1Introduction

Annual reports are corporate-communications tools. This fact allows us to deduce the two main perspectives from which they are usually discussed: (applied) linguistics and communication science, on the one hand, and business administration on the other, each including various sub-disciplines and focuses (e.g., terminology research and discourse analysis, as well as accounting and public relations). However, these are not all the disciplines interested in annual reports; the variety of research approaches ranges from company law and cultural studies to graphic design, photography and IT applications. Yet, regardless of discipline, viewpoint and aims, studies of such documents unfailingly come up with two statements.

The first refers to the significance of annual reports, which − according to the unanimous opinion of all authors − exceeds that of the other types of text used in corporate communications. Some characterisations are relatively neutral, such as “key communication instrument[s]” (Garzone 2004: 314), “integral part[s] of a firm’s promotion” (Anderson and Imperia 1992: 113), some use superlatives such as “the most important external documents and the most used channels for communication between organisations and stakeholders” (Wang, Lixin, and Cao 2012: 55) or “the highest form of corporate communication” (Keller 2009: 19), and some even metaphorical expressions such as “a company’s business card” (e.g., Ditlevsen 2002: 81) or “a company’s handshake” (Leu 2010: 7).

The second recurring statement refers to the annual report’s complexity and diversity. It is seen as a “complex genre” (Ditlevsen 2010: 163), the heterogeneity of which is reflected in practically all relevant dimensions, including authorship and readership, function and content, as well as the form in which it is presented. Oddly enough, the same authors (e.g., Rudolf 2011) who emphasise the complexity of this type of text often use the term annual report in its most restricted, financial meaning. On closer examination, therefore, it turns out that the term is far from unambiguous.

2Clarification of the concept

Annual report, at first sight, seems to be a semantically clear term, the meaning of which can be relatively simply described as “a report on an organisation’s activities in the course of one year”. This definition would cover annual reports of companies as well as those of public institutions, educational institutions, associations, etc. Sometimes, however, the term is used in a more restricted sense, with a strong emphasis on its financial aspect. Merriam Webster10, for example, defines annual report as “a usually lengthy report issued yearly by an organization giving an account of its internal workings and especially its finances”. Moreover, the term is frequently interpreted to refer to the business sphere only, for example in Wikipedia11: “An annual report is a comprehensive report on a company’s activities throughout the preceding year”. It is this interpretation that will be adopted here, in consonance with the general theme of the Handbook.

On the other hand, it seems too restrictive to define the annual report as “an obligatory publication” (Rudolf 2011: 19) or as “a booklet published once a year, providing (legally required) information about the financial position and performance of an entity, i.e. a company” (Ditlevsen 2010: 163). First of all, not all companies are obliged to publish annual reports. The legal requirements and regulations vary between countries, and also depend on factors such as corporate structure, size and business sector, and many annual reports are published by companies not required by law to do so. In fact, the duty of public disclosure does not refer to an annual report as such, but only to certain documents usually published together with others of a non-obligatory nature. The obligatory category includes financial statements and, depending on the legal requirements and the type of company, other documents such as a corporate governance report or a sustainability report. By contrast, letters to shareholders, mission statements and presentations of corporate strategies are examples of non-obligatory documents (see Section 4).

In general, the information published goes beyond – sometimes far beyond – “the financial position and performance”, to take up Ditlevsen’s wording. Thus the annual report consists of different elements, and the obligatory and optional parts are clearly separate in many regards. This separation is sometimes reflected in terminology, as when Ritzinger (2010: 38) calls for a differentiation between “the addressees of the annual report and those of a financial statement”, reserving the term annual report for the non-obligatory parts only. On the other hand, Ebert (2004: 278) uses the term annual report according to the Commercial Code, which by definition only refers to the obligatory financial statement.

