Although I hold responsibility for investor relations, it only accounts for around a third of my time, the remainder devoted to corporate development. Having said that, I hate having to segregate the functions: I view all of my job as dealing with outside audiences, all of it as corporate affairs. It doesn’t matter whether I’m talking to Morgan Grenfell, British Telecom or a sports organization, they’re all just as important to us whether they’re potential shareholders or potential partners. All of them want to learn where this business is going and why.
My background has given me a great grounding for this role. My knowledge of the City comes from initial training as a media analyst at County Natwest. That meant being on the receiving end of corporate communications, so I’ve been led up the wrong garden path by companies in the past and know just how it feels. Once you’ve been misled it really does alter your view of a company which takes a long time to repair. Many of my old clients are now our shareholders and I take their views very seriously. And that has stood us in good stead over the years.
Before joining Chrysalis in 1994, I left the City to become communications director of the International Federation of the Phonographic Industry (IFPI). There I was dealing at the very highest level in the record industry. That’s something I’ve never been intimidated by and the experience of top-level management is invaluable. At that time I became very frustrated by the record industry’s disinclination to look further out to developments going on in the wider market that would impact on its traditional business. As an analyst I’d got used to looking three to five years out rather than to the next quarter’s sales figures.
Attention seeking
It’s hard to describe a typical week in my working life because sometimes one aspect of my role will absorb all my attention for a period of time. The corporate development function of the business is basically Chrysalis’ ‘windows on the world’. That means staying abreast of market developments, working out what the future may hold, enabling the chief executives of each division to concentrate on their existing businesses. This allows the entire company to be fleet of foot, to maintain an overview of our strategy, thus ensuring we maximize return on our investments.
As a result, I’m constantly on the lookout for ways to expand our business. The internet is obviously going to be very important across all our activities as we move toward convergent media. A very large part of the daily function of my team now involves working with the internet. We’re trying to evaluate our strengths, gain an understanding of the spectrum of electronic property rights and also maintain an ongoing dialogue with all of our outside audiences on the subject.
Advising and working with one of our new investments – Taxi Interactive, a leading developer of e-commerce software and solutions – is currently taking up a lot of my time. It was one of about 50 companies we considered for investment. We acquired a 15 percent stake as founder shareholders and play an active role within the company. Our involvement with Taxi not only gives me a view of a business from an investor’s perspective but it has also taken us up the internet learning curve and will help us with other vital strategic alliances in the future.
I’m currently spending at least one day of my average week on Taxi-related business. I sit on the board and help with presentations to potential finance partners and trade partners.
One thing we’ve learnt through the Taxi investment is that it’s not the actual cost of the investment which is the greatest burden, it’s having the time and management resources to help a much smaller company get going. Our initial investment has been just over £500,000 but it absorbs a good deal of my and my colleagues time as we help them develop. And that’s the way we want to do it.
Most of my time is spent meeting with companies operating both within and outside our sphere of activity, both in order to market what we currently do and to look for ways of expanding our business. On the corporate development side a lot of what I do can often be fairly hit and miss. You have to cast the net far and wide in order to find the sort of thing that you’re looking for.
Building on background
The reason for explaining all of this corporate development background is to illustrate the importance of what it means for Chrysalis’s own investor relations. If I’m in Silicon Valley talking to investors on behalf of Taxi, I’m also talking on behalf of Chrysalis. I don’t think that anyone can communicate the Chrysalis story unless they are living and breathing it. The shareholders know that what I tell them is the truth and that I have direct experience of it myself. I don’t think our shareholders would take me seriously if I was responsible solely for investor relations in a business of our size
In fact, we have a much higher profile than our size merits – both in the City and among other audiences. We’re lucky in the fact that we’re viewed as a ‘sexy’ business. We’re also quite a personable company and have a very high public profile in the UK.
It helps that the media loves the media. We can normally supply a snappy photo of one of the bands or a still from a television show which helps get us press coverage. On the financial side, the City loves a good entrepreneur and Chris [Wright, chairman and founder] is just that. He still holds around 35 percent of the Chrysalis shares and that helps focus the minds of all of us. As a business we do have shareholders’ best interests very much at the top of our minds.
We know what we’re doing and what we can do very well which is the accumulation and creation of rights, be they in television, radio broadcasting, music or electronic media. We could turn the tap off in the creation of new rights today and immediately be very profitable, but we believe that would seriously erode the long-term capital value of the group. We believe it’s right to continue to invest in building those assets for the future. Our shareholders clearly subscribe to that view.
Investor concentration
The analyst community has increasingly adopted a pan-European approach which means their attention is focused on the larger stocks at the top end of the market. As a result, most of my IR work has involved talking directly to the shareholders, leading to strong relationships with our investors. Currently there are around 15 institutions that each own more than 1 percent of the stock. We see all our shareholders on a one-to-one basis at least twice a year, call them regularly and respond to their information requests in-between times.
We have a very close relationship with our major shareholders and treat them as an extension of the business. The feedback I get is that they really appreciate being kept in touch with the activities and developments of the group. We still have to balance the time devoted to them by making a judgement on how much contact they want or need. Of course, they’ll also ask if they want us to come in and have a chat over a particular issue.
There is no way to overstate the real importance of knowing the company inside out in order to do a good investor relations job. I sit on the main board of Chrysalis so I’m able to talk to shareholders about our strategy and where we’re going from first-hand experience. It’s not just somebody else’s spin on the corporate story. It is the story.
As an ex-analyst, I know that the investment community does not forgive or forget in a hurry if it feels that it has been misinformed by a company. When we’ve had any problems within our business we’ve been absolutely upfront with the financial community right from the start and it’s paid off in the long run. The City will forgive some failures as long as you’re totally honest about them and they can see that you are in control of the situation. A failure to communicate gives the impression that you are not.
