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Financial market survey 2011 summary


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In order to raise the knowledge on how the financial industry view different IR activities Box IR conducted a survey during April and May 2011, in which financial market professional answered questions about the investor relations work carried out by Swedish listed companies. Although the survey was largely conducted during the height of the Q1 reporting season, interest in the survey was above expectations and 106 people in total answered the questions.

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Financial market survey 2011 summary

  1. 1. Financial Market Survey 2011 May 2011 Copyright © Box IR
  2. 2. Box IR’s Financial Market Survey - 2011Executive summaryIn order to raise the knowledge on how the financialindustry view different IR activities Box IR conducted Other 14%a survey during April and May 2011, in whichfinancial market professional answered questions about Portfoliothe investor relations work carried out by Swedish managerslisted companies. Although the survey was largely 44%conducted during the height of the Q1 reportingseason, interest in the survey was above expectations Analystsand 106 people in total answered the questions, 42%representing a 20 percent response rate. Therespondents were distributed according to the chartopposite.The survey consisted of 10 questions all in all. Answering alternatives were made up of both multiplechoice as well as text answers, which rendered a number of interesting remarks.On the following pages we present a summary of the answers to the survey, but let us begin with somebasic conclusions and a few interesting statements.  The respondents were asked to name the three most important factors for making an investment decision or take up coverage of a company and CSR ended up at the bottom of the list. When asked directly about the importance of CSR it is clear that these issues weigh relatively light. If the survey had not been anonymous, the answers probably would have been a little more politically correct.  The most important investor relations activities are one-on-ones, earnings presentations and the IR web while social media, despite the explosive growth, still has a long way to go before being adopted by the financial market professionals (partly due to the fact that Swedish companies are not very active in terms of using social media for IR purposes).  Access to management is important, but it is crucial that it conveys the appropriate message. "Why does IR enter into "closed periods"??? Isn’t part of the job to communicate in a way that this is not needed!?" Analyst "Good IR is characterized by accessibility, prompt response and good company knowledge combined with an understanding of how the stock market works." Analyst Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | |
  3. 3. Brief summary of the conclusions from the survey Accessibility is important, but not enough With regard to the level of IR activities and the management access, it is important to consider the difference in the resources companies spend. Among the Large Cap companies the IR department usually consists of several people, while the IR work in Mid and Small Cap companies is largely handled by the CEO or CFO. Generalized, our survey shows the following:Every other analyst regards  Large Capmanagement access as poor Good level of IR work, but poor management access. Half of the analysts think it is difficult to access the management of Swedish Large Caps.  Mid Cap Good access to management, but one out of three thinks that the level of IR work is inadequate.6 out of 10 regard the IR  Small Capwork by Small Caps as High management accessibility, but IR work well below par. Six out ofinsufficient ten think that the IR effort is not up to standard. ”IR spend and ambition reflect quality.” Analyst CSR not very importantCSR – is it only ”politically For obvious reasons CSR issues are often mentioned as key investment criteriacorrect”? and today there are a large number of funds with an ethical focus on the Swedish market. No doubt that this is at least "politically correct", but when the financial market professionals are asked anonymously CSR issues ranks low. This is illustrated by the fact that only three respondents stated that CSR issues are very important to their investment decisions. Scale 1-5 where 1=not important and 5=very importantHow important are CSRissues for your investment 5 3decision/evaluation of acompany? 4 19 3 39 2 25 1 17 This picture is reinforced when respondents are asked to specify three criteria for a company being an attractive investment. Only two respondents have CSR among their top three investment criteria. Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | |
  4. 4. Annual reports, not returning value for moneyA quarter of a billion SEK areIt is a well-known fact that Swedish companies spend large resources on theirspent on annual reports... annual reports, in monetary terms in the order of a quarter of a billion SEK for the public companies (see Box IR’s Annual IR Survey 2010). With a growing importance of the IR web, the annual report’s relevance for the financial market…but less than half regard it continues to diminish. Less than half of the respondents to our survey regard theas an important IR tool annual report as important or very important. Although the PDF is still the most common format of the digital version of the annual report, it has become increasingly popular in recent years to create a more advanced Flash or HTML-based version on the website. These types of products rank at the low end when the financial market ranks a number of IR-activities. Scale 1-5 where 1=not important and 5=very important One-on-ones 4,19 Report presentations 4,16 Informative IR web 3,97 Roadshows 3,78 Capital markets days 3,75 Webcasts 3,71 HTML-based annual … 2,81 News letters 2,57 Social media 1,76The HTML based annual HTML or Flash based annual reports are even, by some analysts, met with areport is rejected strong dislike, which is evident in the following statement from an analyst: ”All companies that have their annual report on its website in any other format than PDF should IMMEDIATELY STOP THIS. I am not interested in any Flash based version which is completely user- unfriendly. PDF is the best, period.”2 out of 3 regard the IR web The IR web is an important channel for the financial community to accessas important or very information from public companies. This is evident when asked how they preferimportant to receive information. 