Annual Report Blog | Heywood Innovation

Our new blog

2010-12-14T16:40:00.000-08:00

Hello blog readers

After three years of writing for Heywood Innovation's four blogs – branding, employer branding, M&A branding and annual report - I have decided to combine them all into one 'visual' blog that celebrates a new affiliation with our good friends the Taylor & Taylor creative team in Melbourne, and the sensational strategic and creative work that is driving our growth into 2011. The blog features work our teams are producing in the Sydney, Melbourne, London and Birmingham markets. Our new HITT blog can be accessed here.

Best regards

Tony Heywood

Glued to our screens

2010-08-05T05:59:00.000-07:00

Here we go again. July: Amazon.com has announced that online sales of e-books have nearly doubled those of printed books. Gulp. Think how many trees that just saved... how many printing companies have fallen by the wayside, how many printing ink manufacturers are afflicted by the domino effect, not to mention paper manufacturers.

It's all going online. Magazines and company publications like the annual report. Mind you there are still plenty of baby boomers out there who insist on their printed items to remind them of the good old days, proud of their houses displaying obligatory bookcases with shelves bending under the weight of literary treasures coated in dust and awaiting their ultimate fate in the charity bin or some community book sale. When will they die off? The baby boomers I mean. Another twenty years? Who knows what we will have twenty years to assist us with our reading endeavours? ... virtual screens and surround sound you can conjure from thin air courtesy of that Apple device surgically implanted in the front of your forehead courtesy of your local Apple store.

Back to Amazon.com. They sold 143 e-books for every 100 hard cover books earlier this year but that has now reached 180 e-books! And this does not include books that are available as free downloads. And the e-books readable with their Kindle reader have only been around for a year and a half.

The book printing industry around the globe is understandably concerned.

So are the magazine printers and also the annual report printers who are fighting a losing battle with the new breed of digital printers positioned to pounce on small quantities and on-demand requirements.

The battle for attention in the online space will be won by those companies that invest in technology-savvy designers who can leverage the power of the medium and grab people's attention in a compelling and interactive way that the printed page never can.

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney and London with affiliates in Melbourne, Gold Coast, Singapore and Mumbai.

Printing press for sale, well used, no further use, suit collector with large garage

2010-07-20T04:25:00.000-07:00

You can tell an end of an era is nigh. It appears the editors of The Guardian and The Times in a recent interview with MediaWeek admitted that the presses presently churning out mile after mile of the more readable and intelligent UK news may be their last. Their 20 year life expectancy which commenced in 2005 may be somewhat shortened... headed for that great printing press museum in the sky. The editor of the The Times was even game enough to to comment that “...trying to predict how long print will be around is difficult”. Online platforms here we come. But you can’t swat flies with an iPad.

So where does that leave printed annual reports I wonder?

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney and London with affiliates in Melbourne, Gold Coast, Singapore and Mumbai.

So Paul, should they commission an online annual report this year?

2010-07-08T16:09:00.000-07:00

So there’s still a lot of strife around in the financial markets. And probably for some time to come. I guess the US and China need to get their acts together before we’ll see some global relief starting to spread. Think yourself lucky you aren’t preparing an annual report for one of those Greek companies. Not much fun there. You’ll notice that many Greek company secretaries and Board members are wearing dark sunglasses these days to protect themselves from the hot Greek sun and to avoid becoming a target for low flying Molotovs.

Here in Australia we’re busy trying to cope with boomerang super taxes and monitoring the movements of our new ‘iron lady’ prime minister just in case she inflicts new banking legislation and reporting requirements on unsuspecting listed companies. Red hair is definitely a ‘must have’ this year for those with lofty political ambitions.

Anyway, let’s cut to the chase. Are you still backing away from doing the decent thing by your shareholders this year and committing to an online html ‘microsite’ annual report? Are you going to trot out the same old excuses:

“we’re only a small company”
“we don’t have many shareholders”
“we have an elderly shareholder base, many of whom don’t have internet connections”
“it’s too expensive”
“the money’s being spent on chocolate biscuits at the AGM”
“we don’t have time to produce one of those”
“our Board members don’t like them”
“we’ll think about one next year”
“we really like PDFs for their simplicity”
“earnings are down this year”
“Paul the octopus told us not to get one”

Anyone would think they’re expensive and will break the bank. Well perhaps they might if you commission those ‘other people’. If you’re a caring and understanding person committed to your shareholders and are responsible for producing your company’s annual report and are located in either Sydney, Melbourne, Brisbane, London, Singapore or Mumbai, we can take the load off your shoulders. Find out more by emailing me tony@heywood.com.au

What say you Paul?

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney and London with affiliates in Melbourne, Gold Coast, Singapore and Mumbai.

Just when you thought traditional print has a brave new future...

2010-04-15T23:42:00.000-07:00

Well, we thought the GFC was waning and that we here in the Land of Oz were enjoying a resources-fuelled recovery and the good times were rolling again. For some. Then along came my April 2010 copy of ProPrint to cast darkness into our hope-filled future. Let me pick out a few choice headlines for you to savour...
‘Driving into digital’ on the front cover.... ironic?
‘Pettaras Press up for sale after falling into hands of the receivers’
‘Paragon Printing staff get 11th hour reprieve though future still unclear’
‘Worldwide’s future in question after month of administration’
‘Former owner rescues Printing Department’
‘Standard Publishing House has acquired fellow Sydney-based printer Rapid Digital out of administration’
‘Liquidators hopeful of selling Quality Print’
‘Geon loss hits NZ$183m’
‘Blue Star profits fall but ‘improving’’
‘Salmat earnings rise despite revenue slide’
and in their online (!) Weekly Bulletin... ‘Beaver Press in administration’ – that’s a sad one as I remember Robert Francis from back in the 80s – a nice guy.

Is this the aftermath of the GFC finally hitting home? In the same issue a survey of printers revealed 65.1% of respondents had clients who bought less print.

Or is digital printing finally taking a bite out of the traditional litho market? The survey also revealed 84.7% of respondents believe there is growth potential for digital, with 51.4% planning to increase their digital offering.

Or both? Or is it the online phenomenon changing our communication habits?

Whatever your views it seems that change is happening and some are better prepared for it than others. Sadly if clients are spending less on print, they’re certainly spending less on design also.

My money remains with online faring the best in 2010 and beyond. Excuse me while I go and code another online annual report financials page in html.

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia with affiliates in Melbourne, Gold Coast, London, Singapore and Mumbai.

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

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RSS – is it a new Porsche 911 or a new online investor tool?

2010-03-21T19:27:00.000-07:00

No, it doesn’t stand for Rallye Sport Speciale, it stands for Really Simple Syndication. “What’s that?” you ask. Well, it starts with that little orange icon that you can see on lots and lots of websites. And it’s very clever. And it can be really good for websites. It’s all about getting interesting information to come to you rather than you having to go and find it from many different sources and not knowing when that information is fresh or old.

RSS represents a family of web feed formats used to publish frequently updated works in a standardised format. So now with RSS, websites and blogs send out an alert to you when new content is published. It can be web-based, desktop-based or mobile device-based.

But not everyone wants to be inundated with email alerts clogging their in-box do they? So, some clever people came up with software called an ‘RSS newsreader’ that enables you to read all your new and favourite content in a standardised XML file format. The reader regularly monitors the user’s subscribed feeds for new work, downloads any updates, and provides a user interface to track and read the feeds. This saves a considerable amount of time and effort trawling the web for your favourite information. You can receive headlines, articles, podcasts, photos and even video.

So how can this help your website? It represents an easy way for your audiences – investors, employees and customers – to keep up to date with regular information you want them to have, as soon as you release it. For business analysts and journalists it means they can follow your company on their desktop and not have to rely on traditional newswires. It can serve as an effective reminder of upcoming events or important dates in the company calendar.

There are some key differences between RSS and email you need to be aware of.

> There are no spam filters, and it is opt-in only, therefore no blockages. Whereas many emails and e-newsletters do get blocked, RSS will not and should achieve a 100% delivery rate.

> It means your audience will receive not only a written message the instant you release it, but you can also deliver them audio and video for the full experience.

> You can track through server logs how often the RSS feed was accessed.

Be aware that RSS feeds are already popular among many stakeholder groups – roughly 25% of top tier companies are responding to this. So, don’t get left out, put some performance into your company’s online communications with RSS. Mine’s a Turbo.

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia with affiliates in Melbourne, Gold Coast, London, Singapore and Mumbai.

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

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iPad the new iAnnualReportReader?

2010-02-04T15:02:00.000-08:00

Looks like the iPad from Apple may become one of the biggest ‘must haves’ after the iPhone and the iPod. It seems destined to change the time honoured practice of ‘snuggling up in bed with a good book’. Competitor products are going to have a hard job to beat the sexy, smooth functionality and brand allegiance people have for Apple products. Librarians are starting to look a little nervous. The whole concept of libraries is now up for grabs. Will they be replaced by iPad recharging stations? A new generation may go though life not knowing what a bookshelf is. Ufologists will discover ancient texts with odd looking creatures holding tablets that look surprisingly like iPads. Book printers are livid. Small quantity digital printing has eaten away at their profits, and now iPad is destined to take away a big chunk. Captains of the newspaper industry are clamouring to establish subscriptions in the online space. Newsprint is diminishing. Trees are breathing a sigh of relief. Those digital ‘print-a-book-while-u-wait’ kiosks are starting to look a bit silly.

But just how many books can be made available for an iPad? Book publishers will be feverishly adapting all their best sellers for consumption by iPad, fearing competitors may gain a lead. “Our online library’s bigger than yours!” One wonders exactly how the porn industry might make a dollar from all this. People are already unsure quite where the iPod/laptop/netbook/notebook/iPhone ends and the iPad starts. And it doesn’t stand up vertically so you can’t view the screen ‘the old way’ unless you buy one of the optional extra stands. This means you have to put it down flat on a table or cradle it in the crook of your arm. Hey that’s different. Particularly when you try and type on the ‘virtual keyboard’. But Apple has that covered also. There’s an optional plug-in keyboard. I expect very soon there will 2,967 variations on a protective sleeve, custom colour accessories and a deluge of custom apps.

There are a few other considerations. Where will it live? At home or the office? Is it a work tool or a lifestyle accessory? Will it live next to our PC/laptop or be consigned to the bedroom? What happens when Dad spills his breakfast cereal on it? Will your kids find it a suitable diversion to quell their ‘long car journey’ syndrome? Optometrists will be rubbing their hands with glee as the strain of reading hundreds of pages of fine electronic type slowly but steadily dims our vision. What will book mark makers do? What will newsagents do? Millions of ‘paper boys’ around the world will be deprived of pocket money, no longer able to roam the streets in the rain dispensing their newspapers for a pittance.

One prediction, prompted by some thoughts from a designer colleague, is that there will be a new realisation (finally) that the design and presentation of publications - books, magazines and newspapers - needs to be rethought to optimise the online reading experience and release it from the shackles of the printing process. The experience of reading from the printed page is far different from the potential of viewing and reading from a well designed interactive electronic page.

