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Best Practice Investor Relations What it takes to develop an effective Investor Relations strategy Claire Fargeot
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Best Practice Investor Relations
What it takes to develop an effectiveInvestor Relations strategy
Claire Fargeot
Agenda
> Understanding ……..
> the capital markets and how they work
> the audiences and their needs
> the rules of engagement
> the valuation game
> the role of IR at Board level
> the opportunities for IR
……… will lead to effective IR strategies
Capital Markets and how they work
> Buying and selling stocks and shares
> Shareholder value generation
> Debt and/or equity (primary and secondary finance)
> Capital raisings and IPOs
> Rights issues, share buy backs, bonus issues
> Mergers, acquisitions and takeovers
> Private equity and venture capital
> Institutional investors and private investors
> Banks and strategic investors
Investors
Lifecycle transactions
Capital Markets and how they work
Results comments /Research notes / Sector coverage
Market reports /Investment columns /
Editorial coverage
Media
Investment Press
Local & International
Business Press
OtherContacts
Sell SideAnalysts
InstitutionalInvestors
PrivateInvestors
►►
Company
Information loop
IR Audiences and their needs
Institutional Investors
> Need direct contact, regular information flow
> Active or passive style of tracking funds
Analysts
> Sell-side–Experts on specific sector–Publish research to generate trade
> Buy-side–Less sector focused–Research only used within one institution
Private Investors
> Majority rely on direct communication and press comment
> Most not frequent traders and without ongoing relationship with a bank or trader
Financial Media
> Disseminate corporate information to widest possible audience
> Good relationship essential
> Treat in same way as any other audience
Primary contacts
IR Audiences and their needs
Stock Exchange(s)
Reporting designers and printers
IR consultantsWebsite developers
Corporate finance advisors
Auditors
Registrars
Broking
houses
Legal advisors
Secondary contacts
The Rules of engagement
CommunicationBetween the company and its investors
FeedbackInteracting with the financial community
Clear and accurate reportingBuilding an understanding of the company’s past
performance and future prospects
The Rules of engagement
> Manage the interface between the company and the capital markets
> Manage expectations – internally and externally
> Provide a clear, honest and accurate picture of past performance and
prospects for the future
> Provide value adding feedback for the Board and strategic
developments
> Keep up to date with regulatory developments
> Keep up to date with capital market developments
> Keep up to date with competitor developments
Market Environment
> Competitive situation
> Regulatory issues
> Macro-economic environment
Value creating activities
> Innovation> Brands> Customers> Supply chain> People, environmental, social and ethical
Strategy
> Goals and objectives
> Organisational structure
> Corporate governance
Financial Performance
> Economic performance
> Financial position
> Risk management
> Segmental performance
The Valuation game
Reporting driven
The Role of IR at Board level
Externally
Internally
Fair market valuationReasonable
level of liquidity
Easier access to capitalStrong group of
supporters
Market information Shaping strategy
Easier access to capital (Mark II)
Expectations management
Opportunities for IR
Investors Analysts
Jan Perception study Perception study
Feb 1:1 meetings with top 20 investors Analyst results meetings
Mar Shareholder analysis 1:1 analyst meetings
Apr 1:1 meetings with target investors
May Post release email alerts and calls
Post release email alerts and calls
Jun Investor day Analyst site visit
Jul Perception update Perception update
Aug Post release email alerts and calls
Post release email alerts and calls
Sept 1:1 meetings with top 20 investors Analyst results meetings
Oct 1:1 meetings with other investors 1:1 analyst meetings
Nov Post release email alerts and calls
Post release email alerts and calls
Dec Website overhaul IR pages Website overhaul IR pages
Opportunities for IR
Financial
calendar,
administration
and logistics
Annual reports
CSR reports
Company
presentations
and meetings
Company
statements/
financial news
releases
IR websites
Webcasts
Electronic communications
Crisis management
Transparency and feedback
Effective IR strategies
> Improvement in financial community’s knowledge
> Growing trading volumes
> Rotation of shareholder register
> Improvement in relations with banks and investors
Fair market valuationReasonable
level of liquidity
Easier access to capitalStrong group of supporters
Aims
Monitoring progress
Externally
Internally
Effective IR strategies
More requests for meetings
Improved level of understanding
Recognition and awardsChanges in share
register
More requests for information
Participation in Board discussions
Trusted gatekeeper Better network
Measuring success
