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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