page november 2010 miranda lane financetalking ltd t: +44 (0)1780 450500 f: +44 (0)1780 450505 e:...
TRANSCRIPT
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November 2010
Miranda Lane
FinanceTalking Ltd
T: +44 (0)1780 450500F: +44 (0)1780 450505E: [email protected]: www.financetalking.com
Best Practice in Investor RelationsPalestinian Capital Market Forum 2010
Making financial markets, accounts, corporate finance & valuation accessible
to all
Page
Programme
The Big Picture
Best PracticeLocal Issues
2
Page
Capital Markets Big Picture
Investment Bank
Investors
Raising
Money
Directors
Owners
ABC Co
Valuation
Sell side
Buy side
3
Page
Raising
Money
Benefits of Trust
Investment Bank
Investors
Directors
Owners
ABC Co
Valuation
Sell side
Buy side
Personal reputation
Personal reputation
Company reputation
Company reputation
Access to capital at lower cost
Access to capital at lower cost
Prepared to allocate capital
Prepared to allocate capital
Quality advice
Quality advice
Positive recommendation
s
Positive recommendation
s
4
Page
Raising
Money
If Trust is Lost
Investment Bank
Investors
Directors
Owners
ABC Co
Valuation
Sell side
Buy side
Less access to capital at higher cost
Less access to capital at higher cost
Capital is withdrawn
Capital is withdrawn
Advisers pull out
Advisers pull out
Reputational damage
Reputational damage
Reputational damage
Reputational damage
Negative recommendation
s
Negative recommendation
s
5
Page
Raising
Money
Regulation & Governance – a Prerequisite
Investment Bank
Investors
Directors
Owners
ABC Co
Valuation
Sell side
Buy side
CorporateGovernance
FinancialRegulator
6
Page
Raising
Money
Core Concepts
Investment Bank
Investors
Directors
Owners
ABC Co
Valuation
Sell side
Buy side
COMPANY•Highest standards of corporate governance•Full and early disclosure of price-sensitive information•Openness and honesty of management •Sensitivity towards the needs of investors
COMPANY•Highest standards of corporate governance•Full and early disclosure of price-sensitive information•Openness and honesty of management •Sensitivity towards the needs of investors
MARKET•Equal access for all shareholders to same information•No insider trading or other market abuse•Rules & regulations governing obligations of listed companies
MARKET•Equal access for all shareholders to same information•No insider trading or other market abuse•Rules & regulations governing obligations of listed companies
7
Page
Programme
The Big Picture
Local Issues
8
Page
Key IR Audiences
Sell-side Analysts
Investors & Buy-side Analysts
9
Page
Best Practice – First Steps
Sell-side Analysts
Investors & Buy-side Analysts
• Gain management buy-in for IR
• Develop your investment story
• Establish corporate governance principles
• Establish internal controls to protect shareholders’ investment
• Gain management buy-in for IR
• Develop your investment story
• Establish corporate governance principles
• Establish internal controls to protect shareholders’ investment
10
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I R
Setting Up IR
• Have a dedicated IR function
• Consider consultancy support
• Define your IR objectives
• Develop disclosure policy and establish mechanisms for reporting price-sensitive information
• Establish a financial reporting calendar
• Build relationships with analysts, investors & the financial media
• Prepare for likely crises
• Have a dedicated IR function
• Consider consultancy support
• Define your IR objectives
• Develop disclosure policy and establish mechanisms for reporting price-sensitive information
• Establish a financial reporting calendar
• Build relationships with analysts, investors & the financial media
• Prepare for likely crises
11
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Typical IR Objectives
I R
• To achieve a realistic valuation for the company’s shares by making the shares an attractive investment proposition
• To preserve a ready market for future capital
• To build a broad, diversified shareholder base with an appropriate shareholder mix
• To build a liquid but stable trading market
• To comply fully with the regulations designed to protect investors
• To lower the cost of capital
• To achieve a realistic valuation for the company’s shares by making the shares an attractive investment proposition
• To preserve a ready market for future capital
• To build a broad, diversified shareholder base with an appropriate shareholder mix
• To build a liquid but stable trading market
• To comply fully with the regulations designed to protect investors
• To lower the cost of capital
12
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Buy-Side Relations