In five years time will early model iPads replace books as doorstops?

Of course there will be many witticisms bandied around....

“He tried every trick in the e-book”

“The judge threw the e-book at him”

“Did Steve Jobs take a gamble with the iPad or is he just an online e-book maker”
(cringe)

The pioneering work of the past ten years transforming complex documents like listed company annual reports into ‘mini-websites’, occupies the winner’s podium when it comes to making complex text, photos, graphs and charts come to life on a PC screen. Will the iPad influence more shareholders to make the shift to online report reading? I think it may just influence a few. Thank you Steve.

Will our centuries old reliance on printed paper books, preceded by the first baked clay tablets used in 3500BC Mesopotamia, result in uninspiring dull white screens with endless lines of black type? I don’t think so. There are too many designers around to let that happen. Does that make them iDesigners or eDesigners?

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia with affiliates in Melbourne, Gold Coast, London, Singapore and Mumbai.

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

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Dead tree reports cannot deliver XBRL

2009-12-06T20:42:00.000-08:00

Just in case you are still in the dark over what XBRL is, and how it will eventually change the way information is sourced from electronic documents...

Specific items of information in an electronic document such as an annual report are described and identified by XBRL tags. The tags are standardised, enabling data from multiple documents to be analysed and compared quickly and easily, even in different languages. This suggests even less reliance on paper-based annual reports and more interest in online HTML reports.

Analysts will get audited data in a consistent format which will take away much of the hard work. They will like it because it enables much deeper disclosure of reporting information.

Analyst take-up and adaptation of their internal processes relies on sector-specific national then global take up of XBRL. This requires of regulators from around the world the foresight to plan its introduction and collaborate on a wide scale. Until there is a wide base of XBRL formatted information out there, analysts do not presently have the incentive to take much notice and change their research activities to leverage XBRL benefits.

United Kingdom
In March 2006 the UK government announced the use of XBRL for corporate tax returns and supporting accounts should be mandatory. From April 2011 all companies making a Company Tax Return must file their tax returns online using a specified XBRL data standard. This will require some determined planning on the part of these companies.

USA
The SEC in the USA already have around 500 companies providing interactive data reports for fiscal periods ending on or after 15 June 2009. More will be doing the same over the next two years.

Unusually, Singapore, India and China have a head start over the US.

PricewaterhouseCoopers has been at the forefront of XBRL development and have plentiful advice for companies on how companies should approach integrating XBRL into their reporting process.
www.pwc.com/gx/en/xbrl/index.jhtml

So where does that leave our dwindling tree population? Though there is much pleasure to be gained from receiving a well designed and printed annual report to satisfy your investment decision - which will eventually be discarded or hopefully consigned to an appropriate paper recycling resource - there comes a point where we have to ask ourselves as we drive around in our new hybrid vehicles “why are we consuming vast amounts of energy and resources to produce something which is also available online in a more information rich and accessible format?”

In the words of Al Gore...
“The climate crisis... is our greatest opportunity to lift global consciousness to a higher level”.

Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia with affiliates in Melbourne, Gold Coast, London, Singapore and Mumbai.

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

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The writing is on the wall for ink on paper (in London and Sydney particularly)

2009-10-15T20:25:00.001-07:00

I know we’ve had (note past tense) a recession, but now it’s all looking good (at least for the next two weeks according to various journos in that esteemed business newspaper the Financial Review) and we can start planning a bright new future.

The trees in Australia didn’t get too much of a reprieve this year, despite my efforts, as there still seems to be an abundance of paper-based June year end annual reports about to be printed in the next couple of months. The printers around town however will still cry poor. Quantities are down and the digital printers are massing at the gate. The writing is on the wall for ink on paper.

Onward and upward with online and HTML. So where does your company stand in the online reporting stakes? What investment has it made in its most expensive and important investor communication of the year? Yes I know there are many excuses that are trotted out in response to this question - We’re not ready for it yet. We’re too small. We got hit badly by the recession. We don’t have the time. Our shareholder base is too old to appreciate this type of thing. Our IT guy looked into it and said it wasn’t worth his time getting involved. It’s too expensive. An insufficient number of our shareholders have access to broadband. Our company secretary’s brother owns a printing company. You know what I mean.

It’s no understatement to say that the majority of companies are approaching it in a gradual way. Read that as slow. The easy way out for companies courtesy of an ‘interactive PDF/html’ version has slowed progress and diverted companies from seeking best practice. In fact there is a strong argument that an ‘interactive PDF/html’ version may be counter productive as it does not provide a great experience for the investor, who may just be tempted to revert to the printed version. Also, I haven’t met up with too many companies who seem overly bothered about whether their competitors are doing something better than they are. Oh well.

The reported take up of online reporting by shareholders, whether in London or Sydney, is reported to be 80 percent. It is a concern however to read an article by Clare Harrison in IR Magazine where she states that only around 5 percent are ‘happy to receive the annual report electronically’! I suppose it depends on how you interpret ‘happy’. But why only 5 percent? Does it really take this long to wean shareholders away from print and have them embrace the benefits of accessing reporting information online? I can only think that so many have been afflicted by the limited experience of PDF and ‘interactive PDF/html’ reports touted by many suppliers around the globe.

How long will it take for best practice html ‘mini website’ reports to gain majority approval? Any bets?
What will it take to achieve this? How long will it take for printed annual reports to be reduced to black & white text-only documents for compliance and registration purposes? I got my hands on the 2008 Apple annual report (Form 10-K) recently - all 102 pages of it - all black & white, text only, on rather thin bond paper with a couple of big staples through it. The way of the future?

The html report, just like a website, offers considerable scope for almost unlimited functionality and the ability to customise to specific requirements - graph building tools, charting, print baskets, videos, podcasts - all of which enhance the user experience and leave the expensive days of print far behind.

I raised the new opportunities afforded by XBRL more than a year ago to many companies in Sydney. I have also included details on our website and in blogs, but to date have not received a single enquiry. The benefits are reportedly substantial, where specific items of data are ‘tagged’ for recognition, thereby enabling investors, analysts, accountants, auditors etc to find, compare and analyse data faster and more efficiently. By rights it should enable essential people like accountants to do their jobs faster, thereby saving clients money - but where have we heard that before?

At the end of the day money rules. If only someone could produce an html online report for the price of those nasty ‘interactive PDF/html’ versions. If you’re in London check out report-axs.co.uk and speak with Paul Sillers. In Sydney check out report-axs.com and speak with me. If you’re unfortunate enough not to live in these two highly desirable locations speak to me anyway as we don’t even need a face-to-face meeting to get results you may have only dreamed of. Until now.

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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What’s happening in the world of annual reporting this year?

2009-09-13T18:10:00.000-07:00

The global market turmoil, which is hanging around like a bad smell, is making investors more risk averse and more cautious. They are demanding more information and insight to a company’s 2008-09 performance, its potential to ride out the downturn and its ability to accelerate when the green light once again illuminates our darkness, the race resumes and the world becomes a better place.

We are experiencing extremes. Some companies are investing fewer dollars in communications and as a consequence are coming off the radar and finding themselves back at the starting gates. Some companies however, are taking advantage of this and ramping up their presence to investors and gaining new exposure.

Recent AIRA survey figures reveal that 49% of companies are maintaining the same IR budget for 2009, 37% are reducing and 15% are increasing. My money’s on the 15%.

Companies generally identify a need to try harder this year to capture the attention of a disengaged investment community that has either switched off in disgust or needs some severe prodding. Just like starting the engine of a ’63 EH model Holden with a suspect battery.

Companies need more face-to-face meetings with investors and analysts. Pile them on and deliver them in a more convincing manner. They need to be more future focused. Explain what’s going to happen in your neck of the woods when the markets start to climb. Are you going to be up there with the new achievers or left behind with a flat battery and a puncture? What plans are you putting in place to prepare for the upturn? They want to know.

Online is increasingly the place to access company information as opposed to the printed report – 80-90% of shareholders now say so – the days of screwed up annual reports folded and wedged in mail boxes or waiting at your local post office are rapidly disapppearing, to the great relief of many of Australia Post’s finest.

Video is still the new kid on the block and seemingly resisting exploitation and exposure. A great pity as it is more important than ever to now deliver a convincing glimpse of the company leaders and the manner in which they are responding to changing markets. Photos of the Chairman and CEO in their best suits with frozen smiles captured in print no longer tell a suitably convincing story of who they are, their body language and how convincing they are when they speak.

Didn’t the message get through to you IR professionals? Do you have your eyes closed and your hands over your ears? No? Then tell me why more than 50% of listed companies persist with publishing their report online in PDF format? Don’t start me on this one. Nor do I want to discuss interactive PDFs. On the third day God made interactive PDFs and the world ground to a halt. Adopt HTML and go to heaven. End of story.

This year only a modest number of companies are considering HTML. Seemingly only the brave. The pioneers. Those destined for success with happy shareholders. Get the message? Good.

Explain this to me. Why is it that so few companies have a direct link from the home page on their website to the shareholder centre or the annual report? Images of three seated monkeys come flooding back.

IR professionals need to realise that there is a profound shift from reporting to online dialogue with investors using feedback forms and/or Web 2 technologies. The smell of printing ink is being replaced with digital technologies to enhance user experience courtesy of HTML online annual reports having audio, video, animation, interactive charting and print baskets.

The ‘first generation’ HTML online reports that appeared in 2001-2002 did not make much of a lasting impact here in Australia. Check our turnover for those years – thank you AMP, Cashcard, Commonwealth Bank, OPSM and Perpetual. It has taken six years and a change in reporting Legislation to finally get HTML annual reports back on the radar.

The popularity of the ‘shareholder review’ is increasing and demonstrating that it is more relevant and palatable to the majority of investors than the traditional annual report. Sadly, a bit like most Australian investors, it seems to be putting on more weight as each year passes.

Companies are looking seriously at a ‘reporting suite’ comprising low spec (b&w) printed annual reports, a glossy shareholder review and an online HTML presentation of both. This comprises a landing page with the ability to navigate to each document – see http://info.westpac.com.au/annualreport2008/ which we produced this year.

There is a perception from company secretaries that producing a shareholder review adds more work and requires ‘marketing’ skills that they don’t possess which compels them to persist with the traditional annual report format. Where is the marketing team when you want them?

Printed annual reports are expensive for the low quantity produced (10-20% of what it used to be pre-Legislation change) meaning that more and more printers are stepping in with digital printing presses geared to low quantity production.

Analysts and investors alike recognise that they must look beyond the poor performance figures to the more important information that reveals the future potential of the company. Will they find yours quickly and conveniently and be suitably impressed by it?

If you have any doubts call me. Australia Eastern Standard Time 61 2 8256 3999. And don’t ask me about PDFs.

