MERCK KGaA, an international pharmaceutical and specialty chemicals company based in Germany, published its 2008 online annual report last week, marking the first annual report of the year from online reports specialist GeBer.
I’m always interested to see what’s new from Austria-based GeBer, which operates under the brand Nexxar. We profiled the firm in an IR Innovators Q&A last October, and many in the industry consider them to be among the world’s best online annual report producers.
Their full HTML report for Merck KGaA this year is not flashy or even all that engaging. There’s no video, for example. But if you are a serious investor who likes to do your homework, this report has some extremely useful features. Nexxar Geber’s focus is less on design and marketing, and much more on disclosure and utility.
In this short review I’ll highlight some of the more significant features the 2008 Merck KGaA online annual report offers.
Powerful search capabilities
It might seem strange that I am choosing to focus on the report’s search utility as the first highlight in this review, but a good search utility is one of the most important features of an effective online annual report. Search is hardly ever done well, if it is provided at all, which makes Merck’s all the more noteworthy.
The fact is, very few people read online annual reports in their entirety. Depending on why they are using the report, they may skim various sections of the report or they may home in on a specific piece of information and leave.
Of course, annual reports are often used for reference, which is where search comes to the fore. Investors, analysts, journalists and bloggers often use annual reports to look up specific pieces of information. A good search utility allows these reference-motivated users to quickly achieve their objectives, which makes them more likely to use the company’s site again in the future.
So what is unique about Merck’s annual report search utility? The best way to describe it might be to say that it is similar to searching a PDF, except that the results are weighted for relevance.
Search for a keyword like “derivative,” and the search results page shows you all of the pages where that term is used, weighted by most to least relevant. At the same time, the sections of the report where the search term was found are highlighted in the report’s left navigation menu.
Then — what I thought was most useful — you can navigate through the returned pages from most to least relevant without having to return to the search results page. In addition, on each of the returned pages you visit, your search term is highlighted in the text. It all makes searching a report for a key term or phrase much faster and more relevant.
The screenshot below shows the search features on an example page, but it is best to experience this yourself by following this link to a predefined search results page for the term “derivative”.
(Note: You can click on any of the images to view a full-size version in a new window or tab.)
Compare page to prior year’s report
Comparing two or more years’ annual reports can be enlightening, especially when you’re researching a company for the first time or when you want to see if there has been a change in tone or emphasis.
GeBer provides the ability to easily do this in most of the reports it produces. If you are reading this year’s CEO letter and you want to see what he was saying last year, just click on “Compare to 2007” in the tools menu in the upper right of the screen.
Reflecting the uncertain times we live in, it was interesting to see how the company is emphasizing its strong balance sheet this year, whereas in last year’s CEO letter the balance sheet wasn’t mentioned.
Interactive graphing tool
This Flash-based tool could easily be a standalone feature on an investor relations website never mind a feature within an online annual report. It enables investors and analysts to generate visualizations of Merck’s key performance indicators over several years.
The graphs can be printed, downloaded to Excel or saved as images, which is quite handy for those who write about the company.
A lot of these charting utilities, such as Investis’ “interactive analyst,” tend to be hard to use because they include too much information, have too many options, and because they have to be downloaded before investors can use them.
Merck’s graphing tool has none of these problems. While the graphing tool only includes key data, this is probably why I like it so much. It is simple but effective. I especially like the interaction between the legend and the data series on the charts.
Lots of spreadsheet downloads
It’s quite common for companies to provide Excel downloads of their face financial statements in their HTML annual reports, but it’s rare for spreadsheet downloads to be offered for all of the tables in the report.
Merck’s report includes 86 separate tables that can be downloaded as spreadsheets. You can access them alongside their HTML equivalents or on a separate Downloads page.
Overall, Merck KGaA’s 2008 online annual report provides a high level of utility and usability. It’s not Flashy and it lacks some of the pizzazz of other companies’ reports. But in a time of global economic turmoil, it’s probably the correct approach.