Integrating investor relations


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Integrating investor relations into corporate strategy: profitably

3 take aways from this presentation
Why online IR is an opportunity in Botswana /Africa
How to implement & integrate online IR
The returns on online IR

Published in: Business, Economy & Finance

Integrating investor relations

  1. 1. November 2009
  2. 2. November 2009 3 take aways for today….. <ul><li>Why online IR is an opportunity </li></ul><ul><li>How to implement & integrate online IR </li></ul><ul><li>The returns on online IR </li></ul>
  3. 3. Definition of IR & background to AIC “ Investor relations is a strategic management responsibility that integrates finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a company's securities achieving fair valuation.” (Adopted by the NIRI Board of Directors, March 2003.) IR ≠ PR
  4. 4. The core reason…… <ul><li>Benjamin Graham & David Dodd 1951 edition of Security Analysis </li></ul><ul><li>Quotation </li></ul><ul><li>Study:- </li></ul><ul><li>79% of analysts include poor communication as a reason to downgrade stock valuations </li></ul><ul><ul><li>88% of analysts say poor disclosure drops ratings </li></ul></ul>
  5. 5. History of investor relations in USA <ul><li>Post WWII & depression = savings </li></ul><ul><li>Interest & inflation were low </li></ul><ul><li>Great need for capital in USA </li></ul><ul><li>’ 52 4.5m families owned shares 4.2% of population </li></ul><ul><li>‘ 65 20.1m families owned shares 15% of population </li></ul><ul><li>Shareholders targeted for business </li></ul><ul><li>Shareholder activists resulted </li></ul><ul><li>PR abused – analysts “hyped” shares </li></ul><ul><li>Managements & boards inexperienced </li></ul><ul><li>SEC promoted retail investors </li></ul><ul><li>GE & AMA & NIRI (4300 members) </li></ul>“ To become recognised and active as a group working in the long-term interests of the investor, of broad share ownership and of better relationships between companies and potential investors.”
  6. 6. IR function in the First world <ul><li>Be an expert on the company </li></ul><ul><li>Know all laws and regulations </li></ul><ul><li>Be a communicator </li></ul><ul><li>Valuation and financial modelling </li></ul><ul><li>Analyse shareholders and market perceptions </li></ul><ul><li>Engage investors directly </li></ul><ul><li>Report to the Board at the highest level </li></ul><ul><li>Collect salary of US$150,000 to US$250,000 per annum </li></ul>Africa needs a different formula…….sort out the basics and justify this..
  7. 7. Where technology is taking IR… Web 1.0 = document web Web 2.0 = people web Web 3.0 = database web (people losing control……..) Source
  8. 8. IR’s future – costs low, impact high 2.4m estimate = 8% of population Source
  9. 9. Your website: a beast!! <ul><li>Marketing doesn’t understand finance </li></ul><ul><li>Internal PR doesn’t understand marketing </li></ul><ul><li>External PR company never in the loop </li></ul><ul><li>Finance doesn’t understand IT </li></ul><ul><li>Co sec. can manage shareholder lists but not shareholders </li></ul><ul><ul><li>Legal department : everything is a legal case </li></ul></ul><ul><li>IT guy should be in charge but is TOO BUSY </li></ul>
  10. 10. The reality of doing business… <ul><li>Find cost of communications high ? </li></ul><ul><li>Are finding competition levels increasing? </li></ul><ul><li>Are trying to re-build equity values? </li></ul><ul><li>Are looking to protect market share and grow brand? </li></ul>How many companies?
  11. 11. <ul><li>Desired position in the investment community </li></ul>Identify investment community, communicate with them & receive feedback achieves MANY objectives Your company website: a prime communications tool Data, strategy, interaction
  12. 12. “ African Is Cool” <ul><li>Smallest client P21m mkt cap. Largest + P3.5bn </li></ul><ul><li>Managed investor relations website </li></ul><ul><li>Filling a unique market gap </li></ul><ul><li>No conflict with existing services e.g. PR firms </li></ul>Holistic outsourced online software as a service
