CSA has, for some time now, been looking at the ways in which companies interact with shareholders. Clearly, the annual report is central to this issue. Against a background of low shareholder take-up and the government’s announcement to change the regulations covering its distribution, exactly how this document will look in the future is uncertain.

Meanwhile, the government is also reviewing the concise annual report, in recognition that its objective of delivering key information in a user-friendly way is being eroded by the level of detail it increasingly needs to include. A particular issue is the volume of information required in the directors' report, including the remuneration report and reporting against the ASX Corporate Governance Council guidelines. CSA research has shown that, in the largest companies, these two disclosures alone count for well over 20 pages.

Furthermore, CSA research shows that the introduction of the concise annual report has not met the needs of those who choose not to take the full annual report, with just 35 per cent of shareholders in the largest companies electing to receive the concise annual report, down from 50 per cent in 2003 and 60 per cent in 2001.

1. On Friday 7 April, the government gave the green light for reform to allow companies to make annual reports available on the Internet, with hard copies sent only on request. Do you support this proposal?

Yes 97%
No 3%

Comment

This is in line with the technological advances and is a step in right direction. It will also save time and money in sending out the hard copies of the Annual Reports.
Hard copy annual reports are being used less frequently by shareholders as a source of information. They are also expensive to print & distribute. There needs to be a proactive approach to addressing this.
Majority of shareholders will have access to computers and are used to receiving information via the internet.
This is hard on the non-computer literate although it is doubtful they read the annual report.
Will provide for more efficient delivery of reports and save unnecessary costs.
It’s more efficient and environmentally friendly.
An online copy is more easily stored by shareholders together with quick search options via adobe application.
Problem with definition of 'post'?
Most annual reports produced at great cost are never read.
Yes, provided it is a standing 'opt-in' system for hard copy reports. It will make the 'guessing game' of how many Annual Reports to print even more entertaining. Even if shareholders specify in writing 'no hard copy' they can (and do) change their minds, and a reprint is always more expensive than the original print run.
Yes. The move should be congratulated and pushed through as soon as possible.
The option would be more attractive to investors with the increase in access to fast internet via broadband.
Strongly support — most shareholders have access to internet and if they want a hard copy they only need to elect to receive one.
Environmentally friendly, saves postage, most shareholders don't read them anyway.
Believe shareholders should be provided with hard copies. Great also to publish on the internet.
The Mum and Dad shareholders generally do not read their annual report, or read it quickly then throw it out — not helping the environment. E-copies enable information to be disseminated and still allows those shareholders who wish to research the company in more detail to obtain a hard copy annual report.
Too late for meaningful review of the contents for most shareholders, the market factors in any issues under continous disclosure.
We may see more detail included.
Allows me to just peruse the highlights and file away. Can access specific detail if required at a later date (easier than paper).
For shareholders with access to the internet it is a cheaper and more efficient way to deliver a report. It can be printed as hard copy if required.
Yes, considerable cost savings can be achieved by this.

2a. Do you think the move towards making the annual report available online, with hard copies sent only on request, will significantly change the way annual reports are written and designed?

Yes 44%
No 56%

Comment

It will be more informative and user friendly. The members will be able to understand the terms used better and the layout and design will be according the modern technological advances.
I don’t know that it will change the way they are written as much of this is prescribed anyway. It will change the way they are designed to ensure they are internet friendly.
Will need to take into account ease of access via the internet.
They should still be produced in the same form and content to provide all required information and are still a representation of the company, eg, presenting the company in a professional manner.
It’s still after all a marketing document as well as being informational.
As long as hard copy is an option, innovations that might arise from online reporting will have to be deferred.
I think there can be considerable reduction in size of reports.
More than likely, as it will facilitate alternative reporting tools, particularly from a graphics/charting perspective.
It should lead to less advertising content and more concentration on facts.
Companies see the annual report as a marketing tool for communicating with shareholders. Most shareholders would not understand the Financial Statements (particularly under IFRIS), due to their complexity.
There will be a more notice taken of 'page layout' on screen — ie, the shape and dimensions of the screen vs the traditional A4 layout which doesn't visually work well on screen.
Not at present. However, in the long-term, when the majority of consumers have gotten over the pre-conception that a book format is the best option, then we may see some change.
No, because I understand that those people who do not want hard copies have already arranged not to receive them.
Perhaps the format may change — but in essence this is not a natural, or necessarily logical, or necessary, consequence of the initiative. Notwithstanding the mode of communication/availability to stakeholders, the document’s purpose should be the same. This might be overlooked — but perhaps it should not.
I suspect more companies will decide not to publish a concise report and just send a full report to the few shareholders who elect to receive it. More attention will be focused on a internet friendly report.
Should be no different.
The level of detail required needs review to enable significant change. Indeed internet communication alone could lead to even more detail as the costs and logistics of hard copy are avoided.
Will require more easily readable documents and a design that is attractive and holds interest — easy to click on to a competitor's site at will.
Reading online is not as easy as reading hard copy. That said, to help the reader consume the information in a logical and easy to understand manner, I would expect formatting of annual reports to change.
Brief, concise and without all the pretty marketing blurb.
Probably not — the same information is still required, it just saves on the costs of paper etc –environmentally as well as financially.
The medium brings new opportunities and constraints.
Assuming online will be PDF driven, I expect little change.
The information required to be provided will still be the same, and the design still important.
No, it shouldn't, it is generally in the company's interest to produce a report of a high standard.