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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The price we pay for shareholders requesting a printed annual report

2009-07-23T18:53:00.000-07:00

Manufacturing 26 sheets of A4-size paper emits the same amount of greenhouse gas as driving a car one kilometre.
Source: Clean Up Australia

One tree is used to produce 100 copies of an average (83 page) annual report.
Source: Chartered Secretaries Australia

More water is consumed to produce one tonne of paper than any other commodity.

One litre of water is used to produce seven sheets of A4-size paper.

It takes 13.5 Gj of energy to produce one tonne of paper – this is equivalent to using 552 litres of heavy crude oil.

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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Registry costs crippling you?

2009-07-09T22:09:00.000-07:00

If you are an Australian 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

2009-06-01T16:36:00.000-07:00

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!

2009-04-16T17:52:00.000-07:00

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?

2009-03-19T17:36:00.000-07:00

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

2009-03-05T18:10:00.000-08:00

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?

2009-02-10T15:19:00.001-08:00

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

2009-02-09T22:34:00.000-08:00

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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Does digital printing produce better quality results than litho printing?

2009-02-08T20:52:00.000-08:00

More than 400 print and procurement managers in the UK, Germany, France and the US were recently asked the above question by IT research company Gartner. The responses indicated that digital delivers both better image quality and better value for money. On a scale of 1 ‘poor quality’ to 7 ‘excellent quality’ toner-based digital scored an average of 5.68 with offset the lowest at 5.17.

What does this mean for annual report printing?

Quality
In Australia, the last few years has seen digital printing become a serious contender in the print quality stakes. As regards annual report printing however, with my hand held firmly on my heart, in my own experience it has not yet beaten litho on quality bu is getting close. There are special considerations when designing for digital printing. It does not like large areas of solid or tinted colour, otherwise ‘banding’ will result. Even the mighty iGen3 press from Fuji Xerox, something of an industry standard in Australia, hasn’t found an answer to this achilles heel of digital printing. Overall however, quality is to a very good commercial standard. I estimate that if you took them to task, more than 50% of investor relations professionals would not be able to identify any real quality differences.

Value for money
Digital beats litho on price if you are printing less than around 300 full colour annual reports. Above 300 quantity, there are litho printers in Sydney who can easily better the digital price. Above 1,000 quantity, digital is not in the running.

Where digital really scores is when a reprint is required. Perhaps the share registry underestimated the quantity of reports and you suddenly need another 200 urgently. Reprinting this quantity litho is a very expensive exercise. It takes a lot of time to set up a litho press and get the job ready, where printing plates have to be registered and ink coverage on the paper optimised. It is not unusual for a pallet of paper to be wasted in this process. With digital printing it is a much faster and easier process to reload the files and print 200. And if you select 200 quantity, 200 is what you get, thereby saving a a significant amount of paper.

The future of annual report printing
Legislation in the USA, UK, Australia and New Zealand has made online the default delivery method for annual reports unless shareholders specifically request a hard copy version. This has seen the quantity of printed reports plummet - in Australia by 80-90%. These increasingly small quantities are more and more likely to be printed digitally. It is inevitable that with the R&D funds pouring into it, digital printing or something very similar, will replace litho printing. How many years away is this? Probably quite a few because litho has been around for many years and isn’t going to give up its market share without a big fight.

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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Why choose HTML for an online annual report?

2009-01-15T15:16:00.000-08:00

Reasons why HTML is the obvious choice
Best practice starts with an HTML annual report. To all intents and purposes these are commonly referred to as mini-websites. Why is HTML the preferred format for an online annual report? Is it because billions of people view websites every day and don’t complain too much about them? Quite a few of these people are shareholders of Australian companies. Just think, if they’re relatively happy with looking at websites, it probably means they’d be happy looking at your online HTML annual report!

What are the key reasons for websites having become the global favourite means of accessing information online?
1/. It’s fast
2/. It’s easy
3/. You can include audio and video files

The challenges facing PDF reports
Basically, there’s nothing better than HTML. It would take a brave man or woman to argue that there is something better. Yet some do. For many years listed companies relied on a quick and easy PDF of their annual report courtesy of Adobe Acrobat to satisfy shareholder needs. Although a wonderful tool to get documents from A to B by email, the shortcomings of viewing PDFs of information heavy annual reports have been well documented:

1/. Slow download
2/. Need to zoom in and out to be able to read text
3/. Need to scroll up and down to read columns of text

It’s a bit like listening to music on an old 8-track player from the ’70s in preference to an iPod. But in PDF’s defence it is an inexpensive way of getting your annual report online and keeping the ASX happy... but only if you care little for your shareholders’ welfare. The basic problem is that most printed annual reports are portrait format while PC screens are landscape format. A bit like trying to fit a square peg in a round hole. Several years ago several bright minded individuals started to think of ways to improve PDF annual reports. So onto the market emerged several stopgap measures. These feature a more elaborate navigation and tend to be marketed as ‘interactive PDFs’, or they are based on HTML images of the printed annual report pages, sometimes with pages that ‘turn over for you’ when prompted. How wonderful is that? The old PDF restrictions however still prevail. Beware also that they can be hosted on the supplier’s server which means that when you decide to move supplier, bang goes your report. In its defence, because the printed pages are ‘captured’, the only additional checking by the client is to ensure that the navigation is linking to the correct pages.

In a side-by-side contest HTML wins every time.

So what stimulated this interest in online reporting?
Despite the fact that Heywood Innovation has created HTML reports since 2000 for Top 200 Australian companies, it wasn’t until mid-2007 that The Simpler Regulatory System Bill was finally introduced that stimulated the present interest in online annual reporting. It stipulated that online is the default method for listed companies to provide annual report information to shareholders. Shareholders can however request a hard copy if they so desire.

Although public sector reports still require full printed documents, it is only a matter of time before a mandatory shift to online reporting comes into force.

So what is the level of uptake?
The Australian Shareholders Association calculated in mid-2008 that 90% of shareholders have now made the move online.

From our own experiences in 2008, the number of Australian companies producing HTML annual reports will not equal that of the UK, where 46% of listed companies have produced an HTML report since the Companies Act 2006 came into effect in January 2007 and switched the default towards electronic rather than print-based reporting. Yes, they had a headstart on us. It appears that Australian companies are being a little slow on the uptake and are persevering with PDF-based formats. They are reluctant to change from traditional reporting practices. The move to XBRL will be a real test.

In a 2007 ASA survey it was reported that 40% of Australian shareholders didn’t want an annual report in any shape or form.

A big opportunity with HTML is that audio and video files can be incorporated. For the same reasons that people do not watch static images on television, no longer do shareholders have to endure static photographs of the Chairman and CEO complete with frozen smiles.

Building a case for moving to HTML online reporting
So you’re ready to make the move to HTML. What do you need to consider and what information do you need in order to present a case for moving beyond PDF?
> HTML is the most effective means of displaying annual reporting information online
> reports are fast to download and feature easy and intuitive navigation
> requires no zooming in and out as text is at a readable size on screen
> editorial text can be in bite size chunks thereby eliminating the need to scroll
> reports can be obtained which indicate visitor hits on every page – useful for determining what information interests shareholders, and planning future content
> all photos and images can have descriptive ‘tags’ applied to them that explain their purpose and content
> audio and video files can be incorporated that provide an interactive and engaging experience

Why are 10-20% of Australian shareholders still requesting a hard copy report?
Since the 2007 Legislation change, many companies have found it difficult to make the right decision for their online reporting needs because a printed report is still requested by some shareholders. Let’s analyse why the requests keep coming in.

> shareholders are not fully aware of the Legislation change and its implications
> they didn’t understand the poorly designed share registry communication with the option to ‘tick the box’
> they don’t trust the company’s intentions
> they don’t like the PDF annual reports they’ve seen in the past and probably aren’t aware of user-friendly HTML ones
> they don’t have a PC and internet connection
> they’re too old for ‘all this internet stuff’
> they love the smell of ink on paper and its tactile qualities
> it provides tangible evidence of the investment they’ve made

Most shareholders aren’t happy with viewing large PDF documents on screen such as annual reports. They will be reluctant to move online until they experience a simple and easy to navigate HTML report and realise that the old challenges and frustrations are no longer there, and that it is now as easy as navigating any website.

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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Hug your shareholders

2008-12-11T18:42:00.000-08:00

I often wonder how much notice listed companies take of their shareholders. Apart from the occasional skirmish at the AGM and awkward phone call now and then from those shareholders more advanced in years who ‘just don’t get it’ and have too much time on their hands, do you ever solicit comment from them, or are they a necessary evil to be avoided at every opportunity?

Every time I ask a company the question “Do you know what your shareholders are looking for in an annual report?”, I inevitably receive a shrug of the shoulders in reply, accompanied by a vacant stare. “If we don’t hear from them then everything must be OK”. Come on guys, you can do better than this. Show them a bit of respect and interest. You may just learn something. It may just be valuable. It may just save you money. It may just help save the planet. It may get you more sleep at night.

I know some companies do actually send out the occasional survey and request for feedback, but I suspect they’re very few. And you never get to hear what they did with the results. Strange that.

As a result of the change in reporting Legislation in late 2007 here in Australia, share registries have asked shareholders this year if they are happy to receive their annual report online, or if not, they can request a printed one, mailed at great expense and inconvenience to the company and the planet.

For many companies this change in Legislation was one of the biggest challenges they have ever faced. Do you consider then that it may be beneficial to ask shareholders if they’re happy with the online information delivery? – particularly if you tried to engage them with one of those new fangled HTML mini-website things. You defaulted again to a PDF of the printed report! How could you? Have you no shame? They’re so ’90s.

Beyond the choice of delivery… have you considered the report content and whether it is actually covering ground that shareholders really want you to cover? Why not? Consider this. Have you been blindly following the same old tired format year in and year out? Have you been wasting lots of your time all these years? Do these agonising thoughts keep you awake into the small hours?

You know the writing is on the wall don’t you? You’re going to have to shift to one of those mini-website HTML online reports. Those that are fast to access and easy on the navigation. Those that look pretty schmicko and can even have video of the Chairman and CEO included (providing they get a haircut and a weekend crash course at NIDA). And when you do shift it makes sense you rejig the content into screen size chunks that make for easy reading. I guess you may as well go the whole hog and reconsider the entire report and do it properly! My number in Australia is 02 8256 3999. We’ll start by asking your shareholders what they want and then we’ll create something new, different and devastating – something your shareholders will love you for. They may even want to hug you.

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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Video in online annual reports – a moving experience

2008-11-13T19:42:00.000-08:00

Video provides an interactive experience of key people in your organisation that is far more engaging than static photographs. At relatively small expense, video can unleash the Chairman and CEO in true dynamic style to give shareholders a ‘real’ experience of how competent they are in delivering the company’s results and potential for the future. Video can reveal a lot more about a person than a static photo can. This requires a decision on what style of presentation best suits the subject and the objectives of the video. Is the subject dressed formally or informally... in the boardroom or in the workplace... delivering a monologue or engaged in active discussion with an interviewer in a Q&A scenario? Beware however that the larger the video file the longer the download time.

