Last year it was the Sydney Olympics. This year it was the Investor Relations Magazine Australia Awards 2001
The year 2001 has been a milestone for the Australian investor relations industry. The highlight was the birth of the Australasian Investor Relations Association, which is already contributing to Australia's rapidly improving standards of IR and creating a sense of community within the industry.
This year's Australia Awards, held on a balmy September night in Sydney, saw more than 300 Australian IROs and their advisors come together to celebrate some of the successes of the past year. Winners were identified through research conducted by Sydney-based Financial Research Company, which interviewed 178 members of the Australian investment community about their perceptions of the current state of IR.
Drum roll, please
The top honor, the Grand Prix for best overall IR by an ASX 100 company, went to newly merged resources group BHP Billiton, which also won the award for best IR to the retail shareholder.
It was a real achievement for BHP Billiton to win as there was considerable opposition to the merger when first announced. Many Australians felt a sense of propriety towards one of Australia's oldest mining companies, also affectionately known as 'the big Australian'.
Robert Porter, the vice president of investor relations and also close runner-up for the award for best IR officer, attributes the company's constant communication to the market and genuine attempts to meet information needs as key to BHP Billiton winning the awards.
'We provided ongoing access to the chairman and senior management, and attempted to address as comprehensively as we could areas of market interest, such as the strategic rationale for the merger, valuation methodologies, assets and management capabilities,' says Porter.
He recommends that companies undertaking a transaction should involve their IR department from the start. He also suggests investor relations officers should separate their strategies for dealing with institutional investors, sell-side analysts, individual shareholders and retail brokers.
Winning Wesfarmers
Another winner involved in a major transaction during the year was Wesfarmers, which took over hardware retailing group Howard Smith. Although Wesfarmers, a former agricultural cooperative turned diversified industrial conglomerate and the current darling of the market, failed to win the top award on the night, it did take the lion's share of the other awards.
The group collected three awards: for best communication during a takeover, best communication of shareholder value and best corporate governance. It was also highly commended for its use of virtual conferencing. Erich Fraunschiel, Wesfarmers' finance director, believes the company's focus on understanding shareholder information needs and its efforts to be as comprehensive as possible in the information it gives out helped Wesfarmers win the award.
'Howard Smith was a very important transaction for us. It was a very large acquisition for a company our size,' says Fraunschiel. 'We needed to get 100 percent of the company, which meant we required the support of shareholders from both sides. We had to make sure we understood what both sets of shareholders were thinking. Tracking shareholder sentiment and acceptances on an ongoing basis was a key part of this.'
Fraunschiel says the feedback on the IR program from the market during the takeover was very positive.
With its headquarters in Perth and shareholders located not only all over Australia but worldwide, one of the key challenges for Wesfarmers' IR program is its geographic remoteness. The company takes specific care to ensure that all shareholders receive timely information about the company's activities and strategy.
'Our annual and half-yearly result announcements are broadcast in real time through videoconferencing,' says Fraunschiel. 'We also go offshore twice a year to give overseas shareholders an update on our business and take part in the international conferences put on by major brokers.'
Research conducted for the awards indicates that analysts appreciate Wesfarmers' efforts to address and overcome its remoteness. One analyst applauds the company's IR strategy, commenting that it has 'coped very well with the fact it is in Perth; results presentations are conducted well via conferencing with Sydney, Melbourne and Perth on the day of the announcement.'
New kid on the block
Appropriately for this beach-loving market, Billabong, the surf-wear company whose clothes live in the wardrobes of all Australians young and old, won the award for best IR for a new issue.
Unlike many of the flotations of the past year, Billabong's stock has remained above its issue price and analysts have been impressed with its IR program both during and after the float. One analyst comments that 'its investor relations effort was up to speed since day one of the issue.'
According to Billabong's company secretary, Matthew Perin, 'Not deflecting questions, always returning phone calls and turning around information quickly for analysts helped the company win the award.' Billabong's unique internet strategy may also have played a part in the win. The company has separate marketing and corporate web sites, with different URLs and no link between the two. In addition, the corporate site is not listed under search engines, although investors can find it through financial links like the Australian Stock Exchange's web site.
