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What Makes for Effective Investor Relations Sites? Part 21: Annual Reports – Give Readers a Choice in How to Access Them

Time was, back in the dark ages of about twenty years ago, people only had one option when it came to annual reports – ink on paper. Nowadays we have a multitude of ways to read things: traditional paper, web based, PDF files and e-readers. And people who are visiting your web site to read your annual report expect to have a variety of ways to access the report. Good investor web site design seeks to incorporate a variety of delivery methods for their investors.

Standard Chartered Annual Report home
click to enlarge

A nicely integrated approach for delivering both a web based report and the ability to download PDF files of the report is demonstrated by Standard Chartered, the financial services company. They start with an electronic cover page, which allows you to navigate to various sections of the report.

Each section in turn allows the reader to easily get to relevant subsections, whether it be by opening a new page to the Chairman’s statement or by clicking and expanding a sections such as operational highlights. One can easily navigate the report in this web-centric manner.

Standard Chartered Annual Report download page
click to enlarge

For those readers that wish to read the report in a more traditional, linear fashion, Standard Chartered also provides a download centre. The download centre allows an investor to either choose the entire annual report in a zipped file for quicker download, or pick and choose which sections interest them most for downloading.

Standard Chartered Annual Report
click to enlarge

In one final interesting piece of design work when you click on the two tabs on the right hand side of the page in the download centre, additional capabilities become visible, such as the ability to email the page or to create a customized PDF file. 

Overall, this is a nice piece of design work that addresses the way people navigate for information on the web with the way more traditional readers seek information.

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Next post: Schedule

What Makes for Effective Investor Relations Sites? Part 18: What’s Your Strategy?

In terms of financial theory, investors buy stock in a company on the expectation that future cash flows from the company will be enough to repay the investment and pay a return over a foreseeable time horizon. In order to do this, investors must have some visibility into the potential for future profits. This is where the job of investor relations comes in. Clarifying how the company will meet challenges going forward to pay out returns to shareholders is a three-fold task:

Shire Strategy
  • making sure people clearly understand the company, its products and markets
  • laying down a vision for how the company’s strategy will move the enterprise forward in the future
  • and giving them a transparent view into how the company’s profits were garnered in the past.

One can argue on the relative importance of each of these messages. In fact, it’s a bit like a three-legged stool in that each element is essential to the overall investment story. Without an understanding of how a firm will make its profits in the future an investor will not be likely to ante up his money. Similarly, if the organization, its products and markets are not understood, an investor will have little confidence in the enterprise. Finally, if an investor cannot look at past performance of the enterprise as a gauge to how they will perform in the future, conviction that management will deliver for the investor will be lacking.

Today, however, I want to focus on the forward-looking piece of the story, as this is probably the area that we see the least in investor web sites. Most web sites are good at giving you information about past performance, particularly financial performance. Relatively fewer give you a glimpse into where they want the company to go.

One company that does is Shire Pharmaceuticals. While no single page description on the web can purport to give a full discussion of a company’s strategy, Shire’s page (see above), does give the reader some essential basics, such as their focus on specialty biopharmaceuticals and their use of strategic partnerships to develop most of the drugs in their pipeline.

Compass Strategy

Another example is the Compass Group’s Strategy page. Although there is a fair amount of corporate-speak jargon (Who doesn’t want to deliver value to shareholders and customers; and what do they mean by “leveraging the benefits of being a Group”?), there are some useful pieces of information about what Compass wants to do and how they propose to do it once you get past the fuzzy language.

To summarize, a company’s message will be much more effective if they devote more space and effort on their web sites to telling investors where they want the company to go in the future and how they intend to get there.

In this series:
Previous post: Making the individual shareholder feel welcome
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What Makes for Effective Investor Relations Sites? Part 20: Annual Reports – Make Them Easy for Investors to Find

For investors seeking information about a company, probably the single best source is that company’s annual report to shareholders. The annual report is an opportunity for companies to tell their story in detail to investors every year, combining a message from the Chairman and management with comprehensive financial information. So it makes sense to feature the report prominently on the investor relations web sites of companies.

Yet what I see on the web varies widely as it relates to a company’s annual report. Some companies give prominent display to their annual reports, with large graphics or prominent links to the document. Others bury the report among all other governmental filings. This is further compounded by the fact that some companies elect to give their reports a glossy finish, while others treat it as another bureaucratic form to be filled out. Finally, there are a number of ways that annual reports can be displayed on the web. So it almost goes without saying that one solution will not fit all companies.

