Hug your shareholders

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

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

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

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

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

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?

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

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

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?

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

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

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

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

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

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

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

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

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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