The South African business scene certainly isn’t boring. After an extremely busy business day – during which the rand strengthened to a significant R6 against the US dollar, and a freak storm swept into Johannesburg, causing an hour of darkness in the daytime – there was plenty to talk about at the fourth annual IR Magazine South Africa Awards.
The atmosphere was buzzing at the glitzy Sandton Hilton, just outside Johannesburg, as 200 movers and shakers of the financial world acknowledged the growing importance of investor relations in Johannesburg’s ever-active financial scene.
Since South Africa’s democratic elections in 1994, Johannesburg has increasingly grown in stature as Africa’s most significant financial center. Over time that center has shifted from Johannesburg‘s old business district in the city center to the shiny, multi-story towers of Sandton.
Meanwhile, the financial world in its transformation phase has battled to embrace the new ideals of South Africa. Issues such as broad-based black economic empowerment (BEE), which aims to give black people more senior jobs within the business sector, remain at the top of the agenda. The South African government outlined its position on BEE back in 2002 when it announced its aim to have the mining and mineral sector transfer 26 percent of its assets to historically disadvantaged South Africans within ten years.
The evening opened with recognition of South Africa’s multicultural heritage as the evening’s host, television presenter Denis Beckett, made his opening remarks in South Africa’s eleven official languages.
The evening’s biggest winner was Standard Bank, which carried off three trophies. Kim Howard, Standard Bank’s director of investor relations, and her team hardly sat down all night as the awards table beckoned again and again. The banking giant won for best corporate governance and best investment community meetings, and edged out Telkom to take home the grand prix for best overall investor relations by a FTSE/JSE top 40 company.
‘Of course the one we really wanted was the grand prix,’ says Howard. ‘It’s easy to do IR well when all is going well. I joined Standard Bank at the bottom of a commercial cycle and we’ve ramped it up. [Senior management] has allowed me access to all the information and this is really the culmination of four years’ work in which IR has been a necessary commercial tool.’
Transparency pays
The necessity of IR came up repeatedly during the evening. Times, everyone said, were changing for IROs, who were gaining more attention from and access to their senior management teams.
The awards research carried out by Mary Maude Research and published in the IR Magazine South Africa Research Report 2004, which polled 87 analysts and portfolio managers on their perception of the South African IR scene, found increasing numbers of South African companies have ‘appointed dedicated IROs’ and that the position is increasingly a senior one.
Investment professionals saw increased improvement with 73 percent of respondents saying IR had improved in the past year. ‘Many companies have only recently become good at IR and IROs now add value rather than just answer questions,’ said one analyst. Another noted that ‘IR personnel have improved. They tend to be more like analysts now, which I particularly notice in the quality of their feedback.’
After a busy year at South Africa’s telecommunications giant Telkom, IRO Belinda Williams won huge accolades for her handling of its first year on the Johannesburg Stock Exchange (JSE). One survey respondent said of Williams: ‘Belinda is way ahead of the rest – she understands the business inside out.’ Williams herself is more self-effacing. She says her challenge was helping to promote an IPO for a company such as Telkom that was perceived as ‘an old, fuddy-duddy company. We did a lot of marketing and our reward is seeing how management is now trusted.’
The award for best investor relations officer at a company not in the JSE top 40 went to Tessa Christelis of retailer Edcon. Christelis says her background as an analyst helped her excel in the job. ‘For me the biggest challenge was to get the investment community to talk to me as it would to the CEO or the CFO,’ she explains. ‘My past as a retail analyst has helped me to be proactive in communicating with that community. I put myself in analysts’ shoes and ask myself what they want.’
Tackling a crisis head-on
Few people in South Africa missed the product-tampering crisis at supermarket chain Pick ‘n Pay when it hit the headlines. But out of a crisis can come plaudits, and chief executive Sean Summers’ handling of the situation won him and the company the IR magazine award for best crisis management. The sell side complimented Pick ‘n Pay’s handling of the arsenic crisis, noting the company provided an immediate, effective response and didn’t try to hide anything.
Summers collected the award himself but made it clear he was accepting it on behalf of all the staff. ‘This award is for all of you,’ he said on picking up the trophy. ‘We are a stronger company today. This crisis had an enormous effect on the company and on society. For Pick ‘n Pay it wasn’t about an individual – it was about a company with a long history and a large reserve of goodwill and understanding. This award is not just about the moment of decision – it goes a lot deeper than that. It’s about being very honest and very transparent.’
It was also a good evening for mining group Harmony. Chief executive Bernard Swanepoel was awarded best IR by a CEO or CFO, while the company also won best communication of BEE program. Swanepoel’s openness won great acknowledgement from the sell side. After receiving the prize, he told the audience: ‘We put a lot of effort into IR and believe it is very important to be honest and to value the investment community in good and bad times.’
Ferdi Dippenaar, Harmony’s marketing director and head of IR, agrees. ‘We’ve recognized the importance of IR,’ he admits. ‘It has really worked for us.’ In the bid to improve its IR, Harmony learnt a lot from the way it worked in North America. ‘IR is a new concept in South Africa and we have quickly learnt how important it is,’ adds Dippenaar. ‘For us it is critical to communicate internationally as we have an international shareholder base. This award shows our commitment to IR at the highest level.’
Dippenaar felt the high turnout at this year’s IR awards was also a recognition of the growing importance of IR to the South African financial world. ‘It reflects how IR is growing in status in South Africa,’ he says.
The same feelings were echoed by Rob Katzen, group financial director of AVI, which won the grand prix for best overall investor relations for a non-FTSE/JSE top 40 company. ‘Investor relations in South Africa is growing and developing as investors demand it, but it still has a long way to go in terms of availability of information and its management,’ he notes.
One issue Katzen feels strongly about – and which was widely discussed at this year’s IR Magazine South Africa Investor Relations Conference – was better communication from the JSE about what information quoted companies could and couldn’t make available. ‘The rules change frequently and that can’t be good,’ Katzen points out.
Overall, however, the mood was positive about the future of IR development. And South Africans were given plenty to celebrate at this year’s awards.
