Arkadin webinar ir best practice in 2011 (final)

Arkadin Webinar Series

Industry Leaders ForumSharing your Ideas – Anytime, AnywhereInvestor Relations Best Practice in 2011 –

Strategy and Value Optimization Speaker:

Lynge Blak, CEOLynge Blak Investor Relations Limited

Lynge Blak Investor Relations Limited 1

Definition of Investor Relations Investor relations is a strategic management

responsibilityintegrates finance,

communication, marketing and securities law compliance

enables the most effective two-way communication between and issuer, the financial community and other constituencies

ultimately contributes to a company’s securities achieving fair valuation


Basic IR disciplines

Finance

Comm.

Marketing

Securities law

Why Financial Communication? Financial communication should be

carried out to ensure that:

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all investors have the information necessary to enable them to become fully and fairly informed about all material information, enabling them to make reasonable investment decisions

HighDisclosure Level

Low

Tactical Business Value Strategic

The Investor Relations Components

IntelligenceInvestor targeting

Peer trackingBenchmarking

ComplianceNews releasesPublic filings

OutreachIR websitesWebcasts

E-mail broadcastsPR/Media relations

TransparencyCorporate governanceFinancial statementsAccurate guidance


Company

Shareholders Institutional

Investors Private Investors Buy-side Sell-side I-banks Brokers Financial media Staff

Portfolio Managers

Investment Managers

Money Managers

Mutual funds Hedge funds Pension funds Insurance

Aggressive growth Growth GARP Value Deep value Hedging Income / Yield SRI Index

CEO Corporate

Secretary CFO IR Manager PR Manager Legal Counsel External

advisors

Audience Investor types Investment styles

Different audience / different interpretation / different messages

DIFFERENTIATION – prepare your communication strategy


The Art of Communication Value


Step 1: determine the investment proposition a company presents

Step 2: identify and target the appropriate investor and analyst audience

Step 3: develop the communications platform to present to the targeted investor and analyst audience

Step 4: build relationships with the target investor and analyst audience and maintain consistent communication with the marketplace so the key value drivers of a company’s business are current and obvious to investors

The Investor Relations Process -1-Determine the company’s

investment proposition by asking your audience

Are company performance and business strategy perceived in line with those of The Board of Directors and The Board of Management?

Benchmarking IR for added value with:

Investor Perception Survey & Investor Peer-Group Survey

Why? To help the IRO to understand

How your IR program is performing relative to peers

Whether your IR ”boat” is riding the waves or ”beached” while your peers move ahead

Who do you benchmark against? Industry peers Alternate investments to your company –

investment peers


The Investor Relations Process -2-Identify your ideal

investor and analyst audience

Have you been considering to investigate your peer-group audience?

Add Value with Investor Targeting

The goal of a targeting program is to align the company’s shareholder base with the long term financial and strategic direction of the company.


A higher level of “fit” between acompany’s direction and its shareholder base leads to

optimal valuation, lower cost of capital and lower stock volatility

The Investor Relations Process -3-

Develop the :

communication platform

to present to the targeted investor and analyst audience

Is your IR platform in line with market expectations?

Earnings / operations conference call Webcast Road shows Investors forums / blogs New Social Media Industry conferences IR website E-distributions of news Fact sheets / Fact books Company site visits / capital market days


Analyst meetings Sale/traders briefings Financial media

Electronic Print

Financial press Interviews

Trade journals

- how to deliver your message to the target audienceInvestors /buy-side

Brokers / Sell-side

The Investor Relations Process-4- Build relationships with

your targeted investors, analysts and financial media audience

Do you maintain consistent communications with the marketplace?

Do you ensure that the key value drivers are current and obvious to investors and stakeholders overall?


PHASE 1

PR / Media focused Financial PR Analyst meetings

PHASE 2

Sell-side focused Earnings releases Conference calls Analyst briefings Industry peers analysis Perception study Ownership analysis

PHASE 3

Shareholder/buy-side focused

Shareholder value assessment

Investment peers targeting M&A analysis Spin off analysis High-tech IR

Whi

ch p

hase

are

you

in?

