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

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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