2b. If yes, in what way?

Comment

The design will be user friendly, it will have the terms better explained and the use of graphics and other interactive tools will not only be user friendly but the members can easily interact using the tools which can be made available to them. For example, if a company can have a comments column / email which members can send to the company for more information. Also, the terms can be better explained by use of the definitions / explanations when a person moves cursor to the same. It will be a very useful tool for the members who are not market savvy.
May see reduction in photos included in the report due to access speed.
Shareholders can access the parts they want to — design-a-report.
Only graphics/layout should change — the content should not change.
Not have the requirement to limit the number of pages to save on printing costs.
In the manner information will be able to be reported graphically and in charts.
The only people who will print out the report will be professional analysts and investors who will be less impressed with presentation and advertising material.
Fewer pretty pictures, more concise commentary.
I would have though change was already occurring, many A/Rs are now available on the web. Indeed, I will go looking for an A/R with the expectation that it is on the web. Key issues will be the time taken to download. Graphics certainly slow things down.
There could also be more 'interactive' content, similarly as would be delivered in a PowerPoint presentation — rather than 'still' photographs or charts.
I suspect the numerical content won't alter too much, but the design and styling will alter.
Not immediately, but over time would expect formatting to change to be more electronically user friendly.
It will allow companies to divide the report into various sections, each of which could be sent out if requested — say:
- the sections which do not change much from year to year (eg corporate governance, remuneration policy & structure, description of company activities) — updated as details change rather than annually
- a report on company performance
- directors’ report & consolidated accounts
- remuneration report
- sustainability report
Use of photographs will depend on the extent to which the report is used for company promotion purposes — perhaps only in the main report section.
Need to clarify what needs to be sent to shareholders with NOM (eg remuneration report).
Easily disseminable information, better and more attractive layout.
I would expect more interactive graphics, more high level finanacials with drill-down capability (to a certain level).
Will force them to become more user friendly.
Reports will become more interactive.
Pictorial content and opportunity for interaction, eg questions etc + report of proceedings at AGM etc.

3. The Parliamentary Secretary to the Treasurer has issued a consultation paper suggesting consideration be given to the amount of information required in the concise annual report. Do you think that the remuneration report should be separated from the rest of the directors' report, in order to reduce the length?

Yes 56%
No 44%

Comment

But may be a summary remuneration report added to the directors' report in the concise annual report.
If not then it can’t become a concise report.
Separating the reports would make no significant difference.
The remuneration report should be included as notes to the accounts.
It is preferable to minimise the number of 'reports' contained in the Annual Report. If anything, there should be a 'concise' directors' report (which omits lengthy detail) to be attached to the concise annual report.
Only if the AR is posted on the internet — should the separation occur.
The remuneration information is arguably amongst the most read sections of the annual report.
Do not issue a concise report so cannot comment — makes little difference to a full report.
The remuneration section in the annual accounts is probably the most widely read section, whether for good or bad purposes.
Most Remuneration Reports are 'separate' from the directors' report already, and are cross referenced to, so this extra step would sever the link completely, which then leaves the Rem Report on the same status as the corporate governance report — not technically part of the Financial Statements or the Directors' Report. I'm not sure how this would reduce the length or improve efficiencies. If Annual Reports can be delivered electronically, there will be no future need for concise annual reports at all. The current duplication hardly makes them worth the effort, except for very large shareholder bases (50,000+) anyway.
This is probably a key matter for shareholders; and is also subject of vote at AGM.
Yes, although another way of making it workable is to have separate requirements for a directors' report and a concise directors' report.
It is not sensible to require shareholders to look to the internet for information concerning the non-binding AGM vote on the remuneration report. Inclusion in the directors’ report is sensible whilst there is a focus on remuneration.
Yes, and I think the requirement for a remuneration report should be removed as it involves a lot of duplication.
Information SHOULD be available in a user friendly mode — referable/usable at the discretion of the user.
Yes. It adds unnecessarily to the size of the directors' report. Suggest concise report include a summary remuneration report and corporate governance statement , as is UK practice, with full reports in full annual report.
Everyone is interested in how much the directors are paid.
It is important to view the disclosure as a whole and be aware of the full context.
Wages and salaries bill — particularly directors' salaries - can be an indication of the performance and also the culture and ethics of an organisation.
Until regulators understand that significant numbers of shareholders are not interested in or willing or able to analyse all the Corporations Act requirements of content in AR's, the documents will in the main fail to be used in any significant way, other than by professionals. Splitting out the Remuneration Report only addresses a small part of the issue.
The remuneration report is currently an important section of the report to ensure senior executive accountability aligns with the remuneration being paid by the company. A separate report would, in my view, detract from the overall message to shareholders.
It is part of the overall reporting and time will see it settle down.
The information would still be available to those who want it: a concise report should only give a guide, as the full report is still available.
Reports need to have sharp focus in purpose, content and display format.
Although this is qualified, because splitting the report and providing access to the different parts would be an option. The remuneration report is one of the most interesting parts of the report and should be provided.
No. The remuneration report is now an integral part of the directors' report.

