Registry costs crippling you?

If you are an Australia listed company I have a question to ask you. When was the last time you queried the prices you are paying your registry to produce the Chairman’s letter, Notice of Meeting and Proxy form, bundle it all together with the printed annual report and then mail it?

In conversations with many companies in Sydney it appears they view this as a necessary part of the annual reporting process which has to be paid for - no questions asked. I’m also surprised how many complain about the poor service they receive and yet do little if anything about it – this complaining has been rampant for years. How do the share registries get away with it?

All this seems symptomatic of a market which only has two big share registry contenders and a smaller one. Companies are frightened of moving away from a supplier who is seen to be offering ‘mission critical’ services and where it is difficult to distinguish between the two major players. A nice position to be in if you are one of the share registries. With so little competition, it is easy for standards to fall and pricing levels to rise.

It’s a little known fact that, as we ourselves have proved, these cost and service levels can easily be improved. My company has taken this to heart and, in collaboration with one of the better printing companies and mailing houses in Sydney is offering an audit and cost evaluation service encompassing the entire design, print and mailing processes. We identify, for example, new cost, service and turnaround efficiencies can be realised, where it is not uncommon for the mailing process to be sub contracted to third party mailing houses and then passed on to the client with a healthy handling fee.

The pressure on designers and printers to reduce costs in 2009 is enormous – now it is time to look to your share registry to open up new cost efficiencies.

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.

View some of Heywood’s work on www.heywood.com.au

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Your 2009 Annual Report – important things to consider

1 Companies are looking to realise new cost efficiencies across all design and production processes – but where are they going to find them and who will point them out? 

2 Shareholders will be seeking answers to many questions and will be expecting companies to be forthcoming with them – this is not the time to be shy and withholding. 

3 Online reporting is firmly on the agenda but many companies have yet to understand and embrace the benefits of HTML reports – otherwise known as mini-websites.

4 High on listed companies’ agendas must be the future vision of the company leaders, their confidence in the company’s survival strategies, and their ability to articulate the company’s future prospects. 

5 Shareholders have now had a taste of accessing company results online – persist with a PDF of the printed report at your peril. 

6 The last six months in particular have rewritten the rules on what a company requires from their annual report supplier – designer; IT consultant; web developer; market analyst; brand manager; expert on email management and print logistics; litho and digital print maestro – and if they don’t possess these skills you’re probably missing out on some critical advice and cost saving opportunities. 

7 The advent of online reporting is making planners and contributors of content rethink the structure and level of content for presentation and consumption online.

8 The introduction of Shareholder Reviews back in 2006 has caught the attention of companies and shareholders alike as a concise and easy way for investors to grasp the essential information on a company’s performance and prospects without the clutter of intricate financial data. 

9 It’s highly likely that if the annual report is found wanting this year it will prompt shareholders to question the reasons why they are holding on to the company’s shares and look around for more attractive and more stable opportunities.

10 The search for cost savings will see some printing and mailing tasks performed by share registries migrate to other more nimble and service-oriented suppliers.

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.

View some of Heywood’s work on www.heywood.com.au

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Thar’s a lynchin’ party heading fo’ the AeeGeeM sheriff!

There will be a bit of fun and games at company AGMs this year. Many chairmen, chairwomen, CEOs and directors are not exactly the flavour of the month with shareholders. It’s bad enough for shareholders just watching their life savings slip quietly away and those eagerly anticipated retirement plans evaporate. It’s worse when the company bosses don’t seem to be communicating too well their plan of action, their admission of slow responses and their personal grief at what has been lost. It’s worse still when no half yearly report arrives in the mail, not even a shareholder newsletter, not even on the company’s website. And when the annual report finally arrives stuffed in the mailbox, it’s just a plain old bit of print looking remarkably similar to last year’s report, with its partner in crime a dumb old PDF of the printed report posted on the company website. The carefully posed photos of the Chairman and CEO feature less of a smile this year to match the rather predictable intro to the Chairman’s Report, along the lines of “The 2008/2009 year has been a tough one for your company. The global recession has bitten hard and taken its toll on our earnings. Consequently the payment of dividends...”

These scary times are dividing company boards and senior management into three distinct categories.

1/. “Things are looking really bad out there, we’re all suffering, so I guess we’d better do as little as possible, say nothing to our shareholders until asked... perhaps they won’t call us and it will go away soon”.

2/. “We’re sort of getting through these trying times okay, but our performance has definitely been hit. We’ll just do the same as last year, no more. We’ll play it safe, make ourselves available when asked and conserve our money”.

3/. “This is a great opportunity to get shareholders on our side and influence new investors while our competitors are distracted. Time to communicate to them in a compelling manner that we are ready to tackle the market challenges and have invested in powerful strategies that will accelerate our recovery when markets recover”.

Which one is most likely to get shot up by the rampaging mob?