With that as a lead-in, what I will try to do over the course of the next few segments of this series is to highlight what I think are some of the more effective methods companies use to highlight their reports. This first piece will simply look at best ways to make sure investors can find your annual report. Here are a few examples:

AngloAmerican Annual Report

The mining company Anglo American takes a front and center approach to featuring its annual report with a bold visual and link in the middle of the page.

EADS Annual Report

The defense contractor EADS takes a comprehensive approach to featuring its annual report, providing both a word link in the middle of the page and a graphic link on the bottom.

The approaches of these two sites are better than you see in many other sites which take a more general approach, simply placing a generally named text link in the page menu appearing on either the left or right hand side of the page. If you want to feature your annual report – and I suggest that it is a good thing to do – effective web site design means that you create a spot where investors can easily find the link to the report.

In this series:
Previous post: Help your most frequent visitors
Next post: Annual Reports II

A Vision of Tomorrow, Where Money Isn’t Everything

mallen-bakerA fascinating blog article from CSR maven Mallen Baker caught my eye last week.  I’ve been chewing away on it ever since.

In Time To Redefine Ethical Investment he strikes directly at the root of what’s widely seen as the flaw in today’s business operations: responsibility.

Not the responsibility of managers and executives: the responsibility of investors.  Not socially responsible investment, but responsible company ownership.

In among everything else we’ve lost the fact companies are owned by their shareholders.  It’s not just an issue of finance; it’s an issue of management and governance as well.  Investors are owners.

. [Read more…] about A Vision of Tomorrow, Where Money Isn’t Everything

Complete Twitter Strategy Rules Guide for Investor Relations – Creating Official Corporate Tweets

Twitter mania is everywhere. Whether the quickly deafening crescendo heralds a change in the world’s communication paradigm, or the impending pop of the social networking bubble remains to be seen. What cannot be ignored is that businesses are embracing Twitter for the benefits they can gain from direct, real-time, two-way communication with consumers and business partners. It is only a matter of time before shareholders and company executives alike start asking, “Where is the company’s investor relations on Twitter?”

Twitter Is Different for IR

Jumping on the Twitter bandwagon and establishing a corporate presence is a simple task. The most difficult part of the whole process might be chasing someone off of the username that is the company’s registered trademark.

Otherwise, creating a Twitter account with a username, and typing in sub-140 character messages is a no-brainer. Bragging about company achievements, talking up new products, sending out links to coupons, or even just reminding the business’ followers about the company are par for the course when it comes to business Twitter usage.

Unfortunately, for the Investor Relations Department things are not so easy. There are legal pitfalls to Twitter for business use, as well as regulatory requirements for publicly traded companies on Twitter. Don’t forget, that the whole Twitter business is moot if the tweets the company sends out don’t add up to the kind of Twitter feed that people follow. Between the prospect of getting the company in legal trouble, developing a robust following, responding to shareholder concerns in a fast-moving forum, and just coming up with something to say in the company’s tweets, can tie the most technically savvy IR department in knots.

Fortunately, Twitter for Investor Relations can be broken down into an easily manageable process that provides tangible benefits for the corporation, the shareholders, and IR. This guide provides a step-by-step plan to get a business Twitter strategy running quickly. After all, quick communication is what Twitter is all about.

Rules and Strategy Guide to Twitter for Business Investor Relations

1) – Tweet Officially

a) Link to Official Twitter Account – Don’t make shareholders or analysts guess about your intentions. If you are going to use Twitter or other social networks to communicate with shareholders and others, make it official. Have a link directly from the Investor Relations landing page to the IR Twitter account along with a statement that this is the official Twitter account for corporate IR news. You don’t have to explicitly say it, but the implication is that anything else out there on Twitter, is rumor, innuendo, or speculation from non-official sources.

b) Have a Specific Twitter Account For Investor Relations – Do not use an umbrella corporate Twitter account. Do not share a Twitter username with any other department or purpose other than Investor Relations. Any lawyer with 5 minutes of experience knows that the quickest way to defeat legal protections is to show examples where these were violated, ignored, or otherwise misused or unused. In other words, your carefully crafted disclaimers, tweets, and links will all be for naught if the marketing guys throw up even a single tweet with hyperbole that proves not every precaution to ensure all information posted on Twitter is accurate. Use an IR only account and include IR or some other identifier in its name.

