Creating conversations Our approach to corporate reporting
Who we are MerchantCantos is one of Europe’s leading corporate reporting specialists. Our team has been delivering expert advice and compelling solutions for more than two decades, from our offices in London — and more recently in Paris and Dubai. Our clients come in all shapes and sizes, from across the globe. They range from FTSE 100 household names to smaller AIM-listed or privately-owned entities. They come from nations as diverse as China and Abu Dhabi and operate across all industry sectors.
Contents What we do Reporting programme: how we can help Case studies: Tesco Ladbrokes SABMiller Old Mutual Governance focus: what needs to change? Online reporting: what are the trends? Case studies: GAME HSBC Ping An Multi-channel reporting: engaging audiences Our clients: from across the globe Reporting services: what we offer
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In a constantly changing world, organisations need the best advice on how to communicate with key audiences. MerchantCantos helps you deďŹ ne your messages and communicate — via print, online, video and mobile applications.
MerchantCantos Creating conversations
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What we do Our expertise across the full range of media channels enables us to understand and meet all corporate reporting and communication needs. Our integrated oering includes: Consultancy outputs, such as peer benchmarking and structure audits; Collateral production, from annual reports and accounts to more regular updates; Digital media, from corporate websites to social media content; Video production, from executive interviews to investor documentaries; and Webcasting services, from live results to seminars and roadshows.
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We assist our clients through an in-depth understanding of the issues that they face. From regulatory change and best practice, to market awareness and media knowledge, we have specialists that can help advise and guide your approach. We then help you communicate your critical messages in the most compelling ways — engaging your audience at the right time and through the most appropriate channel.
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Reporting programme: how we can help
Your complete reporting solution Advise — Create — Deliver From prelims to your AGM, we are reporting specialists that can help you through the financial calendar and beyond.
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Prelims Audiocast/Webcast Video management interview Presentation materials
Report production Printed/Online report Online reporting centre Video content Charting tools Mailing solutions Mobile apps
Roadshow Presentation materials Interactive content Online site visits Audiocast/Webcast Transcripts Translations
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AGM Audiocast/Webcast Interactive Q&A Stage backdrops Video content
Ongoing... Interim announcements Quarterly reporting solutions Deal announcements Crisis work
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IInternational ntern national retail Visitors V isitors to Tesco’s online annual report will experience the truly global nature of the business. The report is available in a groundbreaking six languages and features a video on the homepage that brings to life — ‘Tesco Around the World’. A moving carousel caro ousel of images illustrates Tesco’s vision, and interactive features of the report enable users to customise their engagement to reflect personal interests. These range from creating bespoke bar charts of annual performance and expanding content sections, to drilling down into Tesco’s global operations with a dynamic map.
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A winning strategy Last year was pivotal for Ladbrokes, with a new CEO signalling a fresh drive, confidence and clarity at the betting and gaming company. Our annual report captured this dynamism with the cover line: ‘Making Ladbrokes favourite’, emphasising the client’s critical success factors with striking graphics. We also introduced a Q&A-style CEO’s statement to convey a direct approach, and stressed the integrated nature of the business with a racing track illustration in Ladbrokes-branded red across the Business Review.
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Bringing results to life Rich media has the power to engage audiences on a personal level regardless of geography. International brewer SABMiller used this to good effect when supporting its 2011 results announcement with a series of films, webcasts and multimedia e-mail campaigns to target 70,000 employees across 75 countries. We delivered a short, punchy video trailer encouraging staff to take part in local results briefings; a high-end film, published in 11 languages, summarising operational performance; a live Leadership webcast and a series of executive interviews. These assets were used online and in live events — they helped SABMiller engage its workforce in the great performance story that they had created.
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Strategy in action We made customers and sta the stars of Old Mutual’s 2010 annual report. To show how the FTSE 100 long-term savings, protection and investment business was executing its strategy, we created compelling case studies from across the group. Reportage-style photography, taken in the UK, South Africa and US, put a human face on business objectives. This engaging approach was also replicated across the online report and the printed summary version.
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Governance focus: what needs to change?
Corporate governance is now firmly at the top table of narrative reporting. Prompted by the financial meltdown, new regulation and stakeholder scrutiny is demanding that corporate governance narrative delivers more. This new focus offers a prime opportunity to strengthen your report’s business story.
