The second annual IR Magazine Central & Eastern Europe Awards – held on September 17 at the Sheraton Warsaw Hotel and Towers – was a night of looking into the future. With EU accession looming, Central and Eastern European companies know that this is an important period of transition, where good practices must be successfully laid in place. For the winning companies, it was an occasion to recognize all that had been achieved and to focus on what the next steps forward must be.
One of the night’s big winners was Hungarian telecoms company Matav, which picked up four awards including the grand prix for best overall large-cap investor relations. Szabolcs Czenthe, Matav’s head of investor relations, puts the success down to management support and a proactive IR attitude. ‘Our management aren’t just accessible; they also take investor relations very seriously and are very well informed,’ he says. ‘Most importantly, we spend a lot of time asking investors about their views – not waiting for them to come to us.’
Estonia-based Hansabank scooped awards for best investor relations in Estonia and best corporate governance. Mart Toevere, head of corporate communication and investor relations, explains that building strong relationships with shareholders is crucial to overcoming periods of difficulty: ‘IR is a support function and as such you might not miss it when times are good. But the effort that has been put into developing long-term relationships with investors will become evident during more difficult times. In our case, one example would be September 11 – Hansabank’s share price recovered quickly and two months later was already above the pre-crisis levels.’
As well as building relationships with its shareholders, Hansabank prides itself on its openness, to the point where it has drawn comments from outsiders. ‘Sometimes we are accused of being too black and white,’ comments Toevere. ‘But one of Hansabank’s corporate values is integrity. We try to be transparent in our operations and open in communication. We have chosen to follow the principle that if you talk openly with the market there is nothing to be afraid of – no secrets under the carpet.’
Crucial communication
Hungarian oil and gas company MOL also prides itself on its openness. Michel-Marc Delcommune, group chief financial officer, explains that face-to-face contact with shareholders is very important to the company, as is the involvement of senior management.
‘The IR department is always available to meet investors, and always tries to invite top management to attend the first part of its meeting so [department members] can answer key strategic questions,’ he comments. ‘This generally means shareholders can meet the CFO, but on request it could be the CEO, the chief strategy officer or – more rarely – the chairman.’
However, it’s not just external communication that is important to MOL; internal communication is crucial too. ‘IR functions as a communication conduit not only outwardly with the market, but also inwardly to update the board of directors, the executive board and the management on the market reaction to MOL’s performance and strategic direction,’ explains Delcommune.
Involving senior management in IR is certainly something that Polish media company Agora also takes pride in. Indeed, its president won the award for best IR by a CEO/CFO. ‘I think a good relationship, commitment and understanding of the senior management is mandatory in our field,’ says IR director Joanna Bazynska. ‘If you don’t have such support you may be the best professional ever but you will not be able to serve the market’s needs successfully.’
Despite its success, it has not been an easy time for Agora of late, with a severe advertising recession in Poland lasting for the past three years. ‘We had to communicate bad news to the market and manage market expectations,’ comments Bazynska.
She explains that one of Agora’s strategies for getting through difficult periods is to remain in constant contact with the investment community and senior management, particularly the CEO. ‘We keep each other abreast and we hold staff meetings with Wanda every two weeks,’ she comments. ‘Our relationship with senior management is a platform of exchanging views, getting updates and providing feedback on the market.’
Steps forward
George Fenyo, IR director at Hungary-based OTP Bank and winner of the award for best investor relations officer for the second year, is also a firm believer in the importance of good communication. ‘I consider IR a very personal, interactive and relations-connected issue, where a faceless company and a faceless capital market get to know each other and have human communication,’ he comments.
Fenyo also believes that it’s important to tailor an IR program to suit a company. ‘I have looked at recommendations of investment bankers, and at the IR of US and western European banks, and I tried to create a function which suited my company, our investors and my character,’ he says. As for future plans, Fenyo says he is constantly looking for ways to make improvements: ‘I try to make small but visible changes and develop our IR function every quarter. My philosophy is one of small but permanent steps forward.’
One big development, of course, will be EU accession next year. Fenyo, like most IROs in the region, has long been considering how this will affect IR. ‘I believe Hungarian issuers will gradually move from the emerging equity asset class to the EU and global industrial asset classes,’ he says. ‘This means a whole new pool of fund managers, sell-side and buy-side analysts – with experience in western IR practices, transparency and financial reporting – will be looking at our companies.’
Fenyo believes this will mean the standard of IR in the region will have to rise even further. ‘We have to meet these new challenges and accommodate the new environment in order to continue capital market successes,’ he says. ‘We have to strengthen IR departments, be prepared and initiate more active investor relations – travel more, be available for more meetings and fully employ the most up-to-date technologies.’
Agora’s Bazynska agrees there is work still to be done. ‘Although there is much more commitment to meet international standards, we are still facing a gap, which has to be narrowed through a professional IR approach and consistent programs,’ she says. ‘At the end of the day, we compete for the same money and have to stand out to be noticed by our clients, especially when the spectrum of opportunities grows.’
Despite these pressures, Fenyo insists there is only friendly competition between companies in the region. ‘There is always rivalry, but there is no animosity,’ he says. ‘We are in the same boat; the same analysts are looking at our companies and the same investors take positions in our shares. On the other hand, each country and each company is different, therefore it is in our interest to show our similarities and our differences, and to adhere to similar practices.’ Fenyo ends with advice that can be applied to companies around the world, not just in the CEE region: ‘What is important is to build upon each others’ successes.’
Award-winners were identified in a survey of 45 analysts and fund managers by Mary Maude Research. Full results with verbatim comments are in the Central & Eastern Europe Research Report 2003, available for £45 from [email protected] or in the Awards section at www.IRontheNet.com
