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Australian Financial Review : October 17th 2006
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One call to HP's infrastructure team will have your business operating to its optimum in no time, relieving you of all your IT support headaches. The Australian Financial Review Tuesday 17 October 2006 www.afr.com 8 Annualreportshituse-bydate From page 1 Weighty tomes . . . annual reports are too big for many people. Photo: WADE LAUBE ''You often get shareholders standing up at annual general meetings complaining that annual reports don't fit through their letterbox anymore,'' the director said. One executive of a top 50 company said the company's concise annual report now had more pages than the comprehensive version with full financials had in the days before the ''concise'' version came in to existence. ''Every year there seem to be more requirements for corporate governance and, of course, remuneration disclosure,'' they said. AMP said the full annual report was requested by only 7000 shareholders this year, or less than 1 per cent. The number is 4 per cent at Commonwealth Bank and ANZ and 3 per cent at IAG. Fewer than half of all shareholders want to read the ''concise'' annual report, which can often be 100 pages, and some don't want to receive any information at all. Interest started dropping off three years ago. There has also been a drop-off in shareholders requesting the full report at BHP Billiton, Foster's, Lend Lease and Westpac. ''Annual reports are extremely long and contain a mass of information, and I'm not sure it adds any value for ordinary shareholders as very few people read them,'' investor and long-time Australian Shareholders' Association member Rex Burgess said. A spokeswoman for Leighton said the company recently asked shareholders to advise whether they wanted to receive annual reports in the mail. About 5000 said no, and about half asking to receive it by email. ''The break-up of our shareholders is approximately 18,000 receive a copy of the report in the mail, just over 8000 have advised they don't want to receive it at all and around 2000 receive it by email,'' she said. She said the company was progressively moving all of its communication material to be electronic. Australasian Investor Relations Association chief Ian Matheson said: ''It's not just in the last year but part of a medium-term trend as companies have given shareholders greater choice as to how they receive information and what they want to receive.'' The Treasurer's parliamentary secretary, Chris Pearce, is working on amendments scrapping the requirement for companies to send annual reports, which will be included in a broader reform proposals paper due this month. A long-time designer of annual reports, Bob Armstrong of Armstrong Miller + McClaren, said the cost savings for companies were overrated. ''You could be talking big dollars but compared to the net worth of the company, it's less than tea money; it's a lot of huffing and puffing about nothing.'' Costs range from $400,000 to more than $2 million plus postage, which has increased sharply as many voluminous reports are now charged at parcel rates. While Mr Armstrong agreed annual reports had become ''encyclopedic'' since he began in 1964, he said the answer was to simplify them, not abandon them altogether. ''If you're sending out an important document and no one's reading it, they're saying don't send it to them, but surely the answer is send them something they want to read.'' Printers insist the changes will cost at least $100 million to an industry already grappling with cheaper offshore competitors and falling demand for traditional ''ink on paper'' products. ''The government has foreshadowed that if this gets up, it will be extended to the finance industry and include product disclosure statements and prospectuses . . . It's the constant erosion of markets that's hurting,'' Printing Industries Association chief Phillip Anderson said. CBA is sending a short shareholder- friendly ''review'' to all investors this year, joining AMP and ANZ. The bank's general manager investor relations, Warwick Bryan, said the move tried to avoid annual reports, which no longer met the needs of ordinary shareholders. ''What you've got is enormously complex financial data that is only understood by the most sophisticated investors,'' he said. University of Sydney accounting professor Graeme Dean agreed that some accounts had become ''far too complex''. ''If people don't want them, why send them out as long as the full information is on the web?'' Mr Burgess said a shorter shareholder review would be an appropriate compromise. ''Send that to everybody with a reference that if you want more information, go to the website ± that would be an innovation.'' Companies should be obliged to send out some kind of minimum information once a year, he said. Stem cells on agenda Bill Pheasant Victoria is examining options to draft laws to allow wider research into embryonic stem cells should a Senate conscience vote in November fail to overturn the federal government's existing prohibitions. A meeting of scientists yesterday supported implementation of the report by late judge John Lockhart to permit studies using an adult cell nucleus placed into an unfertilised egg with its nucleus removed -- called somatic cell nuclear transfer (SCNT). Premier Steve Bracks said with strong safeguards in place, such research should be allowed. ''Certainly, Victoria's view is clear. We believe we need the next wave of stem cell research,'' he said. ''We are prepared to go it alone but obviously it is best for the nation to have a unified system.'' Robert Klein, the chairman of the independent oversight committee for the California Institute for Regener- ative Medicine, said patient groups overwhelmingly supported a recent move to allow SCNT in his state to advance potential cures for chronic diseases. ''If you want to know how to stop diabetes, you have to see how it develops,'' Mr Klein said. He said the only veto of US President George Bush in his two terms -- to block US federal funds for embryonic stem cell research -- was based on an ideological position. ''In our country ideology and religion are supposed to be separate from the government under the constitution. While we respect peo- ple's different views under the con- stitution -- I happen to be a Christian and I respect other Christian views that are different -- the patient groups across the country view this as a fundamental [aspect] of family rights.''