Both of the following examples take time to download, but the experience is worthwhile. They are expensive productions and probably beyond the budget of many companies, but serve to demonstrate what can be achieved.

The Philips President does a great job projecting a bold and confident face to shareholders. Integrating graphics with his video is particularly convincing. http://www.annualreport2007.philips.com/

The Sainsbury report adopts the ‘page turning’ method which is not universally liked. The design firm SAS however, has reproduced all text at a readable size, and included animated items and ‘hidden text’ that can be uncovered by pulling tabs or peeling back the photos. Ingenuous and engaging. Sainsbury are to be applauded for having an introductory and closing video that explains what they have done and why.
http://www.j-sainsbury.co.uk/ar08/flash/full.shtml

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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Hard Copy Report

2008-10-16T19:18:00.000-07:00

Why are 10-20% of Australian shareholders still requesting hard copy annual reports?

In this first reporting season since the 2007 Legislation change in Australia that made online reports the default option, many companies have found it difficult to make the right decision for their online reporting needs because a printed report is still requested by some shareholders. Companies dream of the day when no shareholders request a hard copy annual report and they can then have a clean slate to determine the way they really want to communicate with shareholders. Let’s analyse why the requests keep coming in.

> shareholders are not fully aware nor understanding of the Legislation change and its implications
> they didn’t understand the poorly designed share registry communication they receive and the implications of ‘ticking the box’
> they don’t trust the company’s intentions and subscribe to the belief that ‘if it ain’t broke, don’t try and fix it’
> they don’t like the PDF annual reports they’ve seen in the past and probably aren’t aware of user-friendly HTML ones
> they don’t have a PC and internet connection
> they’re too old for ‘all this internet stuff’ and delight in showing off the annual report at the bowling club
> they love the smell of ink on paper and its tactile qualities
> it provides tangible evidence of the investment they’ve made
> they don’t fully subscribe to environmental considerations

Most shareholders, particularly the older ones, aren’t happy with viewing large PDF documents on screen such as annual reports. They will be reluctant to move online until they experience a simple and easy to navigate HTML report and realise that the old challenges and frustrations are no longer there, and that it is now as easy as accessing and navigating any website.

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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Annual reporting mistakes you need to avoid

2008-09-26T00:18:00.000-07:00

1/. Not informing shareholders
Research and workshops conducted by Heywood Innovation in Sydney and the Gold Coast have revealed that:

> several months after the event, there are still many companies that have little understanding of the new annual reporting Legislation, its implications and how these affect their shareholder communications
> there is a desire to find out what other companies are doing
> pre-Legislation many companies have already made attempts to migrate shareholders to online communications, but with limited success
> many retail and institutional shareholders have little or no knowledge of the Legislation

Communicating effectively with shareholders has always been a challenge. It does not stop with shareholders, as there are other stakeholders – analysts, employees, environmental groups – who also have expectations from communications such as the annual report. These objectives must be met while meeting core legal, financial and regulatory requirements.Have you told your shareholders about the changes in annual reporting Legislation? Are they blissfully unaware that a printed annual report is no longer coming their way unless they request one? Will this cause you considerable angst when they phone you up to find out why? Most shareholders at present have little or no understanding of the changes that will be implemented this year which will affect the way they access annual reporting information. Here is an opportunity to engage with them and apply some best practice communication that will ultimately save your company money and save the environment and stop the phone from ringing.

The less informed shareholders are, the more likely they will request a printed report and the more it will cost you.

Please be warned however. Telling them all this won’t have too much effect if you intend to simply place a pdf of your printed report on your website. One of those that is slow and difficult to view – one they love to hate. Demonstrate that you have their interests at heart by producing a fast and easy-to-access HTML online report – one that works just like a website that they feel comfortable with.

Remember this. If a shareholder doesn’t like what you’re offering online, if it is slow and difficult to use, they will opt for a printed report and it will take an awful lot of effort over the next few years to change their mind.

> Ensure that not only shareholders know about the new Legislation and the implications for the annual report moving online, but also your analysts and brokers. They'll wonder what's going on when they don't receive a printed annual report from you. Pay particular attention to your institutional shareholders.

> You will probably need different approaches to cover retail and institutional shareholders.

> Inform them that they will be contacted by mail or email when the next annual report is available to view on the company website/or they will receive a link in the email if they have so requested.

> Inform them if you intend to produce a 16-28 page Shareholder Review document (short form report) or continue with a concise report.

> Reinforce to them the company’s commitment to the environment.

> Your share registry will provide shareholders with the opportunity to request a printed report and will collect this information as it determines the new printing quantities. Note that this needs to be repeated every 12 months to accommodate for new shareholders. Shareholders must reply within a specified timeframe in order to receive a printed report.

> Consider a shareholder newsletter and the opportunity for shareholders to receive media releases.

> Be prepared for Legislation-related questions from shareholders at the next AGM.

2/. Not making a determined effort to collect shareholder preferences
The future of communicating with shareholders lies online. Shareholders can not only receive their annual report and NOM & Proxy online but they can also vote online. To achieve this with any degree of success requires that you have their email address and permission to send them financial information direct to their email box – such as when the online report is available for them to view on your website, details of the AGM etc. So how do you communicate this to your shareholders?

Most companies will leave this up to their share registry. Unfortunately they seem to do this in a somewhat half hearted way. The piece of paper that is being mailed to shareholders is not exactly best practice communication. No persuasive argument for the environmental benefits of online reporting, just a quick explanation and the opportunity to tick the box. Nevertheless, some of the larger companies are experiencing only around 5% of their shareholder base are still requesting a printed report.

Remember that each year shareholders must be given the opportunity to re-subscribe if they so wish.

Your share registry must be extra diligent when managing your shareholder database.

3/. Not considering an Annual Review
Producing an Annual Review as an alternative less expensive option to the printed annual report is gaining much support from shareholders. AMP, ANZ, Commonwealth Bank and Fosters are leading the way in producing a smaller A5-format booklet in sizes ranging from 16 to 28 pages. The Annual Review is essentially a short, easy-to-read overview of the more essential information normally contained in the Annual Report. Typical contents are: Investor Snapshot, Welcome, Chairman's Report, CEO's Report, Business Performance, Business Review, Five Year Summary, Director and Executive Remuneration, Our People, Our Customers, Our Community, Our Environment, Board of Directors, Directory and Important Dates.

4/. Opting for a PDF online report instead of HTML
A PDF relies on having a printed report available, from which the PDF is produced. PDFs are not meant for reading reports online. The traditional ‘portrait’ print format is different to the ‘landscape’ format PC screen, requiring scrolling and zooming to read down the page. Large reports can be slow to download. It is not possible to determine what shareholders are interested in as it is only possible to track the number of times the PDF file is accessed, not what pages are read. PDF files have been used extensively by companies to display annual reports on their websites. It is a very effective way to transfer data from one place to another.
Annual reports have relied on having a designed and print-ready file available from which a PDF is made and uploaded to the company’s website. Therefore design costs are incurred.

PDFs are not meant for reading documents online. The traditional ‘portrait’ print format is different to the ‘landscape’ format PC screen, requiring scrolling and zooming to read down the page. Large documents can be slow to download. They shift the requirement on to the reader to print pages from their PC.

It is not possible to determine what shareholders are interested in as it is only possible to track the number of times the PDF file is accessed, not what pages are read.

5/. Litho printing a small quantity of printed annual reports instead of considering digital printing
Digital printing is a toner based process, as opposed to litho printing which relies on liquid inks. Quality and speed of digital printing have come a long way in the last few years. The technology uses coloured toners similar to an office laser printer. The big advantage is that a specific quantity of annual reports, from one to many, can be printed with little or no wastage. ‘Press ready’ time is shorter than litho printing. The range of papers however is limited but seems to be constantly expanding. Embellishments such as varnishes and embossing are not possible.

A big benefit is that digital allows each document to be personalised or have variable data from a customer-supplied database printed anywhere in the report. This means you can impress say institutional shareholders by having their name on the front cover.

Professional digital printing (using toner) primarily uses an electrical charge to transfer toner or liquid ink to the substrate it is printed on. Digital print quality has steadily improved from early color and black & white copiers to sophisticated colour digital presses like the Xerox iGen3, the Kodak Nexpress and the HP Indigo Digital Press series. The iGen3 and Nexpress use toner particles and the Indigo uses liquid ink. All three are made for small runs and variable data, and rival offset in quality. Digital offset presses are called direct imaging presses; although these receive computer files and automatically turn them into print-ready plates, they cannot insert variable data.

Digital printing is more cost effective than litho printing in quantities up to 500, similar in price in quantities from 500 to 750 and more expensive in quantities above this.

Digital printing is less wasteful than litho printing. With digital, if you want 500 printed reports the press prints 500. With litho printing it's likely the printer will print maybe 700 or even 800 to ensure they get a good set of 500. This is because if they are short, it is very expensive to re-run the job to make up the balance. The litho printing process is more wasteful of paper, energy, water and it requires more chemicals and produces more waste.

Use customer data captured from CRM databases, Web sites, and call centers to drive variable text, images, and graphics in marketing communication materials. Variable information printing enables you to support high-value customer marketing programs and increases customer loyalty and response rates.

Wikipedia's take on digital printing:
For more information on digital printing visit http://en.wikipedia.org/wiki/Digital_printing

Details on one of the more popular digital presses, the iGen3
http://www.xerox.com/go/xrx/igen/iGen.jsp

6/. XBRL and its impact on annual reporting
As if the new annual reporting Legislation is not enough to contend with, along comes more technology in the financial arena to enhance investor communications. With yet another acronym to commit to memory, XBRL (eXtensible Business Reporting Language) – the financial equivalent of HTML and XML – promises to revolutionise the way financial information is generated and analysed.

There has long been a desire by global capital markets and investors to compare the financial reporting information of companies regardless of that company’s location around the globe. In other words, standardised reporting of public company results under a single world standard.

A global initiative – XBRL defines categories of financial data and ‘tags’ or ‘bar codes’ them, thus enabling users to search for, identify and retrieve them and pull them into any standard spreadsheet software such as MS Excel to view and analyse them, reducing or eliminating the need for manual re-entry and easing the data collection process. This saves time and increases the accuracy of the data.

It is suggested that XBRL will enable companies to realise significant savings in their internal and external audit costs over time.

Significantly, the US Securities and Exchange Commission (SEC) is moving to electronic filing of company accounts with an interactive database that uses XBRL. This follows a successful pilot program involving 25 companies. The SEC’s first step is to create a dictionary of terms. Once completed, all companies will be required to report to the SEC in XBRL format. This will also affect foreign companies with a US listing.

A sign of things to come in Australia?

For more information visit www.xbrl.org or www.microsoft.com/office/showcase/xbrl/default.mspx

7/. Not considering the environmental benefits of online reporting
Australian Legislation amendments mean that delivery of annual reports online is now the default option, unless shareholders specifically request a printed version. How can you maximise the print and processing cost savings and thus help save the environment?

