Effective Investor RelationsNovember 16, 2012

Ara Isayan Business Development Specialist Thomson Reuters

The Value of Investor Relations

• How do you measure the performance of your IR team?

• How can IR contribute to a real understanding of your investment story?

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• The ‘new normal’ world of risk aversion, macro dominance, reduced focus on active equity and equity fund outflows presents a real challenge in getting your story

heard

Annual Reporting

• Very important - and essential - part of any IR programme. • Often the first reference point for buyside & sellside in understanding a

company, and getting a sense of performance & strategy• Vital part of good corporate governance• Challenges of technology - using mobile devices, the web and more to

deliver interactive reporting• Regulatory changes increase the need for clarity & consistency in reports

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Annual Reporting• Quality of Russian formal reporting satisfactory, but below pan-European

average

• Russian companies devote 20% of IR budget to formal disclosure; ahead of European average of 17%

• Russian companies need to put more focus on sustainability reporting

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What the Buy-Side & Sell-Side Want from IR

• Accessibility ‘Accessibility and openness to hosting meetings is what I value.’ Global investment bank

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• Knowledge of the Business/Ability to Answer Questions

‘What really matters is knowledge of the company/industry; enabling a response beyond what is just in the press release.’ UK insurance fund

North America Europe40%

45%

50%

55%

60%

65%

70% Access to CEO/CFO

North America Europe60%

65%

70%

75%

80%

85% Industry & Sector Insights

• Communication/Disclosure/Contact‘It’s vital there are people in the IRposition who are in the room whenimportant and strategic decisions arebeing made and those people are veryvaluable to talk to.’ Global investment bank

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What the Buy-Side & Sell-Side Want from IR

• Responsiveness/Timeliness ‘I value timeliness, answering questions to the extent that you can and not hiding behind what you wrote in a press release or a 10Q, but actually answering questions with color.’ US long only fund

North America Europe35%

40%

45%

50%

55%

60% Financial KPIs

North America Europe30%

37%

44%

51%

58%

65%

Investment Process Insights

• Transparency ‘The more information you can share the better.’ US Pension fund

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What the Buy-Side & Sell-Side Want from IR

• Quality Deliverables‘It is the clarity of the financials and being able to easily understand the financials when they are presented in a press release and a presentation.’ European long only fund

North America Europe45%50%55%60%65%70%75%

Financial Guidance

North America Europe0%

10%

20%

30%

40%

50%

Granularity

• Proactivity ‘Its good if they act like a conduit - on your side to some extent, understanding your world/pressures, and not just giving you the company line’ US brokerage firm

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What the Buy-Side & Sell-Side Want from IR

• Visibility‘I value helping investors understand the story better so we can value the pieces of the company better.’ US long only fund

North America Europe0%

20%

40%

60%

80%

100%

New Ideas

North America Europe20%30%40%50%60%70%80%

Visibility

Best Practice - a long term play

• Success in Investor Relations is based on building trust with both Buy-Side & Sell-Side

• Trust takes time to create - and needs consistency, transparency and willingness to engage

• Recalibration of the Buy-Side means understanding and identifying investors has to be more individual, targeted and precise

• All against the backdrop of scarce resources, and an uncertain market• Long term IR best practices will generate a premium in the stock price. How do

investors see your IR efforts?

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Best Practice - IR adds to the multiple

• Since 2007, the Top 10 European IR Extel winners outperformed the Eurostoxx 600 by 23.6% on a total return basis.

• Despite a superior return, the risk of the Extel portfolio is only marginally higher in terms of Beta and Standard Deviation.

• Since 2008, there has a widening in the performance of the top rated European companies for IR, compared to the Eurostoxx 600. This underlines the importance of IR in challenging markets, when investor demand for transparency and visibility is at a premium.

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40

60

80

100

120

140

160

2007

2008

2009

2010

2011

2012

Extel Winners

EuroStoxx600

Best Practice - highly rated IR Teams• Spend more management time with prospective investors• Conduct more one-on-ones• Host more site visits & field trips• Devote greater proportion of IR spend to their IR website• Roadshow more to US East Coast, US West Coast and Canada• Have more responsibility for sustainability/ESG reporting• Are more aware of, and using, social media• Put more focus on intelligently targeting new investors• Secure the attendance of more PMs at their one-on-ones• Win most plaudits for quality of meetings, and for IR team insights &

service

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Contact

Steve KellyManaging Director Extel steve.kelly@thomsonreuters.com

 

 

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