Investor relations continues to play an important role as the Irish economy surges ahead, minister for trade, enterprise and employment Micheál Martin told delegates at IR magazine’s annual Ireland conference and awards on April 26 in Dublin. He said good corporate governance was necessary to keep companies on track and ensure the interests of investors and the public were protected, adding that ‘the IR Magazine Awards strike me as a very efficient benchmark for corporate governance.’ Martin also sought to reassure businesses that he would steer clear of ‘knee-jerk’ regulation, insisting that ‘market mechanisms such as transparency and disclosure are more effective than command and control.’
Speaking on an industry leaders’ panel, Maurice Pratt, CEO of C&C Group, argued that Irish firms ‘punch above their weight’ when targeting investors because of the openness of the local business culture. Liam O’Mahony, CEO of CRH, and Denis Donovan, chief executive of wholesale financial services at Bank of Ireland, agreed that Irish companies were reaping the dividends of good communications.
Close quarters
O’Mahony commented that Ireland’s intimate business community is something of a ‘goldfish bowl,’ meaning that the bigger Irish companies, such as his own, are rarely out of the media spotlight. But all three CEOs insisted that this must not lead to a short-term focus from companies. Donovan, for example, admitted that he did follow the Bank of Ireland’s share price on a regular basis but emphasized the need to focus on the long-term view ‘ad nauseam’ when meeting with investors and analysts.
It is clearly more difficult to avoid short-termism at smaller companies, particularly in the unpredictable extractive industries. Tom Hickey, finance director of Tullow Oil, said that he had to check his company’s share price daily because of the potential volatility of the stock. He cited a recent example where Tullow’s stock fell by more than 10 percent in a day on the basis of completely unrelated difficulties at one of its rivals. Within minutes of the initial slide, he pointed out, his phone was ‘ringing off the hook.’
Despite concerns over increasing hedge fund activity, all the members of the panel agreed that they should not be treated differently from other, more traditional investors, with Hickey commenting that ‘very often, hedge funds put long-term holders to shame in their knowledge of a company.’
Punching above
Winners of this year’s IR Magazine Ireland Awards are also aware of the balance between the insatiable appetite of shortterm momentum investors and the longer-term horizon of other holders. The key is to lead by example, with management demonstrating its long-term commitment to building shareholder value, says Matt Moran, CFO of Anglo Irish Bank.
This year Anglo Irish was the big winner in the large-cap category, taking home the grand prix for best overall IR, best investor meetings and roadshows, and best IR by a CEO/CFO. ‘Fundamentally, we are in this business for the long term as a management team and over 90 percent of our employees own shares in the business too,’ says Moran.
This is the third year running that Anglo Irish has collected these particular accolades at the Ireland awards. ‘We are very consistent in doing the things we see as important,’ says Moran. ‘The biggest emphasis is on getting out and meeting investors and, over the last three years, we have involved more people in the bank in our roadshows.We now have 14 people on the road.’
Irish management teams are renowned for the amount of time they spend on the road visiting institutions in the UK, Europe and North America. Moran, for instance, estimates that he and William McAteer, Anglo Irish group finance director, spend about 15 percent of their time on the road. ‘We see it as part of our day job,’ he comments.
The reason companies in Ireland are out so much is partly due to the ‘Irish’ style of management, which calls for face-toface contact, and partly because so much of Irish equity is held outside the domestic market. To reflect the geographical diversity of Irish equity holders, 50 percent of the 82 fund managers and analysts that chose this year’s winners are based outside Ireland in the UK, Europe and North America. Additionally, around 80 percent of respondents are from the buy side and about 25 percent are from the sell side. Comments on the winners and insight into the investment community’s perception of Irish equities and IR are all contained in the IR magazine-commissioned Investor Perception Study, Ireland 2006.
Historic roots
Another of this year’s winners is CRH, which won awards for best annual report/corporate literature and best corporate governance. Head of IR Éimear O’Flynn says the company’s commitment to sound corporate governance dates all the way back to its early beginnings.
‘Ever since its foundation in 1970, CRH has prided itself on reaching the highest standards of corporate governance,’ she says. According to O’Flynn, the company has not made any significant governance changes in the last year. ‘However, we would like to think that fund managers and analysts are recognizing our consistent commitment to, and the quality of our disclosures related to, our governance activities,’ she says.
O’Flynn readily attributes CRH’s investor relations success to the company’s Irish roots. ‘Perhaps it is the pride and enthusiasm with which Irish managements present their companies on the world stage that is so welcome to investors who are interested in hearing the company’s story and investment proposition,’ she says.
by Adrienne Baker and Ben Bland
2006 Winners
Best annual report and other corporate literature
CRH
Best use of the internet for IR
Bank of Ireland
Best investor meetings and roadshows -Mid and small cap company
IAWS Group
Best investor meetings and roadshows– Large cap company
Anglo Irish Bank Corporation
Best corporate governance
CRH
Most progress in investor relations
Kingspan Group
Best investor relations by a resources company
Tullow Oil
Best investor relations by a CEO/CFO – Mid and small cap company
Gene Murtagh – Kingspan Group
Best investor relations by a CEO/CFO – Large cap company
David Drumm & William McAteer & Matt Moran – Anglo Irish Bank Corporation
Best investor relations officer
Barry Walsh – Irish Life and Permanent
Grand prix for best overall investor relations -Mid and small cap company
IAWS Group
Grand prix for best overall investor relations -Large cap company
Anglo Irish Bank Corporation