4. Do you think that the concise report should contain only summary information from the directors’ report?

Yes 62%
No 38%

Comment

It will considerably reduce the bulk for the concise annual report.
Not, then it can’t become a concise report.
Directors’ report should be in full relating to the position and progress of the company, but certain information should be included in notes to the accounts.
If the AR is posed on the internet then access to greater detail is easily accessed.
It should have summary information from the financial statements.
Directors' report is critical from a disclosure view point & should not be compromised.
The less material to be read the better, that way we may actually get people to read the matter fully.
Yes — this has worked well in other jurisdictions that have similar remuneration reporting requirements and also have concise reports (eg, the UK summary financial statement requirements). The concise report should only ever contain concise information.
Yes, as otherwise it is not concise.
Absolutely! However all others Reports should be available to support the Summary Information. It is the 'exceptions' stakeholders need to be made aware of and Summary Reports should address these 'exceptions'.
Should be titled 'summary directors' report' and refer to full directors' report in full annual report.
Directors will 'hide' relevant detail within the summary.
May give the option to gloss over important influences and risk management strategy.
Yes, but qualification as to how that content should be determined and further reduced.
There needs to be the ability to provide detail on certain issues when required. Limiting to a summary of the directors' report could cause the report to become too high level to be useful.
That’s what it is designed to do.
Believe the concise report should be more than a precis it should be a document in its own right.
The full details are important to understanding of the company’s operations.
No. The directors' report is a key component of a company's annual report and therefore should be included, in full, in the concise report.
Important this statutory report is mailed in full.

5. If annual reports are posted to the Internet, as proposed, the directors' report, and different sections of the report, can be posted to a company's website as separate files. This means that shareholders could select the sections relevant to them. Do you think that this would make the concise annual report redundant?

Yes 55%
No 45%

Comment

There may still be shareholders wanting the concise report printed and mailed. This may make it difficult to do away with the concise annual report. However with the reduction in mailing costs, it may be a cheaper option to mail the full report to anyone wanting a printed copy, thus removing the costs of preparing the concise report.
Until such time as it can be confirmed/assumed that ALL shareholders access their annual reports online, it must be assumed that some will continue to obtain only hard-copy reports and, therefore, concise reports will still be a desirable option (subject to cost/benefit considerations).
If it's electronic then why not do both!!
Quite possibly.
Post the concise report to the internet as one item and for those who wish for more information make it available in detail on the company’s website. I see no conflict in that arrangement.
Absolutely do-do territory, they are pretty rare already.
All of this presupposes however that all shareholders are internet-enabled and capable of navigating. I would suggest that some of the older shareholders would not have a clue how to access information...and would just give up at the first hurdle.
But only over time, as generational change in use of electronic media.
Some shareholders will still want the concise report mailed to them.
Not at present, but yes in the long-term (10 years +). Shareholders will still like to have a concise report covering a variety of issue, rather than have to be sufficiently IT-literate to search through a large document to get the information they need.
The concise report is likely to become redundant as the web page becomes the primary source for investors to obtain up-to-date full and summary financial and operational information. Only a small number of printed full annual reports would then be required.
Probably. However it may eventuate that the concise annual report becomes more of a marketing document.
I am not quite sure I agree with this premise. The Annual Report should be available in all its forms in the one process — not having to go to a corporate website for parts. Websites can be tortuous things to traverse — and can be made more so if needed — making access annoying/frustrating and perhaps misleading. The Annual Report is/should be a critical document in the information flow from the company/Board/Management and should be available in all media forms in much the same way — one location/process etc.
If a significant proportion of shareholders elect to receive the concise report in hard copy, which is unlikely, then the concise report will still be in demand in hard and softcopy. Some companies already break up their annual report into pdf or html sections to reduce shareholder download times and costs. A decision on the demise of the concise report is more likely to be on the basis of reduced cost of publication (ie, cheaper to produce one full report rather than a full and concise) than any other reason.
Eventually, as majority of people too lazy to get it off the internet.
It is important to tackle the overall level and detail of current disclosure requirements.
Need to watch the share registry costs if there are too many sections that can be posted!
Suggest that shareholders/stakeholders would still wish to see the full report.
A properly designed Summary Report whether called the concise annual report or some other name should always be available for the non-professional shareholder. The problem is that the content of that Summary Report is predicated on legal requirements, not user needs.
Why produce a separate report if the full report is available in such a manner which allows for the reader to extract only the relevant concise data.
It would just provide more options on obtaining information.
Shareholders will always want a hard copy.
The concise report meets the need for those shareholders who do not wish to proceed any further — but others still have the option to dig deeper thru the reports on the website of the company services.
I believe the concise report should be complete but without the 'fluff' — detailed section files on the website.
Shareholders who wanted access to the full details would still have them available and could choose the amount of information they accessed.
Generally, yes — providing that the full report can be navigated easily on the website.
Not all are comfortable with the internet.