  13. 13. Our clients… <ul><ul><li>16 clients in 4 countries: Botswana, Zambia, Malawi & Zimbabwe </li></ul></ul><ul><ul><ul><li>National Investment Trust Malawi </li></ul></ul></ul><ul><ul><ul><li>Malawi Property Investment Company IPO IR </li></ul></ul></ul><ul><ul><ul><li>Celsys </li></ul></ul></ul><ul><ul><ul><li>Econet Zimbabwe </li></ul></ul></ul><ul><ul><ul><li>Imara Holdings Botswana </li></ul></ul></ul><ul><ul><ul><li>Telekom Networks Malawi IPO IR </li></ul></ul></ul><ul><ul><ul><li>Copperbelt Energy Corporation </li></ul></ul></ul><ul><ul><ul><li>African Sun Group </li></ul></ul></ul><ul><ul><ul><li>Kingdom Meikles </li></ul></ul></ul><ul><ul><ul><li>+ 2 commercial banks tba </li></ul></ul></ul><ul><ul><ul><li>+ 1 venture capital company tba </li></ul></ul></ul><ul><ul><ul><li>+ 1 hospitality company tba </li></ul></ul></ul><ul><ul><ul><li>+ 1 property tba </li></ul></ul></ul><ul><ul><ul><li>+ 2 agric companies tba </li></ul></ul></ul>Market capitalisation of clients + / - US$1.5bn +/- 80,000 shareholders served
  14. 14. Investorpass ™ : IR software <ul><li>Vendor B2i Technologies: Texas USA + 300 clients </li></ul><ul><li>Appends to existing websites seamlessly </li></ul><ul><li>An online CRM and CMS </li></ul><ul><li>Web-mail for each investor </li></ul><ul><li>Self populating / managed investor contacts </li></ul><ul><li>Full audit trail of investor activity </li></ul><ul><li>Strong analytical and interrogation reports </li></ul><ul><li>Sarbanes Oxley compliant – i.e. secure </li></ul>
  15. 15. <ul><li>Comprehensive data – “educated investment decisions” </li></ul><ul><li>Timely data – “material data within 24 hours” </li></ul><ul><li>Interactivity – “ability to communicate & receive feedback” </li></ul><ul><li>Reaching an audience – “ existing & potential investors” </li></ul><ul><li>Brief overview of a comprehensive IR website </li></ul><ul><li>Other practical issues </li></ul><ul><li>Updating website </li></ul><ul><li>Identifying the audience individually </li></ul><ul><li>Acknowledging the importance of your annual report: IR 101 </li></ul>The make up of your IR website
  16. 16. Your annual report…. <ul><li>Annual reports: prime tool for analysts & stakeholders </li></ul><ul><li>Can be used to identify investors </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li>Traffic analysis </li></ul></ul><ul><li>Hot area of debate: environment / cost </li></ul><ul><li>New technologies setting new standards </li></ul><ul><li>- Sample iPaper annual report </li></ul> Less than 29% of all African annual reports are online = +/- 30% Annual reports
  17. 17. Using your website…… <ul><li>A retail shareholder strategy:- </li></ul><ul><li>Offer interactivity and data </li></ul><ul><li>Objectives:- </li></ul><ul><ul><li>Build brand, cross sell, keep costs low </li></ul></ul><ul><li>Use feedback as corporate strategic tool:- </li></ul><ul><ul><li>African Sun experience </li></ul></ul><ul><ul><li>All of our clients </li></ul></ul><ul><li>Automation </li></ul><ul><ul><li>Contacts </li></ul></ul><ul><ul><li>Feedback & management thereof </li></ul></ul>
  18. 18. <ul><li>To respond to or influence the media </li></ul><ul><ul><ul><li>Emails are free – press releases are not </li></ul></ul></ul><ul><ul><ul><li>Pre-empt press releases / bad press </li></ul></ul></ul><ul><ul><ul><li>Respond to the media / press directly </li></ul></ul></ul><ul><ul><ul><li>Crisis communications </li></ul></ul></ul>Newspaper and PR firm placement costs can be avoided if you have a direct communications channel with the broader media Using your website……
  19. 19. <ul><li>“ Good governance” is not “implemented” it evolves from communicating responsibly with the investment community” </li></ul><ul><li>Barriers to online communications fallen away </li></ul><ul><li>High commercial ROI to online communications </li></ul><ul><li>Early starters will benefit the most </li></ul>Our message… “ No need to reinvent the wheel”
  20. 20. <ul><ul><ul><li>Questions? </li></ul></ul></ul>A very big thank you for valuable time….