Shareholders will scrutinise those digitally captured frozen smiles. In this youtube-friendly age however they are really anticipating more than a static image. A bit of video with movement so they can check out the body language, with spoken words ‘direct from the horse’s mouth’ they can play over and over again to make a judgement on their sincerity. “But many of our shareholders are old and don’t have internet access and we don’t have all of their email addresses” you say. Horse shit. 80 to 90 percent of Australian shareholders have opted to receive their annual report online. They won’t settle for any excuses this year. They want the facts. They want the truth. And they want it in plain simple language, not some cleverly written PR masterpiece that bears little resemblance to reality. Companies need to remember that there is much anger out there. And that anger is unlikely to go away this side of the October/November AGM season. Colts and Winchesters are being polished in anticipation of some possum hunting.

And don’t listen to those online purveyors of snake oil – an interactive PDF just won’t do it. It’s got to be HTML unless you want some buckshot in your breeches.

And if some shareholders really, really want to see the full financials in print – how are you going to supply them? Typeset or printed straight from the MSW Word file? Colour or black & white? Laser printed in-house not even with a stiff cover, in the hope that shareholders will be so disappointed they won’t ask for one again?

So are all of your plans this year dependent on working within a lower budget? So how are you going to achieve this? Pressure the poor designer? Pressure the printer? Have you investigated, for example, how to reduce those expensive mailing and processing costs incurred by your share registry – NOM, proxy, Chairman’s letter, fly sheet, shrink wrapping etc? Are you aware of how to tackle this? Perhaps now is a good time for us to talk.

Time to hit the saddle. When it comes to the day of your AGM take my advice and keep a careful eye out for some mean looking strangers in town calling themselves the Tilburn gang. The legend lives on.

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.

View some of Heywood’s work on www.heywood.com.au

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Online annual reporting in 2009 – mediocrity or innovation?

Will creativity suffer the slow death of diminishing budgets this year or will innovation come to its rescue? I’ve been in the annual reporting business here in Australia since 1980 and witnessed quite a few changes. In 2000 HTML online reporting was making inroads in the US from which I took great inspiration. When my company Heywood Innovation introduced HTML online annual reporting (mini websites) to Australia in 2001 with Cashcard, it prompted many enquiries the following year which resulted in us designing and producing a new era of HTML reports for the likes of AMP, Commonwealth Bank and Perpetual – all prominent and influential companies with substantial shareholder bases. It seemed as though we were faced with a huge new opportunity. A positive renaissance of reporting. How wrong I was.



The dot com crash of March 2000 to October 2002 didn’t help matters. Despite the economy gaining strength in the following years, 2003 to 2007 witnessed annual reporting budgets slashed to the bone and mediocrity gaining the upper hand. All of a sudden the prospect of shareholders having access to a new and highly efficient means of accessing financial information meant very little. What caused this apparent denial of shareholder interest and care? Did the powers-that-be decide that shareholders meant very little in the grand scheme of things and that they are at best a minor irritation unworthy of serious consideration? I rather think so. Investor communications have been in the doldrums for many years. Despite much pontificating here in Australia by the respective industry bodies the IR efforts of many companies leave much to be desired. This has not been helped by the dominance of the share registry market by its two well known players Computershare and Link. Admirable for their introduction of new technologies and processes to speed up the transfer of information between company and shareholder, it is significant however that in the past five to seven years not a single company I have spoken with has had anything positive to say about either. Service appears to be a real issue.

I digress. The change in Legislation in late 2007 that made online the default medium for annual reporting was an admirable initiative by government to make reporting less expensive and less onerous a task. Despite the fabulous opportunities to embrace cutting edge online design, animation and video, Australian companies however are proving very slow to leverage the opportunity. Consequently the results are a little predictable with many companies only moving to the half way stage of ‘interactive imaged solutions’ perpetuating the aggravation of trying to make pages from the printed report work on screen. A bit like pitting Robert Louis Stephenson’s Rocket against the Bullet train. Is it too soon since the Legislation changed? Probably so. Innovation, like change, takes time in the real world.

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.

View some of Heywood’s work on www.heywood.com.au

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Companies not responding to climate change

I was intrigued to read an article last week describing how a coalition of institutional investors and public interest groups in the US are pressuring nine companies to develop and disclose how they are responding to climate change.

The nine have been identified as lagging behind what the group consider to be appropriate reporting on the business challenges and are failing to engage effectively with shareholders on the issue.

I predict we will see many more pressure groups put companies on their ‘climate watch’ lists, as it becomes increasingly obvious that poor environmental practice has the potential to seriously impact on share prices.

ExxonMobil, Chevron and General Motors are three of the nine companies.

The group sentiment is that companies’ lack of climate risk disclosure is as great a risk as that of the subprime crisis.

I guess it is inevitable that a company’s environmental initiatives, overall strategy and ability to keep shareholders informed of these have come under increasing scrutiny in recent years. These however face the prospect of being derailed by focus on the continuing mayhem in the financial markets. The prospects of a significant global deal on climate change looks increasingly unlikely. Sadly good environmental practice is initiated from wealth rather than from poverty. And a climate deal is all about imposing substantial costs.

I can’t help wondering how Chinese investors feel about the one new coal-fired power station that gets commissioned every week?

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.

View some of Heywood’s work on www.heywood.com.au

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Are we in for a big dose of annual reporting mediocrity?