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The good news, however, is that there are just two really key areas that regulators want covered more extensively this year: the company’s strategy and its business model
You may have resorted to hollow laughter when faced with Cutting Clutter: Combating clutter in annual reports, this April’s Financial Reporting Council (FRC) discussion paper. Faced with the first full year of the new UK Corporate Governance Code, not to mention a raft of further post-financial crisis guidance from UK and EU rulemakers, the paper’s idea of slimming down annual reports at the same time as firms are being asked to disclose more seems a tall order. Navigating the morass It’s not as if things were straightforward before. In the absence of a single, coherent piece of legislation outlining annual report essentials, those involved in the corporate reporting process are already obliged to consult a patchwork of disparate legislation and guidance to ensure that they meet all necessary requirements. As the UK’s Investor Relations Society puts it: “The extent and complexity of the regulations and guidance on annual reports is already demanding. Simplifying — not adding to — this morass would be helpful, allowing companies to focus on quality, not quantity.” Faced with the welter of new rules and recommendations, it would be understandable if companies retreated back into the very ‘fungus of boilerplate’ that the FRC urges them to avoid. The good news, however, is that there are just two really key areas that regulators want covered more extensively this year: the company’s strategy and its business model. Engaging stakeholder attention It’s likely that your company has already outlined its strategy and business model to some extent in
previous annual reports. The new guidance presents a perfect opportunity to build on this. It offers the chance to spell out what differentiates your business and why it is worthy of stakeholders’ patronage, investment or interest, by clearly setting out what your business is, does and plans to do. Look at it as the equivalent of introducing the characters and context in a novel. The new governance code recommends that this new content is located in the business review rather than tucked away in the corporate governance section. This makes narrative sense, as it means that the company sets out its stall at the beginning of the report. Indeed, a number of annual reports released before the June 29 deadline for code compliance, outlined the company’s business model and strategy in the opening pages, before the formal start of the business review. Defining the business model A company’s business model can be defined in different ways, from how a firm makes money to how it delivers products and services. Essentially, the FRC wants you to outline what your company stands for and does. The best definitions and descriptions of business models in this year’s reports employ graphics (including maps, pie charts and tables) and concise summaries (supported by longer commentary for those who require it). They also offer clear signposts to further information in other parts of the publication or on the corporate website. Many companies provide their business model information in the strategy section of their report. Most firms label the section explicitly, although some add their own flourish, such as ‘Our business model for sustainable growth’.
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The February 2011 Davies Report recommends that FTSE 100 boards should aim for 25% female representation by 2015
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Categories of reporting content identified in Cutting Clutter: Combating clutter in annual reports: Entirely new each year; Refreshed to reflect changing circumstances; and Unchanged or where the changes are trivial.
Crucially, this year’s very best annual reports do not present strategy in a silo
Building on previous disclosure guidance, many of this year’s reports have strong strategy sections. The most impressive include clear overview summaries; key strategic objectives; indications of how the strategy reflects the corporate vision; details of how strategy feeds into business planning; and links to breakdowns of KPI performance. Crucially, the best annual reports do not present strategy in a silo. Instead, strategy content runs throughout every section of the report — just as strategy implementation runs throughout every part of a business. Bringing the board story to life While raising the profile of governance principles at the very beginning of your annual report
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narrative, make sure you don’t neglect the corporate governance section itself. Traditionally the Cinderella of the annual report — written to comply rather than to communicate — corporate governance sections in the best 2010/2011 annual reports are as engaging as the rest of the narrative. In doing so they go some way to achieving the FRC’s goal of embracing “confident and persuasive communication with shareholders”. The best performers infuse their corporate governance sections — and their boards — with life. They preface committee reports with personal, photo-bylined introductions from the appropriate chairmen; use personal pronouns and subjective language,
rather than legalese, and, for example, talk candidly about what they actually did on board training days, not just that they happened. They also use the tried-andtested communication techniques of clear navigation, informative headings and a strong storyline that communicates strategic messaging. Not rocket science perhaps, but far from routine in conventional corporate governance reporting, driven, as it always has been, by a focus on compliance. As regulators and investors increasingly demand greater insights into how companies really operate, whatever clutter you cut this year, your compelling board story should remain intact.
New code key facts Fact 1: The FRC’s UK Corporate Governance Code was launched in May 2010. Fact 2: It replaces the old Combined Code. Fact 3: It applies to financial years beginning on/after June 29, 2011. Fact 4: Companies have the option to explain why they don’t comply with specific provisions.
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Online reporting: what are the trends?
