introducing “investor relations” to corporate strategy in ghana

Shareholder communications for Africa

Introducing “investor relations” to corporate

strategy using commercial imperative to bridge a governance

gap

January 2009

Rob Stangroom

www.africaniscool.com


Definition of IR & background to AIC

“Investor relations is a strategic management responsibility that integrates finance, communication,

marketing and securities law compliance to enable the most effective two-way communication between a

company, the financial community, and other constituencies, which ultimately contributes to a company's securities achieving fair valuation.”

(Adopted by the NIRI Board of Directors, March 2003.)

IR ≠ PR

rob

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History of investor relations in USA

Post WWII & depression = savings Interest & inflation were low Great need for capital in USA ’52 4.5m families owned shares 4.2% of population‘65 20.1m families owned shares 15% of population Shareholders targeted for business Shareholder activists resulted PR abused – analysts “hyped” shares Managements & boards inexperienced SEC promoted retail investors GE & AMA & NIRI (4300 members)

“To become recognised and active as a group working in the long-term interests of the

investor, of broad share ownership and of better relationships between

companies and potential investors.”


IR function in the First world

Engage investors directly Be an expert on the company Carry out the valuation and financial modelling Know all laws and regulations Be a communicator Analyse shareholders and market perceptions Attend conferences Collect salary of US$150,000 to US$250,000 per annum

Africa is only just emerging onto the IR scene & technology means it can jump right into the 21st century


Where technology is taking IR…

Web 1.0 = document web

Web 2.0 = people web

Web 3.0 = database web

Source


IR’s future – costs low, impact high

2.4m estimate = 8% of population

Source

Why isn’t Africa there yet?


The corporate IR website: a beast Marketing doesn’t understand finance Internal PR doesn’t understand marketing External PR company never in the loop Finance doesn’t understand IT Co sec. can manage shareholder lists but not

shareholders No-one understands HR

Legal department : everything is a legal case IT guy should be in charge but is TOO BUSY

Governance codes + regulations + technology agenda


The reality of doing business…

Are finding competition levels increasing? Are trying to re-build equity values? Are looking to protect market share? Are looking regional & need to show credibility? Wish to stand above their peers? Will be re-capitalising – from any source?

How many companies:-


Desired position in the investment community

Actively participate in investment community identify, influence them & receive feedback achieves MANY objectives

Investors

Brokers Media

Data portalsStock exchanges

Global info platforms

Transfer secretaries Institutions

Customers

Your company website: a prime communications

tool

Data, strategy, interaction


“African Is Cool” Smallest client US$3m mkt cap. Largest + US$500m Commercial benefits > cost of implementation Managed investor relations website “SaaS”

How it works

Filling a unique market gap: the basics No conflict with existing services e.g. PR firms

Holistic outsourced online software as a service


Our clients14 clients in 4 countries: Botswana, Zambia, Malawi & Zimbabwe

National Investment Trust Malawi nitlmalawi.com Malawi Property Investment Company malawiproperty.com

IPO IR Celsys celsys.co.zw Econet Zimbabwe econet.co.zw Imara Holdings Botswana imaraholdings.com Telekom Networks Malawi tnminvestor.com IPO

IR Copperbelt Energy Corporation cecinvestor.com African Sun Group africansuninvestor.com Kingdom Meikles kmal.co.zw + 2 commercial banks tba + 1 property + 1 agric company tba

Market capitalisation of clients + / - US$1bn

+/- 70,000 shareholders served


Investorpass™ : IR software Vendor B2i Technologies: Texas USA + 300 clients

Appends to existing websites seamlessly An online CRM and CMS

Web-mail for each investor

Self populating / managed investor contacts

Full audit trail of investor activity

Strong analytical and interrogation reports Sarbanes Oxley compliant – i.e. secure


Comprehensive data – “educated investment decisions” Timely data – “material data within 24 hours” Interactivity – “ability to communicate & receive feedback”

Brief overview of a comprehensive IR website

Other key issues• Updating website• Reaching an audience – existing and potential investors• Identifying the audience individually

The make up of your IR website


Using your website…… A retail shareholder strategy:-

Objective:-

Build shareholder loyalty

Build brand

Improve corporate “reputation”

Automated contacts collection & management

Build brand, cross sell keep costs low

Use shareholder education as a tool

Identify diaspora investors


To respond to or influence the media Emails are free – press releases are not

Pre-empt press releases

Respond to the media / press directly

Crisis communications

Newspaper and PR firm placement costs can be avoided if you have a direct communications channel

with the broader media

Using your website……


Why communicate online? Legal & regulatory requirements Easy access to a global community It makes money, brand & reputation growth is cheap Increases valuation:-

79% of analysts include poor communication as a reason to downgrade stock valuations 88% of analysts said poor disclosure also dropped ratings

Shareholders purchased shares based on 2 assumptions:-

There is a market for them At a reasonable price Corporate governance guidelines


Your annual report….

Annual reports: prime tool for analysts Can be used to identify investors

Africanfinancials.com Traffic analysis

Costs a lot: must be delivered in hardcopy Should be scaled down to

Abridged – 6 pages Regulatory - IFRS Online - Sample iPaper annual report

Af.com

Only 29% of all African annual reports are

online

27% for Ghana

Annual reports


Barriers to online communications fallen away High commercial ROI to online communications Fulfill core governance practices in one solution Take an active interest in IR Early starters will benefit the most Objective is to ensure equities can achieve “fair valuation”

“Good Governance” principles are not “implemented” they result from actions by management to communicate

responsibly with the investment community

Our message


“Questions”&

“Thank you”

introducing “investor relations” to corporate strategy in ghana

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