November 2009

November 2009 3 take aways for today….. Why online IR is an opportunity How to implement & integrate online IR The returns on online IR

Why online IR is an opportunity

How to implement & integrate online IR

The returns on online IR

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

The core reason…… Benjamin Graham & David Dodd 1951 edition of Security Analysis Quotation Study:- 79% of analysts include poor communication as a reason to downgrade stock valuations 88% of analysts say poor disclosure drops ratings

Benjamin Graham & David Dodd 1951 edition of Security Analysis

Quotation

Study:-

79% of analysts include poor communication as a reason to downgrade stock valuations

88% of analysts say poor disclosure drops ratings

History of investor relations in USA Post WWII & depression = savings Interest & inflation were low Great need for capital in USA ’ 52 4.5m families owned shares 4.2% of population ‘ 65 20.1m families owned shares 15% of population Shareholders targeted for business Shareholder activists resulted PR abused – analysts “hyped” shares Managements & boards inexperienced SEC promoted retail investors GE & AMA & NIRI (4300 members) “ 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.”

Post WWII & depression = savings

Interest & inflation were low

Great need for capital in USA

’ 52 4.5m families owned shares 4.2% of population

‘ 65 20.1m families owned shares 15% of population

Shareholders targeted for business

Shareholder activists resulted

PR abused – analysts “hyped” shares

Managements & boards inexperienced

SEC promoted retail investors

GE & AMA & NIRI (4300 members)

IR function in the First world Be an expert on the company Know all laws and regulations Be a communicator Valuation and financial modelling Analyse shareholders and market perceptions Engage investors directly Report to the Board at the highest level Collect salary of US$150,000 to US$250,000 per annum Africa needs a different formula…….sort out the basics and justify this..

Be an expert on the company

Know all laws and regulations

Be a communicator

Valuation and financial modelling

Analyse shareholders and market perceptions

Engage investors directly

Report to the Board at the highest level

Collect salary of US$150,000 to US$250,000 per annum

Where technology is taking IR… Web 1.0 = document web Web 2.0 = people web Web 3.0 = database web (people losing control……..) Source

IR’s future – costs low, impact high 2.4m estimate = 8% of population Source

Your website: a beast!! Marketing doesn’t understand finance Internal PR doesn’t understand marketing External PR company never in the loop Finance doesn’t understand IT Co sec. can manage shareholder lists but not shareholders Legal department : everything is a legal case IT guy should be in charge but is TOO BUSY

Marketing doesn’t understand finance

Internal PR doesn’t understand marketing

External PR company never in the loop

Finance doesn’t understand IT

Co sec. can manage shareholder lists but not shareholders

Legal department : everything is a legal case

IT guy should be in charge but is TOO BUSY

The reality of doing business… Find cost of communications high ? Are finding competition levels increasing? Are trying to re-build equity values? Are looking to protect market share and grow brand? How many companies?

Find cost of communications high ?

Are finding competition levels increasing?

Are trying to re-build equity values?

Are looking to protect market share and grow brand?

Desired position in the investment community Identify investment community, communicate with them & receive feedback achieves MANY objectives Your company website: a prime communications tool Data, strategy, interaction

Desired position in the investment community

“ African Is Cool” Smallest client P21m mkt cap. Largest + P3.5bn Managed investor relations website Filling a unique market gap No conflict with existing services e.g. PR firms Holistic outsourced online software as a service

Smallest client P21m mkt cap. Largest + P3.5bn

Managed investor relations website

Filling a unique market gap

No conflict with existing services e.g. PR firms

Our clients… 16 clients in 4 countries: Botswana, Zambia, Malawi & Zimbabwe National Investment Trust Malawi nitlmalawi.com Malawi Property Investment Company malawiproperty.com IPO IR Celsys celsys.co.zw Econet Zimbabwe econet.co.zw Imara Holdings Botswana imaraholdings.com Telekom Networks Malawi tnminvestor.com IPO IR Copperbelt Energy Corporation cecinvestor.com African Sun Group africansuninvestor.com Kingdom Meikles kmal.co.zw + 2 commercial banks tba + 1 venture capital company tba + 1 hospitality company tba + 1 property tba + 2 agric companies tba Market capitalisation of clients + / - US$1.5bn +/- 80,000 shareholders served

