Greater transparency. More communication and information, more often. An enhanced web presence. All around the world, IROs say disclosure is – and will continue to be – the focus of their programs. Whether their plans call for retaining existing investors or broadening their shareholder base, IROs who have earned accolades from investors are guiding their companies toward deeper disclosure that goes above and beyond local regulations and exchange requirements.
Here’s what IROs had to say about what went on in IR in 2004, and what’s on the horizon for 2005.
Budapest
SzabolcsCzenthe is IR director at Matáv. He reports to the company’s CFO.
2004
Investor relations, in cooperation with other departments at the company, participated in the development and review of a new value creation strategy for Matáv. We combined the announcement of our new corporate strategy with the release of our interim results.
2005
One trend in Europe, including Central & Eastern Europe, is that fewer sell-side analysts report on the market. We will have to become more proactive to ensure decision-makers have the information they need to evaluate Matáv. We will probably amend our reporting in a user-friendly way to combine the typical company reporting style and the analyst reporting style so investors will be able to gain information on their stock holdings. In addition, the accession of Hungary to the EU carries a lot of opportunity for us because we anticipate it will broaden the spectrum of investors who find our company of interest.
Fremont, California
Sandeep Shroff is general manager of IR at Infosys Technologies. He reports to Infosys’ CFO.
2004
With company headquarters in Bangalore, financial data domiciled in India and almost half the company owned by US investors, the US part of the Infosys IR department is constantly aware of and works around the challenges that come with a twelve and a half hour time difference between it and the head office. Results are reported in both Indian Gaap (which is highly detailed) and US Gaap, and IR is expected to be ready and able to discuss all reported financials and operational metrics. In 2004, in the spirit of full disclosure to all investors, IR continued a practice it began many years ago of putting all public financial and operational metrics on the web. With investors becoming much more web-savvy, the web site has become an indispensable tool in the IR tool chest. This has made communicating routine information much easier and faster.
2005
As our shareholder base is growing with investors all over the world, we need to expand the IR department to service a larger number of investors and increase our use of technology. We plan to streamline investor communications and provide value-added support by employing technology to change manual processes. Customer relationship management tools will help us track, know and service our shareholders. The IR department will also need to develop greater cultural sensitivity to our investors and their local markets.
Johannesburg
Tessa Christelis is executive manager of IR at Edcon and reports to the company’s chief executive of group services.
2004
An increasing number of South African companies are hiring dedicated investor relations professionals. The IR function is moving from a secretarial/PR role to a professional designation. The IR position has moved higher in the organization to report to the CEO or CFO. Both sell-side and buy-side members of the investment community are increasingly comfortable dealing with the IRO, whereas a few years ago they were prepared to speak only to the CFO or CEO.
2005
I expect to spend more time focusing on international investors and broadening our shareholder base geographically. This is likely to involve more international travel and contact via e-mail and phone with international investors. Another focus area will be improving our corporate web site and raising it to a world-class standard.
Hong Kong
Anthony Tse is director of corporate development at Tom Group and reports to corporate development.
2004
Tom is diversified and fast-growing – this needs an increasing level of disclosure. The business model of a diversified media organization is new to Asia. Given the complexity of our multi-line business, we provide a lot of information and statistics on the market situation of each industry segment, as well as division analysis. The learning curve is also higher for the average investor and analyst, who find they have more challenges so have to spend more time to get an overall understanding of the company.
2005
Continuing to increase levels of disclosure beyond just meeting regulatory requirements will help create a better understanding in the financial community. IR will facilitate a channel of communication between Tom and investors, so institutions are furnished with background and supporting information – including strategy, financials and operating data needed to make investment decisions – in a timely and accurate way.
Madrid
Ignacio Cuenca is director of IR for Iberdrola. He reports to the company’s CFO.
2004
For Iberdrola, key issues this year are the EU Emissions Trading Scheme (ETS) and National Allocation Plan (NAP), stemming from the Kyoto Protocol on fossil fuel emission reduction. Explaining the effects of this situation will help to eliminate risks and uncertainties with regard to the share price. In anticipation of this change, Iberdrola has developed a comprehensive program for investor communication encompassing press releases, presentations in Madrid and London, and attendance at specialized seminars organized by investment banks.