Thus reports consist of various parts that differ in form and function. They are also sometimes published separately, e.g., in the form of a “manual”, “CSR report” (CSR standing for Corporate Social Responsibility), “group management report” or an “annual review”. Given that, it is debatable whether we can speak of one text or a single text type (or genre). Indeed, Hundt understands annual report only as “a summary term for a wide variety of text types” (2000: 644), which “(a) consists of numerous different types of text and (b) is very stable regarding the number and order of the individual text parts” (2000: 656). Of course, opinions may differ as to the stability of text types, and it may seem legitimate to call the annual report a “genre on the move” (Ebert 2002: 139). Yet − at least according to relevant advice literature − it represents a “complete work based on a compact script that is more than a series of individual parts and results in a coherent and conclusive overall work” (Heisters 2010: 66). Whether it is really perceived in this way remains to be seen, but as regards terminology, annual report has been introduced as a name for a separate genre or text type. It is therefore reasonable to regard the annual report as a text type consisting of various different sub-types that fulfil different functions individually and as a whole, and are directed at different addressees (Garzone 2004: 314; de Groot 2014: 239−241). The text parts are not (or should not be) placed next to each other without cross-reference, although some of them may gain sufficient independence to be regarded as stand-alone texts.

3Function and reception of annual reports

From a linguistic viewpoint, i.e. seen purely as a matter of identifying the sender in the communication process, characterising the production of annual reports is simple: the company is the communicator whose name appears on the published annual report. However, seen from a business perspective, an elaborate annual report requires the co-operation of several departments in a company. Some of these (Finance, Human Resources, Production, etc.) must provide the requisite content, while others (such as those responsible for public relations, investor relations) convert this content into an annual report (cf. de Groot 2014: 242). Companies with sufficient (financial) means and interest may call in specialists (photographers, graphic designers, public-relations agencies, etc.) to assist in the process, whereas those wishing to fulfil only the minimum legal requirements will go with a minimalistic, no-frills version. This leads us to two crucial and closely-related questions. What is the purpose of producing an annual report? And what is the target audience?

The name annual report clearly indicates that the document concerned reports primarily on the past business year. However, this focus automatically leads to an assessment of the company’s situation at the time of production. Increasingly, annual reports are even extending their content to include a review of the company’s future prospects (see Section 6). Their informative role is clearly apparent in the parts detailing facts and figures about the company, its production, employees and branch offices, its management, financial circumstances and so on. The information to be disclosed (in particular, financial information) is regulated by a wide range of provisions under commercial, corporate and capital-market law. Also to be taken into account are the recommendations of, and standards set by various institutions (e.g., the Principles of Corporate Governance of the OECD12, the Corporate Governance Code in Germany13, the Global Reporting Initiative14, etc.).

Legal provisions relating to the reporting requirement laid on annual reports, and on their financial part in particular (the so-called “annual statement”), are primarily intended to protect companies’ shareholders. Nowadays, millions of people own shares, but only a few of them are involved in managing the companies concerned. As a result, their right to information can only be guaranteed by government action, and by ensuring the information is comprehensible. That is why large, listed stock corporations have to fulfil the most far-reaching publicity requirements. It is also the reason that annual reports are aimed primarily at shareholders, even if other groups also have a statutory right to information; these include financial authorities and employees, where these enjoy the right to participate (Maul 2007: 603). Furthermore, the company itself may, in its own interest, wish to inform other stakeholders: (potential) investors, financial analysts, investment consultants, business journalists, creditors, suppliers, customers, employees, governmental and non-governmental organisations, and the general public. All these groups demand precise information and/or should be able to form an impression of the enterprise, its brands and its products (Silberschmidt 2013: 55). The annual report thus has two distinct communicative functions, viz. “to give a true and fair view of the state of the company, and to provide a positive image of the company” (Ditlevsen 2012: 92). It may be that only one of these functions is fulfilled, but in most cases the two are combined. The more the latter is the case, reports lose their purely informative character and become more promotional in nature, concerned above all with building an image.

In that case, the aim is to present the company’s product portfolio, its corporate strategy, its ability to compete in a positive light. The focus is now on strengths and – albeit to a lesser extent – weaknesses, on expertise (Ebert 2004: 279), social position (Silberschmidt 2013: 53) and, most importantly, trust in the company (Keller 2009: 32−44; Malavasi 2010: 212). Yet, even as information meets promotion, the two functions may come into conflict (Ditlevsen 2006: 59). For correct information does not always help to build a positive image, and information that pleases a major shareholder may provoke unrest and fear in a general public sensitised to certain issues.