Online annual reports speak — often literally — to audiences in a way that printed reports cannot. In 2010/2011, the best FTSE 100 reports again pushed back the boundaries of technology to engage afresh with all stakeholders.
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Bridge-building opportunities This year, as online consumption of business information became the de facto default, the Financial Reporting Council mooted the possibility of freeing companies from their obligation to provide a printed report. In this context, it is The power of video perhaps surprising that 25 FTSE 100 Video is a particularly potent digital companies chose to limit their communications tool. The CEO can online annual reporting exposure look users ‘in the eye’ as he or she to a PDF, five more than last year. discusses the year’s performance Even the additional 12 companies against the backdrop of company that opted for a ‘smart PDF’, with operations. The chairman can page-turning navigation, may personally attest to the board’s be missing out on valuable commitment to world-class bridge-building opportunities corporate governance. Analysts, with stakeholders. journalists and others can visit, In another tangible trend, more virtually, the communities in which companies positioned their annual CSR programmes are making report in an online ‘investor centre’. a difference. This year, 21 of the FTSE 100 Video can be used to particular followed this route, locating the advantage by companies that have annual report side-by-side with recently changed leadership or other investor content such as share strategy, especially following information, quarterly updates, high-profile crises. Humility, lessons- investor briefings and other learned and the strength of the new corporate publications. This allows leader are much more convincing the context of the report to be and palpable via audio and video, updated on an ongoing basis — than through a screen of text. with quarterly results videos, Some companies are also being for instance — and keeps the more creative in their use of publication at the forefront of technology to enhance navigation. users’ minds throughout the year. Innovations this year include: Early adopter apps 8fcd!Xckb hcd bUj][Uh]cb VUfg 2010/2011 also saw the arrival of that preview section content; HU[g h\Uh YbUV`Y gYUfW\Yg cb bUaYX apps on the corporate reporting scene. A number of major brands topics, and that change to reflect around the world — including FTSE individual page subject matter; 100 companies — launched annual H\Y ZUW]`]hm Zcf igYfg hc gdYW]Zm report apps for iPhones, iPads and which sections of the report the Android operating system. Most do and do not appear on corporate apps provide very limited their screens, as part of a push reporting content, though a small to enable viewers to create number offer access to full annual bespoke publications. More 2010/2011 reports also enable reports optimised for the iPad. As one might expect, iPads offer visitors to share content via social a better viewing experience than media platforms. the smaller-screened iPhone. The best apps, once downloaded, have Boosting brand perceptions the advantage of being accessible As well as guiding users through offline. Such convenience is clearly content-heavy sites, these an asset but future corporate innovations can aid perceptions of a take-up of apps is likely to depend brand’s commitment to making life on whether the user data makes a easier for investors and customers. good enough case for a slice of The number of FTSE 100 company resources. companies opting to produce a This year, in short, certain large hybrid HTML/PDF report, rather cap companies did a first rate job of than a full HTML publication, rose to exploiting the dynamism of digital 31 from 25. This may reflect doubts technology to make their business — about the value of making less and their strategic messages — come popular sections, like the notes to alive. Others did less well. As ever, the the financial statements, interactive. most successful were those that Cost is also an issue, along with the demonstrated a clear sense of what demands on in-house teams of they wanted to communicate and managing and proofing separate who their key audiences are. With versions of two full reports in print digital technology, as with all and online. channels, it really is the message, not the medium, that counts. Almost two thirds of the FTSE 100 — 61 per cent — now offer HTML-based reports, with companies in all sectors continuing to make greater use of the web’s interactive potential to deepen their engagement with stakeholders.
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Almost two thirds of the FTSE 100 — 61 per cent — now offer HTML-based reports
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The number of FTSE 100 companies opting to produce a hybrid HTML/ PDF report, rather than a full HTML publication
With digital technology, as with all channels, it is the message not the medium that counts
Key trends Trend 1: Increasing use of video to present strategic messages. Trend 2: More opportunity to share content via social media. Trend 3: Early adoption of app annual reports. Trend 4: A move away from standalone annual reports towards multi-collateral online investor centres. Trend 5: Greater use of hybrid HTML/PDF reports, rather than pure HTML publications.
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Leading the game We brought video game retailer GAME’s business alive by weaving the gaming experience through its annual report. Multicoloured gaming iconography, Quick Response codes and stepping-stone text boxes make navigation a stimulating journey — and emphasise the company’s innovative approach. But a serious business message reinforces the dynamic design: bold strategic objectives, clear KPIs and explicit commitments to refreshing the business all communicate how GAME’s new leadership has revised its strategy.
