Derek Pain: Now the annual report is threatened by the rush to online

No Pain, No Gain
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The Independent Online

Well, I suppose it was bound to happen. After the determined but so far unsuccessful campaign to eliminate paper share certificates another hard copy investment asset is under attack – the printed yearly report and accounts.

A little known organisation called the Financial Reporting Council is at the forefront of this latest craziness. The expense, usage of paper and even the carrying weight inflicted on the poor old postman are among the factors cited in support of the abolition of the printed report. It is estimated that between seven and nine million shareholders prefer paper certificates. I would imagine those requiring hard copies of reports is much greater. The FRC believes all investors are happy to go on line to read about their company.

What nonsense. I suspect most are capable of doing so, if they so desire. But don't forget around ten million do not use computers and many of them are bound to be investors. How on earth are they going to be accommodated? Will they be left isolated, probably forced to sell their shares? It is, I suppose, old folk, like me, who most resent the internet intrusion. Yet we do collectively own part of a company and as proprietors should, if we want, receive printed reports. I also wonder about the reaction of the companies concerned. Many regard yearly reports as part of their promotional activities. In hard copy they are far more effective than in online form. I have recently received paper reports from Avon Rubber, Marston's and Mitchells & Butlers. All are presentable affairs, seeking to promote the company. Any business that is worried about cost can always produce a cheaper abridged version.

The FRC, and some other City organisations, seem remote from the real world. Cutting costs and to hell with the consequences seems to be their main objective. They do not consider the needs of people they are supposed to encourage. The FRC says it wants to promote "high quality corporate governance and reporting to foster investment". Of course, investors should be able to use the internet if they want. But suggesting all of them should be forced to embrace it seems contrary to the stated aims. It all resembles the drive to abolish paper share certificates, that will no doubt be resurrected, and the plan to eliminate cheques. The anti-cheque brigade will ignore the simple fact that 37 million people signed cheques in the past year. Progress is necessary but not at the expense of the needs of so many.

Now to a couple of companies that I hope will come out against the abolition of printed reports (the deadline to object is the end of March). Following the departure of and Private & Commercial Finance from the no pain, no gain portfolio, I have, as signalled, descended on Avation (90p) and Capital Pub Co. (120p). Both shares have made headway since I indicated my interest but I feel the portfolio can live with the gains they have achieved.

Avation, which leases aircraft to airlines, moved from Plus to full listing in October. It owns 51.8 per cent of Capital Lease, an AIM-traded leasing group. On Monday, the shares jumped 15.5p flowing a lease deal with two Australian airlines covering 18 aircraft. Naturally I am disappointed I did not embark on the shares ahead of the tie-up.

Capital has around 30 pubs, in and around London, and has its sights on establishing a 50-strong chain in the next few years. With royal events scheduled, plus the Olympic Games, London is in for a busy time which should benefit hospitality groups including another constituent, Whitbread.

Recent encouraging interim figures – adjusted profits up 45 per cent at £2m – suggest that the group is heading in the right direction. Stockbroker Panmure Gordon rates the shares a buy.

I am thinking, as I said two weeks ago, about instituting more portfolio changes. But it is foolish to rush into buying shares even if delay, as illustrated by Avation and Capital, costs a few pounds. Buying small caps can be tricky and it is better to be safe than sorry. The portfolio is not a trading vehicle but a buy and hold operation. Still, by its standards, recent activity, four constituents out and two in, has been quite hectic.

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