Fulfilling different functions for different target groups is certainly a challenge for text composers. It is made even more complicated by the fact that the intended recipients form a very heterogeneous group. Shareholders range from fund managers, who wish to check financial information (to which they presumably already have access), to small investors, who are in no real position to properly read and absorb a particular section. Investors who stay faithful to a company for years must be addressed differently from speculators whose positions may change within a few hours. The general public is, by definition, a heterogeneous group with a wide range of interests, desires and requirements. It is therefore understandable that many companies generate different annual reports for different recipients (or groups of recipients). For example, the financial authorities will be provided with a text different from that made available to the general public (see Figures 10.1 and 10.2, which show the covers of two different annual reports produced by the Mexican company Bimbo, the “reporte anual” for the Stock Exchange, and the “informe anual” for the general public).

Against this background, it is clear why much information in the annual report is repeated; for example, the most important key figures in a (very technical) annual report are condensed into a summary table of key figures for “speed readers”. For this group, an attractive and well-structured layout that makes it easier to find the information of interest is especially important. So much becomes clear when one considers that, according to an adviser on this subject and assuming a length of 200 to 300 pages, the authors of annual reports anticipate a reading time of three minutes for “speed readers”, ten for “fast readers” and an hour for “thorough readers” (Heisters 2010: 90−91). The suspicion is “that the annual report may well be consulted, but it is hardly ever read” (Ebert 2002: 141). Hence, it exists as an elaborately designed, glossy brochure that, above a certain size, is only ever absorbed in excerpts, and selectively.

4Structure and contents of annual reports

As we have seen, the annual report can range from a compulsory exercise required by law to an elaborate public-relations instrument. Moreover, its intended recipient groups are many and heterogeneous. Above all, companies can pursue widely differing objectives by publishing such documents. So it is no surprise that their structure and contents (and consequently their formal characteristics; see Section 5) are equally diverse (see Figures 10.3 and 10.4, which show a rudimentary annual report for the general public and the cover of its elaborate equivalent consisting of 84 pages).

However, if extreme cases are disregarded, the annual reports of large, listed companies – those that are predominantly dealt with in the literature and best correspond to the general notion of such publications – display a typical structure. Its essential characteristics can be described using the example of one of the world’s biggest companies (in turnover terms), viz. British Petroleum (BP) (see Figure 10.5).

Following the cover and inside cover, the BP annual report starts with a section titled “Information about this report” (without page details). This is a type of lead paragraph which sets out the report’s legal basis, explains changes to relevant regulations and gives an overview of the report’s layout. Furthermore, this section provides basic information about the company (headquarters, group structure, stock market valuation, shares), as well as a list of abbreviations. The main sections of the report follow this introductory information: “Strategic report”, “Corporate governance”, “Financial statements”, “Additional disclosures”, and “Shareholder information”. In the one-page section “Cross reference to form 20F”, the report’s contents are presented in a format specifically required for the listing of shares on US markets.

The strategic report describes the company in general, positions it in its environment and reflects the opinion of the company’s management team on future developments. As reflected in the table of contents in the BP report, this section rarely consists of a single, coherent text. More usually, it is an accumulation of different subtexts ranging from a presentation of the company’s activities and business areas (“BP at a glance”), to graphics showing key company figures (“Our key performance indicators”) and statements regarding risk management (“Our management of risk”). Other aspects often included in this section of annual reports are: details of the company’s (or group’s) structure; a list of its major shareholders; the geographical distribution of its activities (production sites, sales outlets); an organigram; and a presentation of the product range.

What is striking in the example text is the relatively limited space given to corporate social responsibility and sustainability, as compared to other annual reports. This fact, surprising for an energy company, is explained by the existence of a separate “Sustainability review”, which can be seen as a kind of parallel publication to the annual report in terms of its graphic design and many sections of its content. Its separate nature is explicitly emphasised (“BP annual report and form 20-F 2013 and the BP strategic report 2013 may be downloaded from bp.com/annualreport. No material in this Sustainability Review forms any part of those documents.” (inside cover20)), whereas other companies most definitely treat this subject in the annual report itself.