2005
The new international accounting standards (IAS) for EU member states took effect on January 1, 2005. Depending on the balance sheet structure of each company, IAS may change companies’ balance sheet or profit and loss statement figures and modify financial ratios. Explaining the possible impacts on Iberdrola’s financial statements will eliminate risks and uncertainties that might weigh on the share price. [In 2005] the IR department will deepen and improve communication with investors through several communication channels. We will listen to investors’ concerns and uncertainties according to their nationalities and type of investment – equity or fixed income, for example.
Mexico City
Jorge Perez is director of IR at Corporación Geo and reports to the company’s CEO.
2004
We made significant efforts to follow Sarbanes-Oxley more closely during the year even though we are not fully listed on the NYSE. We also improved our web site in order to have the most recent information available for our analysts and investors. In addition, we seriously committed to the transparency of information practices.
2005
It is our intention to continue to improve our investor relations practices in all areas noted above.
Moscow
Valery Goldin is VP of international and investor relations at VimpelCom. He reports to the company’s CEO.
2004
The IR function in Russia was developed primarily in companies with ADR programs – in other words, it was directed at foreign investors. However, the Russian capital market is advancing and the disclosure requirements for market participants have become, to a large extent, similar to those in the West. More Russian companies are now familiar with the IR function and general corporate governance requirements and are developing these functions in their companies. For VimpelCom 2004 was marked by the necessity to comply with Sarbanes-Oxley, which required perfecting financial controls, data collection and verification procedures, and more intensive interactions with auditors.
2005
For VimpelCom 2005 will be a continuation of the trends noted above. There will be more effort to improve the quality of IR – more informative presentations and web site materials, widening and expanding of the company’s investor base, further ramifications [in accordance with] Sarbanes-Oxley, and so on. In Russia, the government has announced an objective for continued improvements in corporate governance standards and disclosures that are directly linked to IR as a function and as a profession.
New York City
Mark Aaron is VP of investor relations at Tiffany & Co and reports to its CFO.
2004
Companies are taking IR more seriously. There is a stronger commitment to meaningful disclosure, a stronger commitment to the spirit of better disclosure, a greater obligation – whether or not it’s required by the regulators – to be accountable to the shareholders who are ultimately the owners of the company. That includes communication and corporate governance. Regulations can push companies toward better disclosure, but optimal disclosure has to come from deep down within that IR person and the rest of the organization’s senior management.
2005
There’s a favorable evolutionary trend toward coordination or integration of communication within the organization. IR people are realizing they shouldn’t be in their own little silo. They have to coordinate their activities formally or informally with PR, corporate communications and marketing so the entire company can communicate on the same wavelength.
Singapore
Gavin Hurle is group director of IR at SingTel. He reports to SingTel’s CFO.
2004
Singapore introduced a new code of corporate governance in January 2003 and our market is generally recognized as having the highest standards in Asia. In 2004 we saw steady improvements in corporate governance and financial disclosure – in our case, to world-class levels. For example, we suspended the granting of options and introduced performance-based share plans that align management’s interest more closely with investors’. This has been recognized by a number of awards from respected independent parties including IR magazine, Asiamoney and the Securities Investors Association (Singapore).
2005
We will continue to focus on internationalizing our register. We regularly conduct US and European roadshows targeting major institutions that invest in our region and/or our sector. Our institutional shareholder base is now evenly spread between holdings in our home market, the rest of Asia-Pacific, Europe and the US. This diversification improves liquidity and helps ensure our shares are more fairly valued.
Toronto
Greg Secord is director of IR at Open Text Corporation and reports to the company’s CFO.
2004
IR is becoming more interactive with the buy side. Fund managers are relying less on sell-side analysis, and instead looking to a company’s IR group to help them understand the fundamentals before they invest. The buy side is also becoming quite interested in product marketing, focusing on the competitive landscape and understanding the differentiating uses of products offered by our competition. Building stronger buy-side relationships means an expanded contact list with more phone briefings, and the need for IR to become more tech-savvy as we highlight product features and provide on-site demos.
2005
IROs in Canada are becoming more proactive in communicating to the Street, using web sites and other multimedia to reach a broader global audience. Many companies are starting to place added value on expanding their investor base beyond North America, and are growing IR teams and allocating resources accordingly. This expanding investor base creates awareness, and is more important to companies that sell products and services globally, as customers are placing more emphasis on the financial stability of a vendor before making a purchase decision.
