Cummerbunds were donned, glad rags purchased and acceptance speeches rehearsed. The cause of this palaver? The 1999 Investor Relations Magazine UK Awards, a gathering of 670 IR finance professionals at London’s Hilton hotel for a ceremony which made the Oscars look like a pub darts final.
BP Amoco hit bulls-eye in style and was once again the night’s big winner. BP won the 1997 and 1996 Grand Prix for best overall IR (IR’s Holy Grail) but was pipped for last year’s award by Cadbury Schweppes. In a blatant attempt to snatch the award back, it ingeniously merged with Amoco to impress the 432 fund managers and analysts that judge the awards.
It worked. Not only did BP Amoco regain the Grand Prix, it also scooped best communications during a takeover and best UK company IR in the US. Analysts and fund managers applauded a ‘very professional’ IR team that addressed institutions and the man on the street.
‘At the end of the day, if you haven’t got management support from the highest level, you’ve got an uphill struggle,’ explains Peter Hall, IR manager at BP Amoco. ‘That’s the difference between good investor relations and IR that’s either indifferent or bad. We have full commitment from management and direct contact with the CFO and CEO. That makes our job a lot easier.’
BP was also praised for its program in support of the Amoco merger. One analyst described the takeover as ‘efficiently and professionally handled.’ ‘We are very focused,’ accepts Hall. ‘I think it helps that our remuneration is determined by return to shareholders.’ Hall agrees that the merger improved the company’s US IR. ‘Prior to that we had two people dealing with the US side,’ recalls Hall. ‘It was pretty lean. But I think this award rightly reflects our efforts.’
Rookie power
Years of experience in the cut-and-thrust world of IR is a major boon but not everyone needs it. Take Jane Hurley of Logica. With just a year’s IR experience behind her, she’s helped Logica scoop the newly-created award for best IR from a FTSE 250 company. Respondents describe Logica’s IR effort as, ‘extensive information communicated effectively’.
It’s been a steep but fruitful learning curve for Hurley. ‘My first task was to set up the company web site,’ she comments, ‘and we were runners-up in that category but when we won this award I was over the moon. When I look at what we’ve achieved I’m just delighted.’
Of course, not every winner could get so elated. One company with other things on its mind was Whitbread. The IR team had to forego the treat of picking up the award for best annual report and concentrate on its bid for the Allied Domecq pub chain. Nevertheless, in a category in which it is increasingly difficult to stand out, Whitbread was praised for doing just that with the ‘clearest effort to provide different information to different users.’
The corporate governance category this year attracted cynicism from analysts and fund managers. One said it was ‘easier to think of examples of poor handling.’ That said, Blue Circle Industries, the winner of the best corporate governance award, was praised for always being ‘at the forefront of best practice.’
Blue Circle’s Jacqueline Sinclair-Brown agrees that governance is a woolly area. ‘I couldn’t give you a strict definition of what it is,’ she admits. ‘There’s a lot of waffle about corporate governance. None of it is rocket science; best practice is mostly common sense.’ But she also warns: ‘There’s no excuse for bad handling and FTSE-100 companies shouldn’t get it wrong. We take it very seriously.’
The award came as a bit of a shock. ‘I’ve always been very cynical about these awards because I’ve never seen a building or building materials company win anything,’ she smiles. ‘I’ve now changed my mind.’
Slightly secretive
Property developer Canary Wharf Group won the award for best new issue. Although there were only 32 new issues on the London market during the year, Canary Wharf’s success shouldn’t be underestimated. Its win was emphatic: more than five times as many points as second-placed South African Breweries. In fact, Canary Wharf won special praise: the flotation was seen as the culmination of a remarkable turnaround following the difficulties that have plagued the company for years.
IRO John Garwood admits he had special motivation. ‘It’s fair to say that Canary Wharf has had a slightly secretive image in the past,’ he concedes. ‘There was a feeling that we had to step away from that.’ Respondents to the survey seemed to agree: ‘The management were generous with their time,’ said one fund manager. ‘They came across as involved and dedicated.’
‘We were pushing against an open door,’ remarks Garwood modestly. ‘It’s an easy concept to sell. Investors can come and see the whole company. They can actually see the products and go inside them.’
The development of small-cap IR this year has been tangible. As one analyst remarked, ‘Smaller companies are learning to become more open. In the past they didn’t give anything away.’ And yet, in respondents’ eyes, shortcomings remain. One major failing is the ‘Tendency for central management to feel they know their company best and are therefore in the best position to present it,’ asserts one analyst. Greycoat seems to recognize this. The award for best smaller company IR attracted a huge number of nominations, but Greycoat won by a massive margin with its ‘really highly rated’ defense against a hostile bid. So will Greycoat be back next year? Not likely – it is going through a management buy-out and was scheduled to delist as this magazine went to press.
British Airways won best IR web site but it was a close call, partly because respondents were loath to state a preference. Although the UK’s sell-side analysts have become more active in their use of web sites, respondents in general seem incapable of shedding their vaguely Luddite approach to the internet. As one analyst admitted, ‘It’s not yet automatic to look at the web sites of companies.’
Despite this sentiment, George Stinnes, IRO of British Airways, sees the web site as the most effective portal to the world. ‘I’d say it is the best way to get information out to the investment community. For a start, it’s available 24 hours and it also makes for a good point of contact for those who are just curious.’ And he’s happy to divulge his company’s approach: ‘It’s the standard BA philosophy,’ he says. ‘Give the customer what they want and make sure you do your homework. We conducted market research to find out what people wanted and we’ve incorporated the classic ingredients of clarity and ease of access.’
The night wasn’t just an excuse for UK-centric backslapping, though. Four of the night’s awards went to companies from North America, the Asia-Pacific region, continental Europe and the emerging markets. Tyco International just shaded the North American prize, largely as a result of its ‘direct senior management presence in the UK, which is proactive in seeking out investors and keeping them well informed.’
The category for best continental European company IR was very well represented with a huge number of nominations. French companies fared well here picking up 25 percent of the total number. Finnish telecommunications company Nokia won the award, garnering favor with its strong newsflow and the excellence of its meetings.
As for Asia-Pacific IR, it has long been hampered by a lack of transparency but there does seem to have been a recent sea change. Hong Kong-listed companies are at the vanguard of this move, collecting some 35 percent of the total votes cast in the category. The eventual winner was First Pacific Company. ‘They’re amenable and make an effort to keep investors up to date,’ said one fund manager.
There were many companies in the running for the best emerging market company IR, with over 20 countries represented. More nominated companies came from China than any other country and the Asia-Pacific region accrued 32 percent of the total votes. But last year’s winner Mol Hungarian Oil and Gas was still awarded twice as many points as second place Guangdong Kelon Electrical Holdings. ‘They have dramatically improved the quality and clarity of their presentations,’ said one analyst. ‘They have capable and talented IR people,’ said another, ‘Szabolcs Czenthe [Mol’s IRO] has done a great job.’
Easy start
Of course, if you really want to get into analysts’ good books, excellent meetings and briefings are a pretty good start. Glaxo Wellcome seems to have this sussed, winning this year’s award. Director of IR for the pharmaceuticals giant, Jennie Younger, believes that hard graft is vital. ‘We put a lot of work into this and we make sure we invite analysts and investors to everything. We don’t like to segregate.’ And like many of the evening’s winners, Younger values support from senior management. ‘There’s been enormous commitment from that level,’ she says. ‘We’ve used around 30 senior managers and directors for meetings in the UK and in continental Europe.’
The nominees for the award of most progress in investor relations were judged in two ways. Firstly by having become more proactive and secondly by improving communications. Royal Dutch/Shell was this year’s winner. ‘They’ve responded to criticism and have done so very proficiently,’ said one analyst. In fact, like BP Amoco and Logica, a focus on accessibility seems to have helped. ‘If I call a company I expect them to return my call,’ said one analyst. ‘I don’t rate companies where I have trouble getting hold of management.’
Mineral and metals group Rio Tinto won two awards: best board communications and best environmental reporting. Board communications is an area that concerned many respondents and an emphasis on prompt disclosure was deemed particularly important. Rio Tinto was commended for its ‘timely communication with excellent detail’.
This ability to communicate effectively evidently helped Rio Tinto secure the award for best environmental reporting. Although fund managers assert that, ‘We don’t pay much attention to this area,’ the short-listed companies did manage to convince the investment community that their reporting was genuine. ‘They make an amazing effort to be environmentally friendly,’ said one fund manager.
Cox Insurance Holdings won the award for best crisis management. In December 1998, it suffered a steep plunge in its share price after issuing a profits warning. The company responded promptly, honestly and informatively – employing the three most valued qualities in IR. One fund manager enthuses, ‘They stuck to a strategy of telling investors what was going on and not misleading them in any way, and didn’t allow a short-term crisis to interfere with their long-term goals.’
Show me the money
In an evening that celebrated concerted team efforts, one award focused on individual excellence. British Aerospace’s Andy Wrathall comfortably beat the opposition to collect the award for best IRO. One analyst noted, ‘Great openness and knowledge. I hope British Aerospace pay Andy a lot of money’ – a page to leave flopped open on the chief executive’s desk, if ever there was one.
Wrathall comments, ‘The style has been to stay credible but avoid bullshit.’ He also echoes the recurrent theme of the ceremony. ‘I’m very fortunate to have a senior team who regard investor relations as important, and not just an extension of the hair dressing department.’
After the festivities have died down and the next working day beckons, most of the evening’s winners accept certain inalienable truths: primarily that there is always room for improvement and there’s always work to be done…even with a hangover.