Central to this narrative section is the letter from the chairman (or CEO) to the shareholders. This element has certainly attracted the most interest thus far from a linguistic perspective (Vogel 2012: 89−90). It is presumably also the most read, especially by those readers who lack the expertise required to follow other sections of the report and prefer a distilled presentation of the most important information in letter form (Garzone 2004: 321). The letter’s communicative functions are broadly similar to those already identified for the annual report as a whole: to provide readers with information and to generate a positive relationship with them. Each function may be more or less explicit and emphasised, but both are always present. The main target group is the shareholders (it is not accidental that this part of the text is referred to in German as Aktionärsbrief [letter to the shareholders]). However, it is also directed at employees and customers, in other words at the company’s key stakeholders (Rudolf 2011: 21). Thanks are expressed to these two groups for their commitment and trust, while the performance and positioning of the company is explained in the current business environment. Many companies also use this opportunity to highlight their social role and what they regard as their “responsible activities”. Of greater interest to the shareholders and potential investors will be a summary of the most important data and results, of the company’s strengths and weaknesses in the past financial year, of the management’s strategy at the time of writing and an indication of the profitability of their investments (though important cultural differences have been found to exist in this regard; cf. Schnitzer 2013a).

From the company’s point of view, however, the most important goals are to build trust in the firm and to give it a positive image, without raising unrealistic expectations and avoiding longer-term disappointment (Rudolf 2011: 21). If the financial year has not gone to plan, the report will (wherever possible) ascribe this to external circumstances or unexpected events, while stating that, in any case, the situation is under control. In this way, it conveys reassurance and reinforces trust (Rudolf 2011: 22). This strategy appears to work; investors seem to regard precisely the non-financial elements of the annual report, such as the Chairman’s letter to the shareholders, as critical to long-term investments (Nickerson and de Groot 2005: 328). That is surprising, given that they are fully aware that, in reality, the letter comes not from the signatory but, at least in more elaborate reports, from a public relations department or agency (Reinmuth 2011: 44−45). These authors naturally draw on every rhetorical register to deliver a convincing message to readers. Again, the challenge is to reconcile different and potentially conflicting functions and requirements, and to satisfy target groups with different expectations and requirements, always without appearing formulaic (Schmidt 2008: 321). It is therefore only to be expected that letters to shareholders can vary widely from a formal perspective, as is manifest in their different lengths and internal structures (subheadings, etc.) (Garzone 2004: 321−322).

In the BP report, the first section is followed by one on corporate-governance. It presents the board and the directors (in many annual reports this is done in the first section), describing their positions and functions along with their responsibilities, before listing their remunerations and shareholdings in the “Directors’ remuneration report”. The corporate-governance report is a relatively recent part of annual reports and has been incrementally introduced by listed companies in individual countries following the first edition of the OECD’s guidelines (Principles of Corporate Governance) in 1999.

Finally, the financial statements form that part of the annual report subject worldwide to the strictest regulations. Besides long-existing national rules designed to protect ownership rights in public limited companies, there are now also international standards (International Financial Reporting Standards and International Accounting Standards). These have been compulsory for the consolidated financial statements of listed companies in the member states of the European Union since 2005, and may be adopted by other companies. According to the Official Journal of the European Union, a complete set of financial statements comprises:21

The “statement of financial position” corresponds to what was previously known as the “balance sheet”. It presents the company’s total assets and the means by which these have been financed, either by its own capital (equity) or by borrowings (liabilities). The “statement of comprehensive income” is the former “income statement”, with the addition of a few new items. It shows the company’s profit or loss and the various activities from which this derived (operational activity, financial activity, extraordinary events). The “statement of changes in equity” shows how the equity has changed over the year as a result of the company’s performance, and of capital inflows or outflows. The “statement of cash flows” lists the cash flowing into and out of the company to illustrate its liquidity. What all these documents have in common is that their content and language are both highly technical in nature (Ditlevsen 2006: 63), making them largely inaccessible without specialist knowledge.