There is now an opportunity to reduce quantities of printed annual reports quantities or eliminate them altogether and help the environment. We think this is a powerful argument that can be leveraged when outlining the online reporting benefits to shareholders to persuade them not to request a printed report.

Greenhouse gas emissions
> Manufacturing 26 sheets of A4-size paper emits the same amount of greenhouse gas as driving your car one kilometre.
Clean Up Australia

Trees
> One tree is used to produce 100 copies of an average (83 pages) annual
report.
> The average print run of a Top 200 Australian company is 186,000 copies
= 1,853 trees per company.
Chartered Secretaries Australia

Water consumption
> More water is consumed to produce one tonne of paper than any other commodity
> one litre of water is used to produce seven sheets of A4 paper, therefore
1.1 million litres of water are consumed for an average Top 200 Australian
company’s annual report.

energy
> Pulp and paper production is an energy-intensive activity and energy costs can represent up to 25% of the total manufacturing cost. It takes 13.5 GJ of energy to produce one tonne of paper. This is equivalent to using 552 litres of heavy crude oil.

8/. Not considering the new opportunities for video that HTML reporting offers
HTML reporting offers new opportunities to integrate video into your online annual report.

Video provides an interactive experience of people that is far more engaging than static photographs. At relatively small expense, video can unleash the Chairman and CEO in true dynamic style to give shareholders a 'real' experience of how competent they are in delivering the company's results and potential for the future. Video can reveal a lot more about a person than a static photo can. This requires a decision on what style of presentation best suits the subject and the objectives of the video. Is the subject dressed formally or informally... in the boardroom or in the workplace... delivering a monologue or engaged in active discussion with an interviewer in a Q&A scenario? Beware however that the larger the video file the longer the download time.

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 reporting – bit slow on the take up

2008-08-25T16:54:00.000-07:00

Online reporting – bit slow on the take up

2008 represented a golden opportunity for Australian companies to embrace the benefits of online reporting, following the industry-shaking change in Legislation that went through in mid 2007. Sadly the take up so far has not been as thorough and fast as we had anticipated. There is a fair degree of caution and reticence to make changes to a time honoured print-based process that has been in place for decades.

As the company that introduced HTML reporting to Australia in 2001, we have a great headstart over our competitors, and an obligation to spread the good word about best practice annual reporting to the 2,000+ listed companies in Australia. Later in the year we will be producing a more in depth formal review of what has happened with online reporting in Australia in 2008.

Here were some key messages we have been pushing so far this year:

> HTML is the obvious choice for fast and effective access to information online.

> Interactive PDF versions of printed reports will slowly disappear.

> It makes sense to leverage the HTML medium and adopt video to provide a more convincing and expressive presentation by key players, that static photos cannot achieve.

> If the Chairman and CEO don’t feel comfortable in front of a video camera, consider audio files.

> Printed Shareholder Reviews of around 28 pages in length satisfy the requirement of keeping in touch with shareholders now that 80-90% are happy to access annual reports online. Some companies are mailing them to all shareholders.

> HTML reports can be produced quickly if financial tables are presented as images.

> XBRL is anticipated to be mandatory in 2010 in Australia, which means that all financial tables will need to be in HTML, not images. (see the 10 July blog post)

> Print quantities below 500 are likely to cost less when printed digitally than by the traditional litho process.

> Digital printing is more environmentally friendly than litho printing, particularly with less paper wastage.

> Many companies are resorting to bland, low cost, black & white printed full reports to mail to those shareholders who still request a hard copy of the annual report. Once shareholders receive these unexciting black & white reports in their mail box, they are less likely to want one again in 2009, unless they are really looking for the fine detail in the financials. By that time they may also have seen the company’s pdf-beating HTML annual report which will encourage them to transfer their attentions online.

> HTML reports can easily be enhanced with Flash animation if a more expressive and marketing-oriented online report is required.

> It is now relatively easy and cost-effective to also produce half year reports in HTML for consistency of delivery and ease of use.

> Traditional print designers are slow in advising their clients on the best course of action and don’t seem confident embracing the online medium.

If you are one of the 2,000+ listed companies who still haven’t made a decision as yet and are experiencing sleepless nights, give me a call on 02 8256 3999 or email lyn@heywood.com.au for details of our upcoming workshops.

Lyn Heywood is a Director of Heywood Innovation.

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CSR reports follow the online trend

2008-07-31T21:26:00.000-07:00

There is a downhill trend in the number of CSR reports published by FTSE 100 companies according to new research conducted by corporate reporting consultancy Black Sun in the UK. Evidently 2005 was the peak year with 78 companies producing separate CSR reports. Numbers then fell to 65 in 2006 and then 57 in 2007.

“One obvious reason is that companies are cutting back on paper-based reports for cost and environmental reasons and shifting online, consistent with trends experienced in the USA, UK, Australia and New Zealand”, said Tony Heywood of Sydney-based communications company Heywood Innovation. “Stakeholders can now access the information more quickly and more selectively”.

Reporting of CSR issues inside annual reports however is on the increase. Black Sun reports that in 2007, 87 percent of companies discussed CSR in a dedicated section in their reports.

“Now that 80-90% of shareholders in countries like Australia are accepting their annual report information online, it makes sense that CSR information follows suit, either within the online annual report or in a dedicated online CSR document” said Heywood.

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What is XBRL and how will it affect Australian companies?

2008-07-10T17:27:00.000-07:00

XBRL stands for eXtensible Business Reporting Language. It is an ‘XML’ language which helps to standardise the identifying and communicating of information between businesses and on the internet.

It is an open standard and free of any licence fees. It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world. Of particular interest is the way it streamlines the processes associated with collecting and reporting financial information.

On May 14, 2008 the Securities and Exchange Commission voted unanimously to formally propose using new technology to get important information to investors faster, more reliably, and at a lower cost. At the centre of the SEC proposal is ‘interactive data’ ie XBRL to “uniquely identify individual items in a company’s financial statement so they can be easily searched on the Internet, downloaded into spreadsheets, reorganised in databases, so it can be compared and analysed by investors, analysts and journalists”.

The proposed rule would require all US companies to provide financial information using interactive data beginning next year for the largest companies, and within three years for all public companies.

XBRL is being referred to in the US as ‘Interactive Data’ and as ‘Standard Business Reporting’ in Australia and the Netherlands.

The government of Australia is supporting the adoption of XBRL to ease regulatory reporting and enhance its efficiency and accuracy. It is hoping to bring together multiple regulators across states and territories -12 agencies in all - that require financial-based reports, on a standard language (XBRL) on an electronic channel.

For XBRL to work, the content must be HTML or PDF to be searchable for XBRL tags which identify particular types of information which you can select, analyse and store.

Take a look at this www.xbrl.org/WhatIsXBRL/ for an explanation, and www.iasplus.com/pressrel/0708xbrl.pdf for an update on how it is being adopted around the world.

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Keep your annual report simple, clear, concise and consistent

2008-06-18T18:25:00.000-07:00

Annual reports influence the perception investors have of a company. They are seen by them as the most credible and comprehensive overview of a company in which they wish to invest. They should attract the reader’s attention; educate and inform shareholders (potential as well as current); report on performance; outline the strategy and future direction of the company and fulfil legal and regulatory responsibilities.

Design agencies have an important role to play in adding value and appeal to the reporting process and integrate verbal and visual messages. Design, however, is not just about creating pretty pictures. Good design is an important strategic process in which creative solutions are found to meet the expectations of the company and satisfy the needs of the business. Good design results when the relationship between the client and designer is open and collaborative, and where the designer develops a clear sense of the client’s unique objectives, competitive advantage and day-to-day requirements.

SO WHAT MAKES A GOOD ANNUAL REPORT?

Simplicity: An annual report should be written for someone without specialist industry or financial knowledge and should be aimed at the broader range of shareholders including retail shareholders and prospective investors who may not have any industry or technical knowledge.

Clarity: An annual report should be laid out coherently and be clearly indexed (perhaps with the use of colour), so that it is easy to find key information. Structure and content should be guided by the key messages that reflect the concerns of analysts and shareholders. Jill Howry of Howry Design, a US design company, once said: “If a company cannot articulate why it believes in itself, how is anyone else going to believe in it?”

Concise & Consistent: The content should be precise and to the point while retaining substance. It should contain a clear description of what the company does and articulate progression from the previous years reporting - its ‘hits’ and ‘misses’. This is essential to give shareholders a quick and accessible summary of the business.

With the shift to online reporting in the US, UK, Australia and New Zealand as a result of changing legislation, 80-90% of shareholders now form a new majority who seek an engaging online experience. Are you going to give them one or are you still stuck in the print era?

Finally, the annual report should stand alone in its own right without the need to reference other publications or prior year reports. The annual report is also an important marketing tool that should enhance the brand and help build and manage the brand’s reputation.

Happy reporting!

Matthew White is a Senior Designer at Heywood Innovation.

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HI POD - The changing world of annual reporting

2008-05-29T17:29:00.000-07:00

Listen to HI POD - The changing world of annual reporting

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.

Are you keeping up with changing technology?

2008-05-14T20:55:00.001-07:00

Web2 and social networking sites are wielding significant influence on the way we access information online. "But I'm an Investor Relations professional - what has this got to do with me?" you ask.

Well, as we're all well aware, legislation implemented last year now allows listed companies to use the internet to communicate with shareholders rather than mail printed documents.

Moving on from Print
Over the years we have all become familiar with print and the related time-frames and processes. Printing your annual report however in full colour as a marketing document is becoming a thing of the past. Many companies that want to maintain their communications in print are moving to a smaller more economical version called the Shareholder Review.

The Shareholder Review is written in plain English and contains only the 'bare essentials' from the annual report, usually within 28 pages. This serves well for those shareholders who do not have access to a computer or the internet. It also serves as a means of keeping in touch with shareholders once a year more cost-effectively.

Thinking of online
In our experience most companies that have canvassed their shareholders are pleasantly surprised that around 80 to 90% are happy to access their information online. So how are you going to engage this new online majority with an experience that they will be happy to come back to? One things for sure - shareholders want more than a PDF of the printed report and are welcoming HTML 'website' reports with open arms.

While on the subject of the web most Investor Relations professionals are unaware of how easy/difficult it is to access investor information on their own website. It is often not as easy as it should be. The viewer inevitably has to dig through several layers to get there. As this is the No.1 destination to which most investors are headed to access information, Investor Relations professionals need to be more intimately acquainted with their website, its functionality and attraction for shareholders.

Content is king. It's one thing getting them to the information as quickly and easily as possible, but is the online information engaging and not just a dump of 'old-style' content formatted for print consumption? Is it viewed more as an after thought than a new opportunity to impress shareholders with a new experience that will endear them to your company?

The company brand
The online experience you create for visitors will influence the way they perceive your brand. This is a critical consideration that is often reserved for consumers but this is rarely carried through to investors. In the print mindset the Annual Report performed some of this function when it had a marketing flavour to it. New considerations are required to satisfy the online needs. How a company treats its shareholders on the web says a lot about its attitude to all its stakeholders.

