy or a CD.

It has been a long journey from the days when the accounts were printed in just a few pages to attractive colourful presentations. What a transformation!