The same applies to the next section (“Notes”), which is also a compulsory part of the annual report. It is much longer than the documents mentioned thus far, which consist of relatively small tables and, if especially detailed or elaborately laid-out, may cover at most one or two A4 pages (companies have a relatively large amount of freedom in the level of detail in which such documents are set out). In fact, the harmless term notes usually conceals an explanation, frequently covering numerous pages, of how the figures set out in the earlier documents should be read and how they were arrived at. This section therefore includes details of assessment and calculation methods, along with breakdowns of the aggregated figures.

The fact that two different sets of “financial statements” are listed in the contents is the result of BP’s dual status as a group of companies and the parent company of that group. The first set contains the consolidated financial statements relating to the BP group in its entirety (“Consolidated financial statements of the BP group”). The second includes the financial statements of the parent company as a separate entity (“Parent company financial statements of BP plc”). This structure is characteristic of companies/ groups of BP’s size.

A key legal element of financial statements is the “Independent auditor’s report”, in which an independent accountant reaches an opinion on whether the relevant accounting standards have been met. This, too, involves largely standardised text with formulaic expressions that exhibit little variation. However, together with the Chairman’s (or CEO’s) letter(s), it is the only text in the annual report whose author is explicitly identified.

In the section following the financial statements (“Additional disclosures”), BP provides further information on the production and financial activities of the company, which is of interest for a wide variety of reasons. A final section is explicitly tailored to the interests of shareholders (“Shareholder information”), and informs them on their rights and obligations, as well as the implementation/enforcement of these.

5Layout and style of annual reports

The previous sections of this chapter have set out annual report’s diversity in terms of function and target audience, on the one hand, and scope, structure and content, on the other. This diversity is naturally reflected in the report’s formal aspects, in the widest possible sense. From paper quality and format, typography and imagery, to the use of rhetorical tools in the CEO’s letter, almost any formal aspect can vary with the parameters mentioned. Naturally, this primarily concerns the sections that can be laid out as companies please, but it also applies in part to the compulsory sections (primarily the financial statements), the legal provisions for which are largely formulated as recommendations or take the form of templates. As Ebert (2004: 278) observes, “in theory the annual report could even be published in handwritten form”. Not surprisingly, this extensive freedom regarding the report’s layout is used in full: examples of annual reports can be found with no visual elements or with just a few diagrams, while others − admittedly the exception − consist exclusively of visuals and not a single sentence of running text (see, for example, the annual report of the Austrian company Huber22). Another significant consequence of the limited standardization of annual reports is that the terminology used in these documents is much less consistent than one might expect (Schnitzer 2013b).

In striking contrast to this diversity of layout, the relevant literature laments the linguistic monotony of this type of text − one might even speak of “cloned annual reports” − broken only by companies especially creative in this area (Piwinger 2007: 456). Behind this criticism lies a simplified view derived from the conventional annual report for large international groups with a broad target group. Such documents typically display the following characteristics:

The image section offers a company the best opportunities to present itself as attractive but at the same time reputable, while communicating the business’s corporate identity and giving it character. The generally very dry explanatory language employed in the financial reporting sections is ill-suited to attaining this goal since there “it is not a question of creativity but of legally correct presentation” (Borgmann 2013: 92). The financial data and key figures that are suitable for PR purposes are normally anticipated in the first section in a type of summary (under the heading “Group performance” in the BP report used here as an example; see Figure 10.5).

That apart, the typical bipartition of annual reports is further softened by the need for them to appear as coherent and consistent wholes − from the design of the cover to the last page. To that end, many annual reports attempt to tell a type of story (de Groot 2014: 241−245), and/or they begin with a slogan that is then repeated in the course of the document, both in the text sections and in the imagery. Our example company has been using the slogan “Building a stronger, safer BP” since 2011 (see Figure 10.9) for its annual reports; the use of section headings such as “Our management of risks” or “Risk factors” over the same period is certainly no coincidence. This illustrates how the company has responded to the serious accident of Deepwater Horizon in 2010 (an oil platform in the Gulf of Mexico that sank following a fire, causing the worst oil spillage in the world to date). Hence, the company has had to address a catastrophe within the reporting period, and has, of course, also reconciled the image instruments with the financial data. In this sense, the finance section becomes evidence for the message formulated in the image section: the notion of the “dramatisation of the annual report” (Heisters 2010: 82) is indeed highly appropriate for elaborate reports such as BP’s.