Web2
So what has all this got to do with Web2? It is becoming increasingly clear that regulators are using different means to disclose and disseminate information. The SEC in the US for example are thinking of using Twitter and Blog Talk Radio to disseminate information on XBRL. Most people would not have heard of these Web2 technologies. Australia might be a little behind the US but soon these will hit our shores and Investor Relations Professionals will be caught off-guard unless they consider becoming familiar with technology and its many uses.

Be prepared and get ahead of the pack
Heywood Innovation in Sydney is holding workshops and presentations to help companies get a better understanding of new Legislation-inspired choices and issues. In the 21st Century a year is a long time to get to grips with a new way to do something.

Partner with us and we will keep you informed and one step ahead of the pack in your communications with investors.

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It sure beats watching Biggest Loser

2008-04-27T20:11:00.000-07:00

I just found an email from those clever people at SmartCompany – check them out at www.smartcompany.com.au

Evidently we Australians mustn’t be the outgoing nation we once were – we seem to be staying at home more and cruising the ’net. Or are we?

The Australian Bureau of Statistics reckons that we’re taking up new broadband and wireless internet connections in record numbers. Broadband jumped 33% between September 2006 and December 2007, from 3.91 million to 7.1 million.

Wireless was the big achiever. Over 481,000 people were connected to wireless broadband at the end of the December quarter 2007, more than three times the 186,000 connected in September 2006.

Not good news for cable manufacturers.

Broadband speeds have picked up significantly. The number of people with broadband capable of download speeds of 1.5Mbps or greater increased by 35% to 2.51 million in the 15 months to December 2007.

Good news for listed companies embarking this year on their first ‘proper’ HTML online annual report. Now that online is the hero in these post-Legislation times, it’s comforting to know that those nice people in wireless broadband land are making it easy for thousands of shareholders to view company annual reports in the comfort of their own home, at picnics, family gatherings, the footie, the pub, at the beach, on the train…

It almost makes you want to go out and buy some shares!

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Towards Environmentally Friendly Printing

2008-03-26T22:20:00.000-07:00

The printing industry can so easily become the bete noire when it comes to environmental discussions regarding the future of the planet. Often miscast in the same villainous role as the oil and tobacco companies, they are used as scapegoats by our consumer society when we play the blame game. You can choose not to smoke. You can buy a hybrid car. But it's hard not to read paper-based publications. The truth is that we all read publications and hold in our hands the product of the printing industry's endeavours - ink on paper. And it's going to stay that way for many years to come. We all therefore have a responsibility to understand the impact printing has on our world - paper and power consumption and waste generation, and how we can help minimise that impact.

Best practice from an environmental perspective results in reduced land fill, reduced toxic waste and emissions from pulp and paper processing entering waterways and the air, and less demand on paper that is sourced from virgin forests.

Some interesting facts:
> Over 40 per cent of trees that are logged globally are used to make paper,
> Recycled paper accounts for about 10 per cent of the paper market worldwide.
> Affluent countries such as the United States and Australia among the leading consumers of paper.
> Paper consumption is growing. About 95 per cent of business information is still stored on paper, while the greater availability of copying machines, printers and fax machines, as well as personal computers and desktop printers, has produced an increase rather than a decrease in demand for paper.

Designers and printers who specify paper stocks should adhere to responsible environmental practice. I have compiled a list of Environmental labels and schemes to help you recognise what is available.

The sourcing of wood fibre from well-managed forests is referred to as
FSC
PEFC
SFI

Environmentally responsible manufacture is referred to as
ISO 14001
EMAS
Nordic Swan
Blue Angel
EU Eco-label

FSC
The Forest Stewardship Council is an international organisation promoting responsible forest management.
FSC has developed principles for forest management and a system of tracing, verifying and labelling timber and wood products which originate from FSC certified forests.
> A minimum of 30% of the virgin fibre must be FSC approved for the product to carry the logo.

EMAS
The Eco-Management and Audit Scheme (EMAS) is the European Union's voluntary instrument which acknowledges organisations that improve their environmental performance on a continuous basis. EMAS registered organisations are legally compliant, run an environment management system and report on their environmental performance through the publication of an independently verified environmental statement. They are recognised by the EMAS logo, which guarantees the reliability of the information provided.

PEFC
The PEFC (Programme for the Endorsement of Forest Certification) is a framework for the mutual recognition of national or regional forest certification schemes, rather than being a specific scheme in its own right. National governing bodies apply for membership of the PEFC Council (eg.the Finnish Forest Certification Council is endorsed by the PEFC).
> A minimum of 70% of the fibre must be PEFC approved for the product to carry the logo.

Nordic Swan
An environmental label encouraging production methods that create minimum environmental impact.
> The broad criteria are a ‘life cycle analysis’, quality and performance standards and the periodic raising of environmental standards.
> Now being replaced in favour of environmental management systems such as EMAS.

SFI
Sustainable Forestry Initiative. The American Forest and Paper Association’s Sustainable Forestry Initiative aims to ensure ongoing renewable resources across the country.

EU Eco Label
The EU Eco-label 'Flower' is a certification scheme aimed to help European consumers distinguish greener, more environmentally friendly, products and services (not including food and medicine.) Over the past ten years, the 'Flower' has become a European-wide symbol for products, providing simple and accurate guidance to consumers. All products bearing the 'Flower' have been checked by independent bodies for complying with strict ecological and performance criteria.

Bleaching
White paper undergoes a bleaching process. In the past chlorine bleaching was the preferred method because it produced the whitest pulp – however it produces organochloride compounds, an extremely toxic carcinogen. Many paper mills have adopted more environmentally-friendly bleaching methods in order to reduce their dioxin emissions.

Bleaching methods:
> Elemental Chlorine Free (ECF) which substitutes more benign compounds such as chlorine dioxide for elemental chlorine gas. Dioxins and other persistent carcinogens still remain in ECF effluent, albeit at significantly lower levels than from chlorine gas based processes.
> Process Chlorine Free (PCF) which substitutes benign agents such as ozone, hydrogen peroxide, and oxygen, though the pulp may contain recycled or recovered materials that were originally bleached with chlorine.
> Totally Chlorine Free (TCF) which substitutes more benign agents such as ozone, hydrogen peroxide and oxygen.

Just imagine if every designer and printer adhered to these best practice principles - what a difference it would make to this world. Are you doing the right thing?

Matthew White is the Senior Designer at Heywood Innovation in Sydney Australia.
info@heywood.com.au
www.heywood.com.au

Sources:
Green Guide
Green Fact Sheets
www.spicerspaper.com.au
Evans, P. (1997) The Complete Guide to Eco-friendly Design North Light Books, Ohio, USA
Rethink Paper
Alliance for Environmental Technology

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When Plain English doesn't work

2008-03-04T16:04:00.000-08:00

Greg Pendlebury is a craftsman copywriter and a resident of Sydney. Over the years Greg has enriched my understanding and appreciation of the finer points of written English through his excellent email communications. His articles have comprehensively identified some of the shortfalls in my own writing style and ability, for which I am eternally grateful.

Greg recently distributed an insightful article on using plain English. He has kindly consented to me publishing it on this blog. Take heed all those who believe that effective communication is achieved by abandoning complex sentence structures and the writing of verbose language with flamboyant descriptions. It is not as simple as you think.

When Plain English doesn’t work
Look through almost any book about Plain English and you will likely see somewhere a list of simple words that can be used to replace more complex words or expressions: 'use' instead of 'utilise'; 'before' instead of 'prior to', and so on. Using the simplest word possible to convey meaning is important, but it is not enough.

You'll also find guidelines about sentence length and sentence structure: 'prefer active voice over passive voice'; 'one thought one sentence'; etc.

All this is very good advice, but it will not guarantee a document is written plainly. It will not guarantee that readers will be engaged and understand what you are saying. If that's all you do when attempting to write in plain English it won't work. These mechanical aspects are necessary but not sufficient.

The starting point for clear writing is clear thinking. If your thoughts are not clear (and worthwhile) no amount of simple language will make them any better.

The point was well made by Tadgell J in a judgment given more than 10 years ago (about legislation). He said:

"Official publicity has recently been demanded for the notion that law-makers and practising lawyers should now strive to speak in so-called 'plain English'. The ideal of unmistakably clear verbal expression is admirable but surely not new. To vaunt it as though previous generations had overlooked and neglected it is to risk the mistake of substituting conceit for zeal. It is another mistake to suppose that clarity of expression can be an end in itself. Plain English alone achieves nothing. To be useful it must run in tandem with clear thought. After all, English speech - in the law at least - is a vehicle for the conveyance of ideas. A feeble or wandering idea will not become strong and precise merely because it is dressed in plain, homely language: it will remain simply a poor idea, and perhaps more obviously and emphatically so because it is plainly expressed. A bright idea, on the other hand, is likely to find its own expression and thereby to make itself understood. Statutes, if I may say so, do not commonly contain many naturally bright ideas that speak for themselves, especially those parts of them that seek to create indictable offences. They need to work hard in order to make themselves clearly understood, if only because there are persons whose interests are served by trying to misunderstand them."

The message is simple and plain - to communicate well (in legislation and other documents) get your thinking straight.

The process of writing is a powerful way to get your thinking straight.
Think-write.

Quotations taken from a speech given by the Hon. Justice K.M. Hayne when opening the Centre for Commercial Law, Australian National University, 12 May 1999.

Check out Greg’s ‘Getting the words right’ link below – valuable advice on saying things simply and more effectively.
http://www.thinkwrite.com.au/Getting%20the%20words%20right.htm

Each month (usually) Communication Matters discusses matters that impact the effectiveness of communication. It’s written by Greg Pendlebury of Think-write Pty Ltd. Previous issues are available at http://www.thinkwrite.com.au/newsletter.html

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Beware Snake Oil Peddlers and Salesmen Selling Interactive Online Annual Reports

2008-02-07T21:05:00.000-08:00

I'm tired do you know that? And angry. Tired and angry of seeing companies selling products masquerading as competent 'interactive' HTML online annual report solutions. There are several out there - www.interactiveinvestor.com.au and www.republicast.com are two of them (how dreadful of me to tell you!). They are based on printed annual reports that have had their PDF pages 'captured' in HTML. So what do shareholders get?

> Slow and tedious navigation.
> Pages that they need to enlarge in order to be able to read the text.
> Pages they then need to scroll up and down in order to read columns of text.
> Pages that don't make any sense when the print designer decides to run text and images across spreads
> Images of pages that won't work with XBRL (just around the corner)
> No links within the text
> Something that electronic screen readers of the sight impaired don't like

... and I haven't seen one yet that works 100% of the time.

Just wonderful in this first post-Legislation year (in Australia) when you want to seduce your shareholders into accepting the benefits of accessing their annual report information online. Just when you're desperately hoping they will resist ticking the box on the form from the share registry and perpetuate their desire for a printed annual report. Just when you know that each time it happens it will cost you another $5 or so. And add further damage to the environment.

