Australia’s economy is in its thirteenth year of expansion, and while 13 is unlucky for some, the economic environment of this so-called lucky country looks like it will continue to thrive. While the Economist Intelligence Unit this summer revised its forecast for the country’s 2004 GDP growth from 4 percent to 3.7 percent and predicts GDP growth of 3.4 percent in 2005, the country still has an aura of prosperity surrounding it. A low unemployment rate and low inflation coupled with strong consumer spending allowed the country to survive the impact of one of Australia’s worst ever droughts last year.
Despite this, there are still several issues of concern for the country’s investor relations industry. According to Australian IROs, these include the Corporate Law Economic Reform Program Mark 9 (Clerp 9), the introduction of international financial reporting standards (IFRS) in 2005, current and improving standards of corporate governance, board effectiveness, balancing disclosure in light of regulatory change and increasing demand for transparency, and the added regulation around corporate disclosure.
‘Both Clerp 9 and the introduction of the international accounting standards are major issues that will affect the IR community throughout the course of the next twelve to 18 months,’ says Luke Oxenham, head of investor relations at Promina, a group of Australian and New Zealand insurance and financial services companies.
‘The move to IFRS will have a major impact over the coming year,’ adds Mark Gell, vice president of external affairs and investor relations at Sydney-based OneSteel. ‘Most of the investment market has already moved to analyzing companies under the new requirements, but companies themselves will need to adjust the way they report to ensure history is not lost.’
On September 22, those involved in the IR world in Australia will have the chance to discuss and hear advice on these topics, as well as many others, at the annual Australasian Investor Relations Association (Aira) conference in association with IR magazine, being held at Exchange Square in Sydney.
The conference will involve panel discussions and presentations on a range of IR issues, including the Australasian investment picture, IR in special situations, the relationship between business and media in Australia, IR and the IPO, crisis management, corporate social responsibility and cross-border IR. Following the conference, companies will be rewarded for their IR expertise over the past twelve months at the fifth annual IR Magazine Australia Awards at Sydney’s Four Seasons Hotel.
Carolyn Kerr, chair of Aira and IRO for Commonwealth Bank, will give one of the opening welcomes at the conference. ‘I would say Australia is at the same level of IR development as the US and the UK – and ahead in some areas,’ she comments. ‘Australia has had to deal for years with a continuous disclosure environment that is ahead of the US and the UK, so IROs are ahead in terms of immediate – not the ‘four days real time’ but actually immediate – dissemination of market-sensitive information.’
Kerr adds that IROs are becoming increasingly involved in corporate governance issues, and points out areas where Australian IR differs from the rest of the world. ‘After some corporate collapses in the 1980s, Australia was ahead of others in many corporate governance areas – for example, it is unusual to have the same person as CEO and chairman,’ she explains. ‘Following on from the Enron and WorldCom issues overseas, and some large but not as spectacular issues in Australia, we have the ASX corporate governance guidelines, which are non-prescriptive guidelines covering a wide variety of governance issues. Companies are expected to follow them or, if they don’t, to say why not. This is seen as more flexible than, say, Sarbanes-Oxley.’
‘I believe IR in Australia has come a long way over the last ten years,’ adds Gell. ‘It’s developed from a share registry management process to one where IR practitioners in many cases are active participants in the development of company direction, the longer-term determination of key messaging and brand positioning for an organization, as well as acting as a key contact point for the investment community. In areas such as communication and corporate governance, we would be only partly under par.’