As far as the style of annual reports is concerned, it is striking that neither the business administration nor the relevant advice literature has much to say on the subject. General text layout and visualisation appear to be the focus, while language tips are often formulaic (“Try personal pronouns”; “Omit superfluous words”).26 Yet interested parties from the world of public relations often complain about the poor linguistic quality of annual reports (“Why is annual report language so bad?”19), and similar criticism is also found in scholarly publications (Ebert 2002: 145−146; Piwinger 2007: 459).

Researchers are confronted with several problems in considering annual reports’ linguistic features. Firstly, as we have seen above, this is a type of text that consists of multiple, sometimes very different subtexts. For example, in the majority of cases there are virtually no common linguistic denominators between the Chairman’s letter, with its rhetorically elaborate style, and the table-form cash-flow statement in the same annual report (apart from the fact that they are written in the same language). Accordingly, deeper language-oriented studies of the annual report tend to concentrate on particular sections (Breeze 2013: 86). The Chairman’s letter seems to be a preferred object of study, whereas the notes section has yet to undergo closer examination from a linguistic perspective. A second problem, of course, is constituted by the language- and culture-specific character of many observations (Garzone 2004; Bolten 2007: 83−92; Conaway and Wardrope 2010). In fact, the majority of empirical studies relate to individual languages and specific linguistic aspects (cf. Garzone’s 2006 “The use of discursive features expressing causal relations in annual company reports”). Finally, many studies focus on specific types of company (cf., for example, the work of Malavasi 2006 and 2010 on the annual reports of banks). It is therefore unsurprising that efforts to characterise the language of annual reports have so far produced few concrete results:

Studies of verbal themes have shown, for example, that annual report texts include information on finance, management, CSR or marketing and expectations of future results [. . .] Several studies have also pointed out how the structuring of annual report texts help to build writerreader relationships [. . .] and influences their readability level [. . .] From a stylistic perspective, moreover, lexico-grammatical research has exposed the use of informative as well as persuasive language [. . .] and the formulation of biased cause-effect relationships in annual report texts [. . .] (de Groot 2014: 244).

Findings of this type are hardly surprising and can be derived directly from the objectives of the type of text.

Few empirical studies relate to the language in the annual report as a whole or point out differences between the individual sections. Wang, Lixin, and Cao (2012) attempt to do so for the lexical area and generate some interesting insights, relating mainly to the following:

The characteristics listed here are taken from a single study, but they largely coincide with those that have been highlighted in compilations by other authors (Breeze 2013: 91−105; Leibbrand 2015). Naturally, differences can be found in the details, and statements are not always directly comparable since different aspects have been targeted, although generally a “positive framing” (Breeze 2013: 105) of the company performance prevails, even in the legally compulsory sections of the annual report (Rutherford 2005). However, factors such as the business sector, the results achieved or exceptional events (such as the Deepwater Horizon accident) affect the linguistic means used to “frame”, with regard to both word selection and syntax (e.g., the more frequent use of passive constructions in times of crisis; cf. Thomas 1997), and so contribute to the complex and dynamic linguistic character of this text type.

Just as much diversity as in the text sections can be found in the imagery and graphical representations. It can be assumed that the former serve essentially to “address the reader on the emotional level, in order to counteract a dry reporting style” (Neubner 2008: 3), whereas in the graphs and other figures “facts are coded into a graphical system and hence the complexity is reduced” (Neubner 2008: 33). This does not mean that images are used purely as a kind of aesthetic accessory, completely detached from the rest of the content, but that verbal, graphical and image content are usually inter-related and mutually enhancing. Accordingly, bestpractice literature suggests that the images in an annual report should be selected in such a way that they “form a common theme through the report and hence tell a story that helps bring the company to life” (Kuhn 2003: 237). Likewise, improving a report’s readability by means of graphical representations should not be seen as a neutral process. Essentially, easier readability is desired only if “the curves are constantly pointing upwards” (Kuhn 2003: 237) or, at least, a positive tendency can be surmised. Graphics offer sufficient opportunities (changing the period included, scaling of axes, etc.) for manipulation. Similarly, images are often idealised representations of corporate reality, “eliminating reference to less positive realities of the business world, such as the dangers and pressure to workers and injuries to the environment that business and industry create” (David 2001: 198). Witness the two images in Figure 10.9, which convey an impression of strength, security and even satisfaction, rather than that of a workplace which constitutes a danger to both workers and the environment.