• Know who your investors are
• Develop strong personal relationships
• Regular roadshows/meetings with management
• Hold annual investor days/site visits/R&D updates etc
• Participate in investment bank sector conferences
• Conduct regular perception studies
• Don’t be drawn into selective briefing
•
• Know who your investors are
• Develop strong personal relationships
• Regular roadshows/meetings with management
• Hold annual investor days/site visits/R&D updates etc
• Participate in investment bank sector conferences
• Conduct regular perception studies
• Don’t be drawn into selective briefing
•
13
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Sell Side Relations
• Encourage a wide following - a better informed market will attract investors
• Offer regular briefings, site visits and updates
• Good disclosure on outlook will avoid a wide range of forecasts
• Conduct regular perception studies
• Don’t be drawn into selective briefing
• Encourage a wide following - a better informed market will attract investors
• Offer regular briefings, site visits and updates
• Good disclosure on outlook will avoid a wide range of forecasts
• Conduct regular perception studies
• Don’t be drawn into selective briefing
14
PageThe Investment Decision Making Process
Sector prospect
s
Company prospect
s
Financial analysis
Forecast ValuationInvestme
nt decision
15
Page
Key Valuation Variables
Sector prospects
Company prospects
Financial analysis
Forecast ValuationInvestment
decision
16
PageTelling Your Story & Influencing Valuation
Sector prospect
s
Company prospect
s
Financial analysis
Forecast ValuationInvestme
nt decision
Define your sector or peer
group
Define your sector or peer
group• Flag expected
changes to trends• Clear communication
of expected capital structure
• Flag expected changes to trends• Clear communication
of expected capital structure
Clear guidance
Clear guidance
Help with non-sensitive
items
Help with non-sensitive
items
Understand your investor
base
Understand your investor
base
Communicate•Quality•Growth•Risk
Communicate•Quality•Growth•Risk
Clear communication
of dividend policy
Clear communication
of dividend policy
Clear communication
of dividend policy
Clear communication
of dividend policy
Provide industry statistics
Provide industry statistics
KPIs to bring market closer to mgt's view
KPIs to bring market closer to mgt's view
17
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Building Trust
Sell-side Analysts
Investors & Buy-side Analysts
• Promise & deliver
• Build relationships
• Give regular access to senior management
• Demonstrate commitment to best corporate governance practices
• Benchmark disclosure, presentations & reports against best practices
• Keep talking
• Promise & deliver
• Build relationships
• Give regular access to senior management
• Demonstrate commitment to best corporate governance practices
• Benchmark disclosure, presentations & reports against best practices
• Keep talking
18
Page
Programme
The Big Picture
19
Page
Raising
Money
Local Issues
Investment Bank
Investors
Directors
Owners
ABC Co
Valuation
Sell side
Buy side
COMPANY•Control by founders•Liquidity•Size
COMPANY•Control by founders•Liquidity•Size
MARKET•Lack of data/analysis•Volatility•Other risks (geopolitical, repatriation of capital etc)
MARKET•Lack of data/analysis•Volatility•Other risks (geopolitical, repatriation of capital etc)
20
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Raising
Money
Palestine - Attracting Capital
Investment Bank
Investors
Directors
Owners
ABC Co
Valuation
Sell side
Buy side
COMPANY•A good growth story, backed up by track record to date•An understanding of risk•Strong management•Best practice corporate governance•Best practice IR•Liquidity•The prospect of returns commensurate with the risks involved
= create trust
COMPANY•A good growth story, backed up by track record to date•An understanding of risk•Strong management•Best practice corporate governance•Best practice IR•Liquidity•The prospect of returns commensurate with the risks involved
= create trust
MARKET•Develop data•Develop/attract intermediaries•Develop regulation•Develop corporate governance
= create trust
MARKET•Develop data•Develop/attract intermediaries•Develop regulation•Develop corporate governance
= create trust
21
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November 2010
Miranda Lane
FinanceTalking Ltd
T: +44 (0)1780 450500F: +44 (0)1780 450505E: [email protected]: www.financetalking.com
Best Practice in Investor RelationsPalestinian Capital Market Forum 2010
Making financial markets, accounts, corporate finance & valuation accessible
to all