So how much do you value your shareholders? Remember this. If they don't like what you've got online, they're gonna tick that box.

SHAREHOLDER GOES ONLINE > CHECKS YOUR ONLINE REPORT > DOESN'T LIKE WHAT THEY SEE > OPTS FOR A PRINTED REPORT > COSTS YOU MONEY.

Take heed. Online annual reporting demands an HTML annual report built just the same way as a website. That's right. Just like a website. Just like the millions of websites that millions of people access every minute of every day. I guess perhaps that's probably because the website concept works. Probably because people of all ages find them easy to use. Perhaps I could even go so far as to say that it is a universally accepted, competent and easy-to-use solution.

People like Australian bank Westpac aren't silly. Check out their 2007 HTML annual reporting solution and compare it to the 2006 republicast report. Oops it's no longer there. I wonder why? Perhaps it's because the republicast report didn't reside on Westpac's server! Take careful note of this.

There's a big transition going on out there. Traditional print designers are not all competent or comfortable with designing and producing online reports. There's a learning curve involved. And if you're not technically competent there's always the fear that things can go horribly wrong. Then there are the techos. Companies that may be technically brilliant but don't really understand online design and communication. You can usually tell just by looking at their work. You need someone with both skills.

Are there any drawbacks with a 'proper' HTML report? Possibly cost. Hand coding HTML can be a slow process. Time = cost. There is one company in Sydney however that has developed their own software that automates and speeds up the process. Let's say it enables them to code 400% faster. Makes a big difference. Email me and I will let you have their details.

So now you're going to tell me that all this HTML stuff is just too much and you're going to stick with a good old pdf of the printed report. What a loser. You must really love your shareholders. Just de-list and save yourself a lot of grief!

Happy reporting.

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A Brief Guide to Annual Reporting and How to Get the Most from it

2008-01-23T15:20:00.000-08:00

Hey guess what! In 2008 most Australian listed companies’ annual reporting teams are going to get lucky with more work and more decision making. Not only will they have to contend with the old traditional printed report but they’ll also have to plan for some online reporting. Read on.

The biggest thing to hit the annual reporting world happened in mid 2007 when new Legislation in Australia made it no longer necessary for ASX-listed companies to supply hard copy annual reports to shareholders, unless they specifically request one. This closely follows similar changes that have already happened in the US, UK and New Zealand. So will this mean the end of printed annual reports and dealing with those expensive designers and printers? No.

For the forseeable future the printed report will still be around, but it won’t be quite the same and there certainly won’t be as many of them. Why is this?

1. Decision-making time for shareholders
In 2008 many Australian listed companies are going to rely on shareholders receiving a rather ineffective and poorly presented piece of paper from their registries (who have been very slow on the uptake), briefly informing them of the Legislation change and asking them to tick the box if they still want a printed report. Sadly, most shareholders ‘in the heat of the moment’ of viewing this poor piece of communication will probably tick the box regardless of really knowing why. Also, in the absence of being able to view anything better than the traditional PDF report on the company website to whet their appetite, there is no real incentive for them to change old habits.

Why not try a DL-size mailer, perhaps with an environmental theme, simply and carefully explaining, as a company committed to its shareholders and the environment, why you think the new Legislation makes sense for all concerned and the good reasons for moving online?

It will get better in 2009, you wait and see. Oh by the way, are you getting good service from your registry?

2. The environment
Here we are wondering whether we’ll still be able to afford to run our cars in coming months, frightened to wipe our backsides on virgin tissue paper, wondering why drought-ravaged vegetables are so expensive in the shops while shop keepers in Queensland strive to save their livelihoods from swollen flood waters. And still companies are not leveraging the environmental good sense of moving online. They’re still not informing shareholders of the power, water and trees consumed and the pollution generated by producing their printed annual report each year.

Perhaps the following isn’t sufficient to prompt some action?

Greenhouse gas emissions
> Manufacturing 26 sheets of paper emits the same amount of greenhouse gas as driving your car one kilometre.
Clean Up Australia

Trees
> One tree is used to produce 100 copies of an average (83 pages) annual report.
> The average print run of a Top 200 Australian company is 186,000 copies = 1,853 trees per company.
Chartered Secretaries Australia

Water consumption
> one litre of water is used to produce seven sheets of A4 paper, therefore 1.1 million litres of water are consumed for an average Top 200 Australian company’s annual report.

This is why there is an obligation for responsible companies to communicate the facts to their shareholders!

Heywood Innovation offers a service where we can calculate the resource consumption of your present printed annual report and how a move to online reporting can drastically reduce it. Valuable statistics to have available to help ensure shareholders resist the temptation of ticking the ‘yes’ box. Email us for info on this service

3. Annual Review
In the blue corner, weighing in at around 24 pages or so, and pioneered by the likes of AMP, ANZ and Commonwealth Bank is the all new contender for the annual report crown – the shareholder friendly Annual Review, or Short Form Report as it is also known. Received to rapturous applause from the ringside, this is probably what shareholders have always wanted. ASIC however just wouldn’t allow it in those dark days before Canberra parted the waves and led shareholders to the Promised Land of online reporting. It is an easy-to-read, discreet and cost-effective way for shareholders to quickly access and digest essential information on the company’s performance and prospects... but remember that it is still not compliant, and the ASIC man will pay you a visit if you pretend otherwise! If shareholders want a printed report you have to give them a concise or full version. The Annual Review at best is a way to wean shareholders away from the traditional and more expensive reports.

What content do you put into one you might ask? We have yet to find any guidelines from the likes of ASIC. Perhaps they’re too busy knocking on doors. Reviews so far have included Company Overview, Chairman’s Report, CEO’s Report, Company focus, Financials Highlights, 5 Year Summary, Remuneration Summary, Board of Directors, Community & Environment, Governance overview, Online information map, Financial Calendar and contact details.

4. Where did the colour go?
Why are the latest annual reports only black & white or one colour? Or have I gone colour blind? Simple. Companies want to save money. It’s justified by the fact that few shareholders will request a printed report. Why spend big bucks on so few? Companies like Foster’s for example complement their 2007 b&w concise report with an Annual Review as described above http://fosters.com.au/investors/docs/fgl_review07.pdf This has a more lively, retail-focused presentation compared to say the ANZ offering at www.anz.com/aus/shares/finance/annual.asp

But don’t forget that you are still required to have an online version.
“Knock knock who’s there?”
“ASIC”.
“ASIC who?”
“’as sick and tired of knocking on your door”.

So how are companies responding in these post-Legislation times? When my fellow director Lyn and I spoke at a CSA-sponsored online reporting workshop on the Gold Coast in late 2006 advising companies on the forthcoming Legislation changes, we were met with varying responses from participants. These ranged from “Does that mean we don’t have to produce an annual report any more?” to “We’re sticking with printed reports regardless”. Since then much discussion and analysis has issued forth from CSA, AICD and ASA together with a few mutterings from the ASX who still have some technology problems to fix at their end, and many traditional printed annual report designers have gone out and purchased ‘HTML for Dummies’.

PDF vs HTML
In the battle between PDF and HTML for online reporting supremacy, PDF has been forced back to the Adobe labs for a rethink. Despite being an unmatched way of transferring print-based documents electronically from PC to PC, the shortcomings of looking at static images of many printed annual report pages are no longer acceptable to shareholders. The obvious benefits of HTML annual reports we pioneered in Australia, which finally found favour in 2002 with the likes of AMP, Commonwealth Bank and Perpetual, underpin their acceptance as the best practice option. It will be interesting to monitor how many companies persist with a PDF of their printed report this year. They will probably be the same ones who don’t even offer shareholders a cup of tea and a biscuit at their AGM.

Remember this – things have now changed... the online annual report is now the hero not the printed one. Focus your efforts on planning the online report first.

So what is an HTML annual report?
Put simply, an HTML report is like a mini-website with the recognised benefits of easy and fast access to information and intuitive navigation for viewing on screen, the way it was meant to be.

How much do you want to pay?
There are basically two price point options you need to consider. I’ll use the offer from my company Heywood Innovation as the example – 1. $4,950* and 2. $14,950*. So what’s the difference between them?

1. $4,950 – The client supplies us a PDF of the printed report. With our software we convert the editorial section to HTML and convert the financials pages to images. This is a capable and professional templated presentation which should satisfy even the most discerning shareholder.

When XBRL arrives however, and it’s just around the corner, you may wish to upgrade to having the financials also in HTML. In this version only the editorial section can be searched.
View our Aspermont example
View our more advanced Westpac example

What is XBRL and how does it affect me you ask?
Take a look at this www.xbrl.org/WhatIsXBRL/ for an explanation, and www.iasplus.com/pressrel/0708xbrl.pdf for an update on how it’s being adopted around the world. For XBRL to work, the content must be HTML or PDF to be searchable for XBRL tags which identify particular types of information which you can select, analyse and store.

2. 14,950 – The client supplies us the editorial section as MSWord or Indesign files and financials in MSWord or MSExcel. This version has all content in HTML, making the report XBRL compliant. The report is custom designed to your requirements and can include Flash animation for additional effect. View our Coates example

* based on 60 pages. Further information can be accessed at our other site www.report-axs.com

The changing of the ways
Are you confident that you have a great process in place that will optimise your chances of producing a great annual report? Or is it one you’ve lived with for many years that gets dusted off each year when your desk calendar reminds you once again to hold off on the holidays, stock up on Panadol and rehearse the excuses to your partner as to why you’re late home the sixth day in a row? Now you’re going to have to change. You need to be confident that you’re going to select the most appropriate online solution for your needs. You’ll need to ask shareholders how many of them still want a printed report. You’ll need to co-ordinate production of the printed and online versions. You’ll need to decide whether you’re going to offer an Annual Review instead. You may consider online interim reporting now that it just got easier and less expensive. And more...

So what if only a handful of shareholders request a hard copy report?
You probably have four options:
1. Be slightly apologetic and hand over a laser printed set of your Word and Excel files
2. Wrap a nicely designed colour cover around them, with fewer apologies
3. Get the report digitally printed
4. Provide a full colour annual report and try and ignore the print invoice when it comes in.

What does Flash do for online reports?
Flash is a program that enables animation to be included in your online HTML report to create further interest and focus attention. It needs treating with some restraint as it is very easy for designers to get carried away with extreme effects that are at odds with the report’s communication objectives!

Check these out. Here is the Coates 2007 online with Flash incorporated into the home page

Here is the AMP 2002 online AR with a brief Flash introduction

So what’s digital printing got to offer?
It means that for quantities up to 500, digital printing is more cost-effective than litho printing to get a full colour printed annual report. Digital printing quality has improved over the last few years to the point where most readers will find it is almost indistinguishable from traditional litho printing. And you can personalise every copy. Think about that. Those important institutional shareholders and analysts can have their name on the front cover...