Why Invest in Your Company?Your company as an investment

Business• Industry attractiveness• Key differentiation points• Growth potentials• Corporate, business and operational strategies

Financial• Financial goals and strategy

Management• Non-financial factors often the major reasons for a company trading at a

discount


How new IR ratings on CSR & Corporate Governance are affecting:

Corporate Image

Reputation

Valuations12Lynge Blak Investor Relations Limited

Your Company’s Risk Premium – or Discount

Investment professional – both on the buy and sell side – understand the merits of good corporate governance – and take it a step further.

If Boards and the quality of corporate governance serve as a type of “insurance policy”, then under modern portfolio theory the market will naturally award a risk premium or discount based on perceived governance quality or deficiencies.


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Optimizing Your IR Program – key elements

Capital Markets – where is the money? Shareholders – who owns your stock? Potential new investors – how do I find them?

Targeting, Investors in Peers

Road shows I-bank or independent? See major investors and potential investors annually

Investor feedback – perception work Unbiased? Independent?

“Sustainability” / SRI investors / Corporate Governance Continuing and Consistent Investor Communication

Further Transparency

Website: IR Online / conference calls / contact details Solutions for Sell-side and Buy-side including retail investors

Lynge Blak Investor Relations Limited

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Your Optimizing IR Checklist Do your investors see the

company as senior management do?

Do you know what corporate strategies will cause investors to buy or sell your stock?

Who are your real peers and competitors? How does your IR programme compare?

Alignment of vision with your investors is one of the keys to building loyalty.

Perception studies will uncover issues that take IR into the board room.

An ongoing dialogue with the investment community is critical for long term IR success.

Lynge Blak Investor Relations Limited

Measuring Quantitative and Qualitative Goals

Lynge Blak Investor Relations Limited16

• The balance between institutional and retail

Ownership Mix Targets

• The balance between cross-border markets• Domestic, Asia, Nordic, Europe, North-America, Middle East

Geographic Distribution Targets

• In general to be avoided, but P/E ratios matching peer’s could be considered

Valuation Targets

• Measured through surveys

Perception Targets

• High price volatility perceived as risk factor – however market sentiment has

Volatility Targets

Measuring Your IR ProgramFrequent reporting to Senior Management–

IR Review /Flash Report – • Minimum quarterly updates to the Board

Have IR Objectives / written IR Policy & IR Strategy

IROs should know:

• Who to target• What to say• How to say and how to evaluate

Execute well – remember:

• ”The most important thing is managing expectations……the biggest mistake is failing to meet them.”


The New Investor Relations Purpose of IR during and after financial downturn• To achieve an accurate valuation• Minimize irrational swings in value in response to new information• IR-Officers need to be “value-centric” • Why are we undervalued?

New view of IR – Investor Relationship Management• Implementation of internal valuation process – key value drivers• Optimizing and measuring IR performance - key IR success criteria• Managing internal & external relationships – key strategic IR process


IR Best Practice in 2011Means…Credible business model and long-term value creation strategy

Understanding of investors, markets and insiders’ expectations

Investor Relations part of the strategic decision process

Wide exposure of management to the investment community

Consistent and continuing communications strategy

Transparency – simplicity of reporting/communication

Ongoing targeting program to optimise liquidity

Corporate Social Responsibility (CSR) to be taken serious

Regular measurement of impact – quantitative/qualitative


Contact details

Lynge BlakCEO

Lynge Blak Investor Relations LimitedUnit 801, 8/F, Pacific House

20 Queen’s Road CentralHong Kong

Phone: +852 6258 6174E-mail: [email protected]


mailto:[email protected]

Arkadin webinar ir best practice in 2011 (final)

Investor Relations

Transcript of Arkadin webinar ir best practice in 2011 (final)