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Straight talking — from the top HSBC’s executive team speaks directly to investors, the media and staff, through the videos we produced ahead of the bank’s interim and annual results. The video interviews — filmed in a controlled environment — bring elements of colour to the regulatory results information on the bank’s corporate website, as well as being streamed on the HSBC group intranet. With a relaxed, TV interview-style format, the videos allow the executive team to communicate HSBC’s strategic messages and update stakeholders on performance in a personal manner — and free of third-party interpretation — to the audiences that count.
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Art illustrating life Ping An, one of China’s leading life insurance companies, offers its 60 million customers a unique combination of local knowledge and international corporate governance best practice. In designing Ping An’s annual report, we also combined heritage with contemporary practice: creating traditional-style pen and ink drawings with shades from the client’s brand palette. The result, like the other two award-winning annual reports we have produced for Ping An, showcase the business beside its global peers.
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Multi-channel reporting: engaging audiences 24
Arena Leisure —— Print annual report The largest operator of UK horseracing fixtures, Arena Leisure, needed an annual report that demonstrated the full breadth of its revenue streams, rather than focusing purely on its racing activities. We designed five large messaging pages with half- and full-page images to showcase the company’s strengths in catering and hospitality, events, golf, hotels and leisure, and media rights.
Carrefour —— Video Carrefour, the world’s second largest retailer, asked us to use video to illustrate its strategic shift to new store formats. For Carrefour investor days, we film interviews with senior directors, complemented by ‘virtual tours’ of new store types. After events, video content is available on the Carrefour website and on our site, and distributed via our network of partners. Feedback from investors is positive, and Carrefour continues to use our video content whenever it needs to communicate key stakeholder messages.
Anglo American —— Video Anglo American, one of the world’s largest mining groups, wanted to introduce its new chairman Sir John Parker ‘in person’ to both internal and external audiences. We created a prerecorded short video interview, which provided an ideal way to answer important questions in a controlled environment and restate some key priorities for the business. The video was released at the same time as the announcement of Sir John’s appointment and played a key role in shaping the resulting media coverage.
Charter —— Print annual report —— Online report Engineering group Charter has two businesses: one focused on welding, cutting and automation; the other on air and gas handling, serving a wide variety of global industries. The challenge was to highlight the group’s strengths without detracting from the individual companies’ activities. Our solution was to emphasise business and financial performance upfront, while moving more detailed content on strategy and the business model to the respective 2010 overview sections. Reporting on risks and governance was also enhanced.
Diageo —— Video webcasting Diageo, the world’s leading premium drinks business, relies on us for all its global live and on-demand video events. From London, New York and Shanghai, we provide full end-to-end video webcasting services, including investor relations and media results presentations, investor days and divisional updates. During our six years as webcasting partner, we have helped Diageo to communicate directly with its worldwide investor base, increasing viewing numbers every year.
easyJet —— Mobile video Low-fares airline easyJet wanted to connect directly and personally with each of its employees. The challenge was to make sure the communication reached every member of the highly mobile workforce. We recommended streaming a video message from the CEO, using smart-phone optimised web pages that could be easily accessed on a range of online and mobile devices. Our client has praised the effectiveness of our approach, which ensures that all staff are kept in the loop.
British American Tobacco —— Video FTSE 100 company British American Tobacco relies on us for video communication of its yearly and halfyearly financial results. Our footage of BAT directors conveys key messages to the City, the media and other stakeholders. Filming takes place on the eve of the results’ release and the interviews are edited, signed off and turned around for publication the next morning. We also produce a substantial internal campaign around the results for communication to employees across the globe. In February 2011, we filmed eight directors and produced 27 versions of the interviews in nine languages.
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GEA —— Print magazine —— Online magazine A market leader in food and energy processing, German company GEA wanted to create a dynamic discussion forum for both its internal and external audiences. Our solution was a quarterly publication, Generate, which uses bold graphics and a lively magazine style to get its messages across. Generate is stimulating debate and proving far more effective than a traditional in-house newsletter.
Invest AD —— Print brochure Formerly known as the Abu Dhabi Investment Company, Invest AD now has a mandate to attract funds with a view to investing in opportunities in the Middle East and Africa. It came to us looking for a range of solutions that would help it communicate with clients and other business audiences. We developed a practical yet smart template for its analyst notes so that all of its reports looked consistent. We then mirrored that look and feel across a corporate brochure in Arabic and English.