The decision was made to separate the web sites so as not to confuse the company's main sales demographic: young people. Perin reports the company has received no negative feedback about separating the two sites. 'A lot of thought went into the [corporate] web site. There's no graphical intensity so it's easy to access and we offer choices like Word documents instead of PDF files, which take a long time to download.'
'We're also one of the few companies that uploads its top 20 shareholders each month. They're minor points, but they're targeted at keeping shareholders informed,' says Perin.
High-tech heroes
Telecommunications behemoth Telstra Corporation did well in two new media categories, winning best use of virtual conferencing and getting highly commended for its use of the web for IR. That's just as well, for as one analyst comments, 'If they can't do it, who can?'
Telstra's IR manager, Mark Dehring, says the company relies heavily on its internet and electronic communication capabilities to communicate to shareholders both in Australia and abroad. 'Our head office is in Melbourne, but many of the analysts who follow the company are based in Sydney, and we often use teleconferencing to communicate with them instead of jumping on a plane. We are also using webcasts more and more as people become used to them and firewalls are being changed.'
Telstra also won best annual report and was highly commended for best IR for the retail shareholder. Dehring was thrilled to win these awards, particularly as producing an annual report that satisfies the communication needs of 2 mn largely retail shareholders is one of the IR team's major challenges during the year.
'We produce three different annual reports for our different audiences: A full 200-page report for professional investors; a 60-page review which is mainly for our retail shareholders; and an interactive version of the review which is viewed through our web site,' Dehring explains. 'Shareholders choose which one they would like to receive.'
Although Telstra recognizes that it will never be able to rely solely on electronic media, the internet will be used as much as possible for future Telstra shareholder communications. 'Even a simple letter to shareholders costs a million bucks in postage, which is why the internet is so useful,' Dehring concludes.
IR star
Greg Baxter from building services giant James Hardie - which was also awarded runner up for the Grand Prix for best overall IR - is this year's best IR officer.
According to Baxter, management decided to create his IR position five years ago following a survey which showed that the company was a long way behind corporate Australia in its investor relations capabilities.
'An important part of the decision to create the position was that the person had to be part of management and report to the CEO,' says Baxter. 'Which is why I now sit on the management team and take part in decision-making regarding the company's strategy. And because I'm well-informed on strategic planning, I can talk intelligently to the market and give shareholders and the media the information they need when they need it.'
The market acknowledges and appreciates the value of the IR officer being an active part of the management team, with an analyst commenting: 'Greg Baxter has the advantage of being involved in management decisions, and this gives him an increased effectiveness in IR.'
ANZ also picked up a slew of trophies, winning awards for best results meetings and analyst briefings and for best communication of shareholder value. The bank was also highly commended in the best investor relations officer category - an accolade for its IR manager, Phillip Gentry.
In line with the ongoing trend for better disclosure, ANZ implemented a new IR program this year, and now releases separate profit and loss statements for each of its 16 business units. Gentry says that while this approach was initially treated with skepticism by the market, most analysts now appreciate the level of detail.
'The performance of each business unit and who's accountable is now much more transparent,' comments Gentry on the change. 'We are really trying to be more open and we communicate to the market when we have good news and also when we've got problems.'
The research conducted for the awards indicates this is something the market admires. One analyst comments that Gentry 'is the most knowledgeable and balanced IR officer, unlike others who are always biased with the information they give out.'
Winners Round-up
Grand Prix for Best Overall Investor Relations by an ASX 100 Company
BHP Billiton
Grand Prix for Best Overall Investor Relations by a Non-ASX 100 Company
David Jones - Novus Petroleum
Best IR Officer
Greg Baxter, James Hardie
Best Results Meetings and Analyst Briefings
Australia and New Zealand Banking Group
Best Communication During a Takeover
Wesfarmers
Best Corporate Governance
Wesfarmers
Best Annual Report
Telstra Corporation
Best Communication of Shareholder Value
Australia and New Zealand Banking Group - Wesfarmers
Best Use of the Internet for Investor Relations
AMP
Best Use of Virtual Conferencing
Telstra Corporation
Best IR for a New Issue
Billabong International
Best IR by a Loss-Making Company
Hutchison Telecoms - Pasminco - PowerTel
Most Progress in IR
National Australia Bank
Best Crisis Management
Woodside Petroleum
Best IR to the Retail Shareholder
BHP Billiton