Recessions have a habit of putting extreme pressure on people. Take your typical IR professional. The company has taken a nose dive. Shares are worth considerably less than they were in 2008. Shareholders are not happy and there is a groundswell of activism. Membership of the Australian Shareholders Association rises in anticipation of a dog fight. The company’s executive remuneration policies suddenly look out of synch with these recessionary times, and don’t the shareholders know it. Strangely the ‘people at the top’ don’t quite share your views on the matter. Communications to shareholders remain infrequent and have failed to deliver the admissions, information, strategies and insight from the CEO’s mouth they so dearly need to hear. The more senior and vocal shareholders build up a head of steam and make the phone call, lambasting IR and executive teams and generally blowing a valve that leaves junior staff lost for words and ruing the day they entered the world of IR. The press are unrelenting in their criticism of your industry, company and CEO, revelling in the firestorm that has clouded the previous years’ stellar performance, now a distant memory. Calls to prominent jornalists become lost in the queue. No-one wishes to discuss the AGM with you despite it promising to be the company levelling event of the year, perhaps with a record number of shareholders in attendance demanding than a cup of coffee and a biscuit. Thoughts of sacrificial swords loom large. The phone rings on.  

Investor Relations professionals are presently under immense pressure to smoothe the waters, pacify shareholders and maintain their company on the investor radar.

The annual report which over recent years has kept a modest face will, in 2009 and probably 2010 also, be under more scrutiny than ever before and has a very hard job to perform.

So how will companies approach the annual report this year? The pessimists among us will bet their dollars on the ‘same as last year, don’t rock the boat, and for heaven’s sake don’t make it look as though we spent any money on it’ approach. The optimists, and I am confident that there are some of you out there, will seek expert opinion on how to realise ‘more for less’ based on the following:

> cost savings across the entire annual reporting process
> an intelligent presentation without the designer decoration, that is sympathetic to circumstances yet confident in its ability to tackle the future
> a comprehensive and convincing HTML online annual report (mini website) from which shareholders can access information easily and quickly
> a centrepiece Q&A video with the Chairman and CEO who answer specific questions in a frank and open manner on the company’s position, its ability to survive and succeed, and how it will achieve this
> a decision on how to present the report in hard copy form for those 10-20% of shareholders still requesting it – do we produce a colour annual report, a black & white one or a discreet Shareholder Review in an easily digested format?

Times change. Markets change. And so must the annual report. It has a hard job to perform this year and warrants advice from experts to not only provide new cost efficiencies but take it to a level that satisfies the information needs of concerned investors and reinforces confidence in the company’s ability to forge ahead when markets recover.

So are you a pessimist or an optimist? Your decision will most *certainly influence your shareholders’ decision making later this year. 

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.

View some of Heywood’s work on www.heywood.com.au

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2009 annual reports face intense scrutiny from investors and analysts

It is inevitable that companies will slash their 2009 investor communications budgets as they grapple with risk averse investors who are seriously concerned about the future of their investments and the ability of listed companies to weather the financial storm.

BUDGETS SQUEEZED + SHAREHOLDERS MORE DEMANDING

Companies will demand more for less and need reassurance that despite lower budgets their spending on IR activities is highly effective.

How will this translate as the year unfolds? Fewer roadshows. More shareholder analysis despite the high perceived costs. More frequent communication with investors. More focus on the annual report and its content, which has a hard job to do this year and will be under intense scrutiny from both investors and analysts.

The value of a company’s annual report will be much higher this year. Why?
Because it needs to achieve the following:

A frank and honest understanding of the company’s position
> For many companies the annual report is the sole source of information from which an investor can accurately glean a comprehensive understanding of the company, how it has been impacted by market change, its financial health, the competency of its team driving the company forward, its vision, the strategies that have been put in place to protect its interests in stressed markets and its future potential. Investors will perceive the annual report to have much greater value this year as a means of guiding thei investing decisions.

Outline strategies that are in place
> Reveal strategies the company leaders have put in place to strengthen its position and minimise damage to its business, brand and investment potential

Forward looking
> The report will need to be more forward looking than previous years in order to convince investors the company has adapted to change and is strategically positioned to benefit from recovering markets.

Investors want reassurance that companies are being very honest and realistic when it comes to explaining their state of affairs and strategies that are in place to weather deteriorating market conditions, protect value and position for future growth when markets start to recover hopefully in the latter part of 2009.

The need for companies to engage in regular communication with investors will prompt them to consider half year reports and quarterly reports. It goes without saying that those companies who are willing to keep investors regularly informed with accurate and up to the minute information will engage more positively with the investment community.

It is a sure bet that the expertise of IR professionals will be sorely tested this year. Newcomers to the industry will probably have a ‘baptism of fire’ as markets are predicted to drop even lower before they get better.

This suggests that the successful investor communications businesses in 2009 will be those who can adapt to change, be able to work within lower budgets yet deliver much more, have comprehensive understanding of the challenges facing IR professionals and be totally attuned to working in the online arena to deliver competent HTML online reports as part of the investor communications mix. We’re ready for it.

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.

View some of Heywood’s work on www.heywood.com.au

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