Lancashire Holdings Limited —— Print annual report —— Online report Ever since its original AIM listing in 2006, specialist property insurer Lancashire has turned to us for its annual report. Produced in both print and online formats, this is the company’s primary publication. In 2010, Lancashire celebrated its fifth anniversary, and we devised an annual report that used the theme of ‘5’ to emphasise its compelling investment proposition and reinforce its unique position in the market.
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Melrose ——Print annual report Melrose buys underperforming industrial businesses where it sees opportunity for improvement, turns them around and then sells them to release value to shareholders. This year’s challenge was to clearly detail the current profile of the Group’s ever-changing business divisions. Each division has many companies within it so we brought these right up front and also demonstrated management’s strong track record throughout the document. document
New Look —— Print annual report —— Online report Privately-owned fashion retail group New Look wanted a best-in-class annual report, reaching a wide audience via print and online channels. We developed a ‘New Look in 10’ booklet for the front of the report to provide readers with a snapshot of the year. We also advised our client on introducing best practice approaches, such as an in-depth market report and detailed strategy and business model sections. The online version offers a range of video content, including a CEO interview and insights into a selection of stores.
Prime Development —— Website Construction company Prime Development aimed to launch its own distinctive luxury brand to coincide with the announcement of a new project, Bulgari Hotel and Residences, in London’s Knightsbridge. We were tasked with creating a website that captured the company’s values of timeless elegance, discretion and trust. The end result used striking imagery to promote the company’s activities in the luxury hotel sector and its community involvement.
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Royal Bank of Scotland (RBS) —— Video In the wake of the financial crisis, RBS remained committed to enhanced quarterly and annual reporting and to providing investors and taxpayers with greater transparency. We helped the bank to communicate important messages through a series of highquality digital video interviews, released alongside the annual report and its results . The Chairman, CEO and six divisional heads discussed critical issues within the business and RBS’s progress against its recovery plan. The content was distributed through an extensive network of syndicated partners and picked up by international media.
TPG Capital ——Print brochure TPG Capital (formerly known as Texas Pacific Group) is one of the world’s largest private equity firms. We produced a high-impact brochure outlining the company’s work across the Asia Pacific region, helping our client to open doors with potential investments and business partners.
Sorouh ——Print annual report With a tight project schedule of just eight weeks, we created a duallanguage annual report for real estate developer Sorouh. The company is one of the Middle East’s leading property firms and is listed on the Abu Dhabi Securities Exchange. Our brief was to produce a report in English and Arabic that evolved the structure and design of the previous year’s publication. Working in close partnership with our sister company Brunswick Gulf, we delivered on time and on message. The client was very happy with the finished product.
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Our clients: from across the globe
Reporting services: what we offer
Our wider offer Effective stakeholder engagement often requires much more than an annual report. We have a wide range of services for reporting and beyond. Whatever your communications challenge — from crisis communications to reputation management — we deliver relevant solutions across print, online, video and mobile.
Consultancy
Collateral production
Peer benchmarking Detailed planning and structural analysis Design audit Online content and technical audit Stakeholder feedback research Editing Writing
Annual report and accounts Annual review Form 20F Sustainability report Employee report Half year reports Quarterly updates Roadshow material PPT presentation Delegate pack Presentation panels
Digital
Video
Corporate website IR website CR website/portal Online annual report/review Online sustainability report HTML/PDF hybrid report Social media content
Advisory Executive interviews Investor documentaries Management profiles Roadshow content Results/AGM webcasts
Richard Carpenter Managing Partner rcarpenter@merchantcantos.com Amanda Alexander Business Development Director aalexander@merchantcantos.com Tel: +44 20 7242 1336 Main office: London 20 Lincoln’s Inn Fields London WC2A 3ED United Kingdom Dubai Level 5 Gate Village Building 10 PO Box 506691 Dubai International Financial Centre Dubai United Arab Emirates Tel: +971 4 446 6270 Paris 10 Boulevard Haussmann 75009 Paris France Tel: +33 1 53 96 83 83 Associated offices in Abu Dhabi, Beijing, Berlin, Brussels, Dallas/Fort Worth, Frankfurt, Hong Kong, Johannesburg, Milan, Munich, New York, San Francisco, Stockholm, Vienna and Washington, D.C.