Why choose HTML for an online annual report?

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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