16 clients in 4 countries: Botswana, Zambia, Malawi & Zimbabwe

National Investment Trust Malawi nitlmalawi.com

Malawi Property Investment Company malawiproperty.com IPO IR

Celsys celsys.co.zw

Econet Zimbabwe econet.co.zw

Imara Holdings Botswana imaraholdings.com

Telekom Networks Malawi tnminvestor.com IPO IR

Copperbelt Energy Corporation cecinvestor.com

African Sun Group africansuninvestor.com

Kingdom Meikles kmal.co.zw

+ 2 commercial banks tba

+ 1 venture capital company tba

+ 1 hospitality company tba

+ 1 property tba

+ 2 agric companies tba

Investorpass ™ : IR software Vendor B2i Technologies: Texas USA + 300 clients Appends to existing websites seamlessly An online CRM and CMS Web-mail for each investor Self populating / managed investor contacts Full audit trail of investor activity Strong analytical and interrogation reports Sarbanes Oxley compliant – i.e. secure

Vendor B2i Technologies: Texas USA + 300 clients

Appends to existing websites seamlessly

An online CRM and CMS

Web-mail for each investor

Self populating / managed investor contacts

Full audit trail of investor activity

Strong analytical and interrogation reports

Sarbanes Oxley compliant – i.e. secure

Comprehensive data – “educated investment decisions” Timely data – “material data within 24 hours” Interactivity – “ability to communicate & receive feedback” Reaching an audience – “ existing & potential investors” Brief overview of a comprehensive IR website Other practical issues Updating website Identifying the audience individually Acknowledging the importance of your annual report: IR 101 The make up of your IR website

Comprehensive data – “educated investment decisions”

Timely data – “material data within 24 hours”

Interactivity – “ability to communicate & receive feedback”

Reaching an audience – “ existing & potential investors”

Brief overview of a comprehensive IR website

Other practical issues

Updating website

Identifying the audience individually

Acknowledging the importance of your annual report: IR 101

Your annual report…. Annual reports: prime tool for analysts & stakeholders Can be used to identify investors Africanfinancials.com Traffic analysis Hot area of debate: environment / cost New technologies setting new standards - Sample iPaper annual report Af.com Less than 29% of all African annual reports are online = +/- 30% Annual reports

Annual reports: prime tool for analysts & stakeholders

Can be used to identify investors

Africanfinancials.com

Traffic analysis

Hot area of debate: environment / cost

New technologies setting new standards

- Sample iPaper annual report

Using your website…… A retail shareholder strategy:- Offer interactivity and data Objectives:- Build brand, cross sell, keep costs low Use feedback as corporate strategic tool:- African Sun experience All of our clients Automation Contacts Feedback & management thereof

A retail shareholder strategy:-

Offer interactivity and data

Objectives:-

Build brand, cross sell, keep costs low

Use feedback as corporate strategic tool:-

African Sun experience

All of our clients

Automation

Contacts

Feedback & management thereof

To respond to or influence the media Emails are free – press releases are not Pre-empt press releases / bad press Respond to the media / press directly Crisis communications Newspaper and PR firm placement costs can be avoided if you have a direct communications channel with the broader media Using your website……

To respond to or influence the media

Emails are free – press releases are not

Pre-empt press releases / bad press

Respond to the media / press directly

Crisis communications

“ Good governance” is not “implemented” it evolves from communicating responsibly with the investment community” Barriers to online communications fallen away High commercial ROI to online communications Early starters will benefit the most Our message… “ No need to reinvent the wheel”

“ Good governance” is not “implemented” it evolves from communicating responsibly with the investment community”

Barriers to online communications fallen away

High commercial ROI to online communications

Early starters will benefit the most

Questions? A very big thank you for valuable time….

Questions?