6Historical development of annual reports

Among other things, annual reports have been referred to as “tree rings in the life of a company” (Piwinger 2007: 456), in the sense that the company’s development is documented in its successive reports. Not only that: they also react to commercial and technological changes of every kind − probably more directly and rapidly than many other genres. Thus a change in accounting standards will be applied in the subsequent annual report, and a commercially controversial subject has to be addressed relatively quickly insofar as it affects the company (like the Deepwater Horizon accident mentioned above). Hence, it is understandable that a type of text that a priori should strive for continuity in order to build trust has nevertheless undergone enormous changes. The majority of studies on this topic focus on the last 40 to 50 years; those that go further back, such as the studies by Ditlevsen (2002, 2012), are exceptions. If one examines annual reports from this period, three things stand out immediately: the rapid increase in scope and in the number of text sections, the increasing importance of image and typographical components, and the emergence of new channels of publication and distribution. It is hard to quantify these developments. Indeed, the literature provides highly divergent values depending on the period analysed and on the company, or at least the business sector. However, just to give an idea: Ditlevsen’s study about a Danish company starts with an annual report from 1935 consisting of 12 pages, eight sections of text and one visual element, and ends in 2007/2008 with an annual report of 128 pages, 36 text sections and 123 visual elements.

The reasons for this trend are multifaceted and to some extent overlap. It is clear that the legal and social requirements concerning the structure of annual reports have become stricter over time. This applies both to the financial statements and to other sections, whether legally prescribed or not. Corporate governance and sustainability are merely the two most obvious examples of topics added recently to annual reports. This expansionary tendency will certainly be reinforced in times of financial crisis and increasing investor protection, as well as by internationally applicable prescriptions. Similar expansion has been experienced by the purely graphical layout and, to an even greater extent, by the image section.

Many authors see sufficient justification for this development in the fact that the annual report has turned more and more “from a retrospective log into a futureorientated instrument for marketing shares and for identity or image management” (Ebert 2004: 280). More widespread shareholding and the increasing internationalisation of financial markets have meant “that the target groups of corporate communication in the area of investor relations have become more and more heterogeneous” (Schmidt 2008: 317) and that competition between companies for investors’ patronage has certainly also risen. With ever more elaborate layouts requiring the services of specialist agencies (Stanton and Stanton 2002: 479−480) and with versions in multiple languages (at least in the case of non-English-speaking companies), businesses are attempting to reach an ever more varied and international readership.

Of course, the relative decrease in the importance of the actual reporting function is also associated with the fact that, by the time of publication, the annual report is of virtually no news value to many recipients (Ebert 2002: 143). Relevant figures, especially those needed by short-term investors, are communicated significantly more quickly, normally on a quarterly cycle or even faster. This has been made possible by the use of technologies that have also fundamentally changed the way annual reports are published – and will continue to change it. Annual reports are still published in printed form, but the text is available as a PDF document on the home pages of every major company and, increasingly, in an HTML version. Hence the prerequisites have been met for a layout that exploits the Internet’s potential: future developments will surely tend towards an animated, interactive format (Piwinger 2007: 463).

7Conclusion

After an introduction dealing with conceptual issues, this contribution has concentrated on the function, structure, content, layout and history of the annual report as a medium of external business communication. I have used the 2013 annual report of British Petroleum as an example of the genre, but the discussion should have made clear that annual reports display enormous variety. Our description would certainly have been different if, instead of a European multinational petroleum company, we had chosen a smaller company from a different sector or from a non-European country with minimal legal disclosure requirements. In such cases, some of the textual functions described here would have featured more prominently while others faded into the background, with concomitant changes at the concrete textual level. Indeed, the annual report turns out to be not only a complex, but also a heterogeneous genre, which continues to combine highly specialized terminology with the most banal propaganda, complex semiotic devices with simple prose, and the use of the newest media with traditional forms of publication.

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