70 percent of the financial market professionals rank the IR web as important or very important.Low interest in social media It is also evident that the financial market still has very low interest in IR via social media such as Twitter, Facebook etc. These are on the other hand relatively new channels and Swedish companies are certainly not among the frontrunners in using these new information channels for IR purposes.One-on-ones when the Investors rank one-on-ones and earnings presentations as their favorite IRmarket gets to choose activities conducted by public companies. Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | |
  5. 5. What characterizes good and poor IR? ”Accessibility, accessibility, accessibility and knowledge of operations. MUST be part of the management team to be of interest for analysts.” AnalystWhat characterizes good IR? Accessibility 33 Knowledge about company/industry 19 Openness 12 Timely information 11 Transparancy 8 Consistency 5Management access is When the financial market professionals in their own words describe whatimportant, but good IR also characterizes good IR, accessibility is mentioned most often. However, none ofrequires… the respondents believe management access alone is sufficient. That is clear when we summarize the questions regarding IR level and management access above. ”Open and honest communication. Being prepared to discuss the company’s weak areas.” Portfolio manager…openness, transparency It is apparent that the market demands openness, transparency and honesty in theoch honesty, as well as financial communication. But in order to excel in IR, thorough understanding ofthorough financial market the financial markets as well as good knowledge, not only about the company, butunderstanding. also about the business environment as a whole and the competition are equally important. ”Thorough understanding of the work and perceptions of analysts and portfolio managers. Good knowledge about the company as well as competitors.” Portfolio manager Poor IR is mainly perceived as being the opposite of the above, however a few statements are well worth quoting:Holding back on bad news is ”A lot of info in good times, hardy any in bad times. Information hard tonot appreciated interpret, only conveyed by employed communicators that is emotional or of the type ‘corporate bull shit’.” Portfolio manager ”Limited information, unrealistic targets.” AnalystAs well as boycotting critical ”Another bad habit is when IR boycotts critical analysts who don’tanalysts maintain a buy rating on the share.” Portfolio manager ”Only pouring coffee during presentations; cannot do a good company presentation by themselves. Unfortunately, in order to fulfill the female quota, they have put in a ‘blonde’ as IR and it is not sufficient!” Portfolio manager Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | |
  6. 6. What is most important for the investment decision? Professional investors and analysts regard share liquidity and profit growth the most important criteria for investing or initiating coverage.Name three criteria in order Market cap, liquidity 40for a company being Prospects, growth 34interesting to start coveringor make an investment Management 22 Investment case 19 IR, communication 18 Valuation 18 Business concept, strategy, … 17 Key figures, financial 11 Track record, history 10 CSR 2IR as important as In this context it is worth mentioning that IR and communication is considered asinvestment case or valuation equally important as valuation or investment case. Please contact us for a more in-depth presentation! Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | |
  7. 7. About Box IRBox IR is a financial communications firm specializing in investor relations and strategic corporatecommunications. Our offer is based on advice from senior consultants with vast experience in equitytrading and research. Combined with our experience in communications, public relations and mediarelations, we can offer an integrated range of services built on industry knowledge and first-hand capitalmarkets experience from some of the leading Nordic Investment Banks. Box IR is owned and operated by Mikael Zillén and Tomas Öqvist. With over 30 years joint experience in the financial sector and over 10 years of financial communications, our vision is to become the leading communications agency for companies and organizations who demand excellence in financial communications, combined with financial expertise.In order to be cost effective and being able to offer our customers a full range of services Box IR hasformed strategic partnerships with a network of specialists, including Sjö & Berg for graphic design, printproduction, etc.Short about the founders:Mikael Zillén holds a B.Sc. in Business and Economics from the University ofStockholm. He has since 2005 Worked with financial communications andinvestor relations, both as self-employed and as senior consultant at CitigateStockholm. Mikael has a solid Financial Market background from investmentbanks including SHB, Nordea and Danske Bank, where he during 15+ yearsworked in institutional sales. Mikael has had a large number of major Swedishand US institutions as well as hedge funds as clients and also has experiencefrom several IPOs. Tomas holds a B.Sc. in Business and Economics from the Stockholm School of Economics and has more than 15 years of first-hand Capital Markets experience as equity analyst at Carnegie and Alfred Berg including several years as top ranked within the Software & Services sector. Tomas has been advisor and speaking partner to large Swedish, European and US institutional clients and also participated in a number of IPOs and M&A deals. Since 2007, he has worked as a consultant within financial communication and investor relations.For further information please call us on +46 8 21 41 00 or visit our website. Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | |