The survey of the investment community to discover the winners of our UK awards took place against the backdrop of a bear market, war in Iraq, Sars and a general economic slowdown. But the nearly 1,000 people gathered at Le Meridien Grosvenor House in London on June 30 had good reason to celebrate, and even laugh, as they were regaled by compere Rory Bremner.
All the companies nominated for awards won accolades despite the difficult market conditions. The IR departments were singled out for their attention to detail, communication skills and dedication to clarity. From pharmaceuticals to real estate, from large cap to small, there were stars of the UK IR scene in abundance.
Touchy-feely
Unilever shone particularly bright, winning the grand prix for best overall IR along with six other awards. The company puts its success down to its huge number of investor meetings. ‘We call it our touch-and-feel program,’ says Steve Bolton, Unilever’s vice president of IR. ‘We have extensive contact with the investment and analyst communities – we want them to see how the business is operating on the ground.’
Unilever organizes regular investor visits to its operations in South Africa, North America and Europe, and held over 300 one-on-one meetings over the past year. The company was also praised for its internet technology, a result of a web site relaunch last year. ‘We’ve made it easier for users to navigate and increased the amount of information available,’ explains Bolton. ‘Specifically, we have an investor center on the site which makes all the presentations we make throughout the year readily accessible. We’ve also built up a very significant database of investors and analysts who we keep in regular contact with through e-mail.’
Hammerson, the recipient of seven awards, also won citations for its use of the internet. Although the company won the award for best IR web site at a non-FTSE 100 company, Chris Smith, director of corporate affairs, still thinks there’s room for improvement: ‘We revamped our web site five years ago, and now we believe it’s time to move on again. In terms of technology, I would say our site is probably not up there. But because the award was voted for by investors, it proves we have assembled the information well and have made it navigable and acceptable to users.’
Hammerson plans to relaunch its web site in the next few months, having spent time over the past 18 months looking at the concept of the Hammerson brand. ‘As part of that process we’ve been looking at corporate ID and making sure the same corporate ID is applied across all our communications material, including the web site. This has enabled us to take a fresh look at what we want to be achieving with our site,’ Smith explains.
Responsible behaviour
A further enhancement to the Hammerson web site will be the creation of a separate corporate social responsibility section. ‘For a property company, CSR is of substantial significance,’ Smith comments. ‘Hammerson’s experience is that we’ve been carrying out CSR practices for many years. Now we will be drawing all these activities together under the heading of CSR and publishing our first CSR report later this year,’ he says.
Lonmin, a mining company with African operations, is another that takes CSR seriously in light of black economic empowerment and South Africa’s mining charter. ‘Being a mining company, it’s extremely important for us to look at the economic and social effects of our business in South Africa. So BEE is the main focus of our CSR activity at the moment,’ explains an IR spokesperson for Lonmin.
In January Lonmin produced its second corporate accountability report and presented it at a special meeting devoted to SRI analysts and fund managers. ‘It was our first presentation of this nature so we learned some things from it,’ says the spokesperson. ‘It was well received although we did get asked some sticky questions. But if we couldn’t respond to them at the event, we made sure we dealt with them later.’
AstraZeneca also found itself in a sticky situation as doubts spread over its drugs pipeline. The way the company handled communications in this difficult time gained it the award for best crisis management. According to one analyst, ‘There were lots of concerns and worries as to whether the company would come through, but it handled the situation very well.’
Company spokesman Chris Major comments that investor concerns are inevitable for companies that have to deal with patent expiry and the approval of new products. ‘You have to have a strong program of IR and communication,’ he advises. ‘We had a range of specific analyst conferences at key times as events unfolded and we continue to keep shareholders posted as and when things happen.’
Listen and learn
The Wood Group, an oil services company, is new to the market but has already had to adapt to changing circumstances, too. After listing in June 2002, early in 2003 the company held separate investor and analyst ‘teaching days’ at which senior management spent a day with each group, covering the business in more detail.
But, as finance director Alan Semple says, it’s not just a one-way process: ‘We think it can be educational, meeting with analysts and investors who are very knowledgeable about the business and the industry. It’s a good opportunity to sit down and talk to them. So while we’re providing an update on our business, we like to try to learn from the experience as well.’
The Wood Group has also been dedicating a lot of time to other investment meetings, extending its interim roadshows into a second week and a third week for the finals. ‘This is longer than people normally do,’ Semple points out, ‘but we think as a new public company building relationships with shareholders, it makes sense to extend these roadshows and spend time with them.’
These efforts are clearly appreciated by the investment community, with one analyst praising the Wood Group’s ‘detailed communication’. Another analyst remarks, ‘I think that the company’s investor relations is now right at the top of what is expected from a quoted company.’
Such praise is significant considering that the company doesn’t have a dedicated IR department per se. Semple says the management team wants to fully understand the process of being public, so they’re ensuring they have as much contact with shareholders as possible: ‘You have to commit quite a bit of time to it, but we think it’s very important that we get in front of the investors and analysts.’
Management view
The Wood Group isn’t the only winning company without a proper IR department. One of the night’s biggest successes was ARM Holdings which collected four awards and whose IR falls under the remit of the board and the management.
‘We feel that investors are very happy hearing messages from the management team,’ comments CFO Tim Score. The quality of interaction between management and the investment community also comes through in the company’s conference calls, which take the format of a short summary followed by a lengthy Q&A session.
‘The interesting thing about our conference calls is that they’re not very formal,’ says Score. ‘It’s the Q&A section that the investors really like, so the split of our conference call is probably ten minutes of introduction and an hour of spontaneous Q&A.’
ARM is a relatively complex and very high-profile business, according to Score: ‘This is partly a result of having previously been in the FTSE 100, and also because we sit in the middle of a global semiconductor industry. Therefore investors are interested in what ARM thinks as it helps them form views on other companies in this space. That is the type of information that people like to hear from senior management.’
All change
In contrast to ARM’s approach, over the past two years Land Securities has transformed its IR and communication functions, which were previously run by the finance director, to its current team of seven people. ‘Over the past few years the company has been through a great deal of change, so we’ve had to be very proactive in terms of communication,’ says ARM’s head of communications, Emma Denne.
ARM’s transformation meant restructuring the group, making corporate acquisitions and adding a new section to the business. Indeed it’s a whole new business model. Denne explains how this has affected the IR function: ‘If you change a business model, people think things are complex. You have to be very consistent in your communication so that people can be clear about what you’re trying to achieve.’
BG Group has also been through restructuring since its demerger from Lattice Group in October 2000. According to BG’s IRO, Chris Lloyd, this has naturally meant getting BG’s story better understood and raising the company’s profile: ‘We have a coherent plan to broaden the message out, both in Europe and in the US. BG is focusing particularly on getting better known in the US. We go there seven times a year and each time we go we try to see more people.’
Staying strong
Even for companies that haven’t had to deal with transformation or crisis, it hasn’t been an easy twelve months. But as conditions have become more difficult, it seems UK IROs have risen to the challenge, improving their practices to satisfy the increasing demands of investors.
As one buy-side analyst commented in the awards survey, ‘Investor relations has become a lot more professional in the last twelve months. Companies have improved their contact with investors and have become a lot more open. IROs make a good effort to explain everything.’
Despite having to cope with new rules and regulations, rising shareholder activism and a loss of investor confidence, it seems that investor relations has strengthened while much around it has weakened.
In the research conducted for the awards, 57 percent of sell-side analysts and 55 percent of buy-side analysts and fund managers say investor relations in the UK has improved during the bear market. Only 7 percent of the sell side and 12 percent of the buy side disagree, saying it has worsened. Clearly, for the nominated and winning companies, this is a true example of triumph over adversity.
The winners were identified by a survey of 640 fund managers and analysts, conducted for IR magazine by Richard Davies Investor Relations. A full list of nominated and winning companies, along with comments from respondents, is available in our UK Research Report 2003. Order a copy for £260 from www.IRawards.com
Click here to see the winners