So who’s Heywood Innovation anyway?
Having produced around 100 printed annual reports and 20 HTML reports since we founded the business in 1989 and accumulated 15 awards, I guess we’ve learned a lot about what makes a great annual report and what can be done to ensure a trouble-free production. Some say we’re the most experienced online reporting team in Australia but I’ll let you decide that.

Happy reporting in 2008.
Tony Heywood

Dazed and confused? Need a Panadol? Got a reporting problem that needs fixing? Email tony@heywood.com.au for some quick relief.

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

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.

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Environmental Impact

2008-01-09T15:04:00.000-08:00

I hope the following information will make people realise how necessary it is for everyone to adopt a more responsible attitude to paper production and consumption - particularly when it comes to companies communicating with their shareholders.

As reported by Clean Up Australia ... The manufacture of 26 sheets of paper produces the same amount of greenhouse gas as driving your car for 1 kilometre. When you consider that the average size of a company annual report is around 82 pages, shareholders will make a significant gesture to saving the environment by going online.

Global warming and environmental damage are now hot topics which cannot be ignored.

A company’s social and environmental involvement has become an essential component of its corporate communications, resonating with shareholders, stakeholders and the broader community.

Research by Chartered Secretaries Australia has revealed some alarming statistics:
> 1 tree is used to produce 100 copies of an average size annual report (83pp)
> the average print run of a Top 200 Australian company is 186,000 copies = 1,853 trees per company

also ...

> More water is consumed to produce one tonne of paper than any other commodity – this equates to
around one litre of water for every seven sheets of A4 paper produced = 1.1 million litres of water per
Top 200 company to produce their annual report. In addition to this, the water used to grow trees in renewable forests is greater than indigenous forests, thereby adding to the environmental impact.

> The chlorine bleaching process of pulp for the production of paper has harmful effects:
Pulp mills that use chlorine compounds to bleach pulp produce chemicals called organochlorines. Among the most deadly organochlorines are dioxins: potent, toxic chemical by-products of chlorine bleaching that get into the air, water, soil, and food chain. Over 1,000 different organochlorines have been found in chlorine bleached pulp mill effluent. Hello Tasmania, are you listening.

Once released, these chemicals persist in the environment, spread through the food chain, accumulate in fatty tissues and disrupt, mimic, and block the hormone systems of living organisms. Hormones actively regulate the reproductive, learning, behavioural and disease fighting capabilities of humans and wildlife.

In its three-year assessment of these pollutants, EPA scientists warned in 1994 that minute exposures to organochlorines can lead to cancer, loss of reproductive capabilities, developmental and behavioural disorders, learning disabilities, birth defects, and damaged immune systems. Thirteen years later who knows what damage has been done.

other links: http://archive.greenpeace.org/toxics/reports/gopher-reports/chlora3.txt

> Pulp and paper production is an energy-intensive activity and energy costs can represent up to 25% of the total manufacturing cost. It takes 13.5 GJ of energy to produce one tonne of paper. This is equivalent to using 552 litres of heavy crude oil.

> The printing process is wasteful – paper is wasted setting up the printing press before the print run commences and also on over-runs.

> Because of the high cost of reprints, companies tend to over-order ‘to be on the safe side’.

> In 2001-2002, 1.51 tonnes of greenhouse gases were emitted per tonne of paper produced. This is equivalent to 5 million cars driving from Sydney to Perth (4110 kms).
(http://www.paperonline.org/enviro/level3/issues/issues_frame.html)

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Change in Annual Reporting Legislation – a Real Opportunity for a PR Disaster

2008-01-08T21:04:00.000-08:00

There is a fear that if communication with shareholders to inform them of the legislation changes is not handled competently, there is a real opportunity for a PR disaster, resulting in bad press and shareholder angst.

Shareholders can be disenfranchised, claiming that the company is trying to take advantage by not adequately informing them and trying to save money at their expense. This can be particularly sensitive where shareholders are also customers of the company in question. The media can then take the company to task.

Communication is the key
I believe every effort should be made to ensure shareholders are aware of the Legislation changes and the reasons why the company is adopting a particular approach.

40% response from shareholders
Heywood Innovation has already made inroads to reducing quantities of printed annual reports in this area. A recent initiative to shift shareholders to accept online reporting through an environmental focus achieved a 40% response from shareholders.

Click here to view the Tamaya Resources case study

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A Holistic Approach to Investor Communications

2008-01-08T20:52:00.000-08:00

I have read numerous articles in recent months that suggest a divide between companies and their shareholders. This should not be happening. The Directors and Senior Executives are appointed to run a company and deliver returns to shareholders who have contributed hard earned money in the hope of better returns than a bank can offer.

The crux of the matter is the dialogue between the two. The more open and informative this dialogue the happier the shareholders are likely to be, which means engaging the shareholders in communication.

Historically the annual report has been embroiled in legislative compliance making it bigger and more difficult for the average shareholder to understand. The recent change in Australian legislation (permits listed companies to publish their annual reports online and only supply printed reports to shareholders that specifically request them) provides the opportunity to look at the entire shareholder communication more holistically ie to stand back and assess the effectiveness of the communication in engaging with the shareholder as well as the effectiveness against the dollar spend.

Many companies are slow to pick up on this new opportunity, happy to continue with the status-quo because that is what they know and are comfortable producing. In reality, they are uncomfortable with the change process. This comes at a cost to both the company and its shareholders.

Many consultants are unaware or reluctant to offer appropriate advice, as it comes at a cost to their own service. Many PR companies are unaware of how new media can be used effectively and to deliver cost savings. Designers, printers and share registries all stand to lose by the reduction and emphasis on print. This perpetuates uneconomical and environmentally damaging practices.

The environmental benefit is one that very few people are looking at or even concerned about. Click here to read more on the environment. (Click here to environmental issues on article below)

Some companies have adopted practices that deliver staff bonuses on savings made against a nominated budget, driving them to seek lower prices often at the cost of effective communications.

So how can companies create effective dialogue with their shareholders?

Making the most of technology today means using the internet instead of printing and mailing. Digital technology is now used for printing small quantities cost effectively. Consider separating the legal compliance from communication to more fully engage with shareholders eg communicating the achievements and future prospects of the company.

Online best practice does not include uploading a PDF of the printed report. Shareholders now demand faster and easier access to information. Companies also need to keep in mind the sight impaired and provide an online solution that can be accessed by electronic screen readers. Further engage shareholders with a video presentation from the Chairman or CEO or both. Give shareholders the opportunity to communicate via email - this is non-confrontational and gives recipients the opportunity to think about their response. Adopt online voting instead of the traditional printed proxy forms. AGM presentations should be webcast, so that non-attending shareholders do not feel disadvantaged.

Think outside the square. Put yourself in your shareholders’ shoes.

Companies need to focus on effective communication not the cheapest.

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The New Legislation

2007-12-21T21:00:00.000-08:00

For Australian listed companies the recently introduced new Legislation now means that online annual reporting is the default option for delivering information to shareholders. There is no need to produce a printed annual report, unless specifically requested by a shareholder.

What does this mean for listed companies? – How can they save costs? – When does this come into effect?

Parliament passed the Corporations Legislation Amendment (Simpler Regulatory System) Bill on 21 June 2007. The Bill was then given Royal Assent, making it effective from 28 June 2007. This means companies wishing to take advantage of it can do so as soon as they have obtained shareholder preferences.

Key aspects of the new Legislation

The Simpler Regulatory System Bill was released mid 2007 in Australia. The new Legislation allows companies, should they choose, to make annual reports only available on their websites. No longer will they have to supply printed annual reports to shareholders, unless they specifically request them.

Presently shareholders must ‘opt out’ if they no longer wish to receive a printed report and rely on access to an online report on the company’s website. Now online is the default and they will have to ‘opt in’ if they wish to receive a printed copy.

By moving shareholders to access annual reporting information online, the changes open up new opportunities for companies to review the way they communicate with shareholders, embrace new production efficiencies and benefit from significant cost reductions, while reducing the impact on the environment.

Company secretaries and investor relations managers are keen to understand the full ramifications of the changes, the options available, how their own company can benefit and how they need to inform shareholders who are presently quite oblivious to the changes – a desire to be better informed and therefore better prepared.

Annual report producers must not lose sight of the fact that the annual report not only provides information, but also plays an important role in positioning the company in the minds of its audiences. It can be a barometer to signal changes and new direction, support brand strategy and attributes and provide a positive perception of company strengths and wellbeing. It should not be lightly dismissed.

Why have the changes happened?

Key influencers of legislative change that are prompting governments around the world to enact legislation to abolish the compulsory production of printed annual reports are:

> the high cost to companies of printing and distributing
> accelerating acceptance of the Internet and related technologies
> annual reporting legislation and regulation has become increasingly burdensome in recent years
> shareholder feedback suggesting that much content is unintelligible
> increasing concerns over the environment
> making the most of technology to deliver results earlier and to a global audience

The Internet has become a viable information source for many Australians, supported by statistics such as:

> 14,663,622 Internet users in Australia in 2006 – representing 70.7 percent of the population Nielsen (NetRatings, ITU, Computer Industry Almanac)

> of the 4.7 million households with home Internet access in 2005-06, 48 percent had broadband Internet access. Australian Bureau of Statistics (Household Use of Information Technology, Australia, 2005-06)

> 77 percent of shareholders have email and internet access Chartered Secretaries Australia, Tim Sheehy letter to AFR 20 Oct 2006

> in 2005 70 percent of large companies provided webcasts of their AGMs Chartered Secretaries Australia, Benchmarking Governance in Practice in Australia 2006

What has happened in other countries?

USA August - 2006
The SEC approved the elimination of the requirement for companies to distribute printed copies of annual reports to shareholders. Companies can make the report available on a corporate website or by a link to it. The website must state that a printed copy of the annual report is available upon request and free of charge.

UK January - 2007
Electronic communications provisions in The Companies Bill 2006 eliminate the requirement for companies to distribute printed copies of annual reports to shareholders. Now companies assume that shareholders do not wish to receive a printed version unless they request one. Since 2000 shareholders could opt out of receiving printed annual reports and could request an electronic version.

Originally planned for end 2008, the Government has fast-tracked the provisions to come into effect earlier. It intends to introduce the electronic shareholder communications aspects of the Companies Bill in January 2007. Companies need to amend their Articles of Association in order to take advantage of the new provisions. Those that have already amended them as a result of the earlier Electronic Communications Act 2000 may not have to amend them again. It is anticipated that most companies will take advantage of these provisions by the end of 2007.

New Zealand - November 2006
The Section 209B of the Companies Act provides for electronic delivery of annual reports. Companies have the choice of sending out a printed annual report or a notice stating:

‘that the shareholder has the right to receive a copy of the annual report free of charge within 15 days of the notice if they request it from the company: and that the shareholder can obtain a copy of the annual report by electronic means, and how such a copy can be obtained.’

Once the notice has been distributed, shareholders can then request a printed version.

A round of applause for these four countries. How long will it take other countries to realise the good sense in adopting this online approach. A determined effort will save millions of trees and help us breathe more easily with a clearer conscience.

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