2) Create A Disclaimer Specifically for Twitter – The temptation to just use one of the standard disclaimers for Twitter is understandable. However, Twitter is unlike any other form of communication already engaged in, and it needs its own disclaimer. Do include as much of the standard boilerplate disclaimers as necessary, but also include Twitter specific information.

3) Post Twitter Disclaimers – Immediately next to your link to the official Twitter account, place a Twitter disclaimer. There will actually be two Twitter disclaimers required. The first is the short and sweet one that goes with the official link to the official Twitter account. The second is the one that is as long as the lawyers want it to be. The last sentence of the short one should be an “important note” that this is only the quick disclaimer and a link to the full disclaimer.

4) Create Twitter Terms of Use or Twitter Terms and Conditions – Disclaimers are one thing. Terms or Conditions of usage are another. Draw up Twitter specific terms to help protect the company against mistakes. Wal-mart created a stir with its laundry list of terms, which it has relabeled as “Twitter Discussion Guidelines.” The provide an excellent starting point for creating Twitter TOS.

5) Require Acceptance of the TOS or TOC – The software industry pioneered the concept of forcing consumers to agree to something without actually asking. CDs or Floppy Disks came in envelopes that said by opening the envelope you agreed to a whole list of terms and conditions. U.S. Courts have repeatedly upheld these “contracts” as valid. Do the same thing for your Twitter account. Use the “Bio” section to include a sentence which states that following or reading the posts on Twitter constitute acceptance of your terms of use.

6) Accept Limitations on These Safety Features – Disclaimers and Terms and Conditions can go a long way toward shutting the door on many avenues of liability. However, what stands up against a tort claim in court, and what stands up against the actions of a governmental regulatory agency such as the SEC, are two very different things. However, do not neglect these important safeguards. For every avenue of attack the company eliminates, the less chance there is for something to “stick.” – Following the rest of this IR Twitter guide will help provide more legal and regulatory protection.

With official Twitter accounts, disclaimers, and terms in place, the company’s investor relations department has done everything it can reasonably be expected to do in order to protect the company from unforeseen Twitter liability issues. Now, investor relations  is ready to Tweet.  What to tweet and how to keep what IR posts on Twitter from causing trouble is the next piece of Twitter strategy to get into place. Getting the corporate IR Twitter posting strategy right is next.

What Makes for Effective Investor Relations Sites? Part 8: Providing Context for Your Financial Information

Business does not happen in a vacuum, but financial statements are often presented that way. As an investor, you always have to ask yourself if the company results are being driven by the company alone, or by external factors. Of course, usually it is a combination of the two. But beyond some verbiage in the interim results press release, or a brief statement in the annual report, the average investor is often left without any broader context to judge how the company is doing. Further, because active investing is a forward-looking activity, this lack of background will mean that investors will seek their own data sets to help correlate past performance with their judgment as to future prospects. When making decisions about future investments, it’s important to know if the company you are interested in is prospering because of its managerial expertise or because it’s boom times in the industry. Because when things change, as they invariably do, you want to be with good management.

This is a serious oversight by many corporations and represents a missed opportunity to educate investors interested in their firm. Company performance can be heavily influenced by a variety of factors, whether it is interest rates, new construction starts, inflation or a particular type of commodity cost. Investors may or may not have a good handle on these influences. However, company personnel, who spend their days immersed in the details that drive their businesses, know what external factors most affect their businesses. So it makes perfect sense to direct investors to the appropriate information and to make it available on your investor site. Yet few companies do.

There may be several reasons for this. Companies may be understandably reluctant to include information from third party sources on their websites, for one. Or they may be hesitant to deviate from the “cookbook approach” when it comes to financial information. That is, if it is not required to be disclosed, then don’t deviate from the recipe by adding extra spice. Whatever the reasons, it means that investors will have to search on their own for the causal links between internal performance and external effects.

Total main indicators

To their credit, some companies do attempt to fill in the gap and point out important external factors. Total, the French energy company, does this on a page in their investor relations section titled “Main Indicators”, which I have reproduced alongside. On that page, Total sets out a chart showing the Dollar/Euro exchange rate, European Refining Margins, the cost of Brent crude per barrel, and average gas and liquids prices, all factors that are of importance to an energy producer. In creating the chart, Total enables its investors to make more informed decisions and saves them a lot of research time. In short, they have made their financial information more effective.

It is something I’d like to see a lot more companies do.

In this series:
Previous post: Financial information
Next post: Provide context