A look at the second annual Investor Relations Magazine Nordic Awards
It's been a bittersweet year for the Investor Relations Magazine Awards. On one hand, who feels like celebrating when the stock market is in the doldrums? On the other, plenty of companies are continuing to do great IR and are being rewarded with positive feedback.
In each of the ten regions where Investor Relations magazine presents awards, investment professionals are asked if the quality of IR has improved or declined. This year the response was generally disheartening. Only 61 percent of continental European respondents perceived improvement. But in the Nordic region, over 80 percent of investors and analysts said IR had improved.
'Development in high technology and other sectors in the region has created a highly sophisticated market for financial communications,' remarks Lynge Blak, head of the Dansk Investor Relations Forening, which will be hosting the next Nordic IR conference in Copenhagen on May 22, 2003. 'Together with a growing understanding of the need for good corporate governance and sustainable reporting systems, this has made Nordic IR among the most advanced in Europe.'
A comment from the Nordic survey sums up the nature of the awards in 2002: 'Times have become very hard and the acid test has been whether companies can rise to the challenge. Some companies, but only some, have managed this.' It is those few that were honored in Oslo in October, on the occasion of the second annual Investor Relations Magazine Nordic Awards.
Take Denmark's TDC, for example. As a telecoms company it has it tough, and indeed at the time of the awards ceremony its stock was down some 40 percent for the year to date. Yet it won the award for best Danish company IR, with senior VP of IR Ole Soeberg winning as best Danish IRO. Despite the down market, TDC has continued its focus on IR and increased staff from three and half to five full-time personnel.
While some IROs may have found themselves scrambling in the chaos of volatile markets, Soeberg has taken a calm and reasoned approach. One month he and his team members kept a log of every minute of every day and discovered they spent a lot of time just hunting for information. Soeberg describes the solution: 'We took time to explain IR internally, increasing communication between IR, corporate communications and the budget and controller's departments where we get our statistical information. Together we created a much better organized fact book and made the fact-finding process much more automatic. Now we can spend a full two thirds of our time on outgoing communications to investors.'
On the external side, TDC has begun systematically crunching statistics about investor meetings and follow-up, using Thomson Financial's IRChannel service for market intelligence, targeting and contact management. For its third quarter results, TDC produced a webcast solely for private investors - perhaps the first of its kind.
Soeberg and his IR team have a unique bonus plan tied to a 'balanced scorecard' which sets goals for changes to the shareholder base and positive feedback. 'Success is rewarded,' enthuses Soeberg, adding ominously, 'Failure is not.'
Showing improvement
How much difference can a new IRO make? Sweden's Nordea acquired Sigurd Carlsen in 2000 along with Christiana Bank, where he was finance director. In April 2001 he became head of IR and went on to help Nordea win most improved IR in 2002. As one investor in the awards survey sums up, 'The newly appointed head of IR has clearly improved Nordea's services, especially in terms of written information, response time and accessibility.'
The first thing Carlsen's new team did was work out 'a totally new disclosure standard and package for the market,' he says. Previously the disclosure was more 'ad hoc and inconsistent over time.' Now around 200 slides on every aspect of Nordea's business are posted on the web each quarter, updated according to the bank's current themes.
Next they devised a more proactive approach: 'Instead of just accepting meetings when investors or analysts call, we actively go out and visit them.' Plus, Carlsen says, Nordea maintains an 'open door' in Stockholm. 'Easy access is the key,' he adds.
Carlsen insists Nordea could never have shown such progress in IR without a 'good and well-functioning team. Plus, you can't achieve anything in IR, no matter how knowledgeable and smart you are, unless you have top management support.'
While Nordea and TDC show what the region's largest companies can accomplish in IR, at the other end of the size scale is YIT Group, which was the joint winner of best smaller company IR in Finland. One admiring analyst remarked, 'YIT produces good financial reporting, particularly its interims, which have detailed information on the industry and competitors. Not all companies do this.'
'We have been very open,' concurs Esko Makela, executive vice president at YIT. 'We have been providing forecasts at a time when many companies have refused to do so.'
Another company admired for its forecasts is Ossur, a prosthetics maker in Iceland that is growing fast. This is the first year Iceland has been included in the Nordic awards and Ossur stands out as the clear leader, garnering more than twice the number of points as its nearest contender, Bakkavor. Indeed, Ossur 'sets the standard for other Icelandic companies,' said one survey respondent.
Hjorleifur Palsson, Ossur's CFO, is proud of his company's role as a pioneer in Icelandic IR. Last year it began quarterly reporting well in advance of it becoming compulsory on the Iceland Stock Exchange. 'Because Iceland is such a small community, we are much more vulnerable to insiders' information,' he explains. 'A more frequent flow of news about financial statements reduces the risk of selective disclosure. Quarterly reporting is a great step forward for Iceland.' This year Ossur opened its budgets to scrutiny. In other words, there is no difference between the company's internal budget and its external reporting - the goals it sets for itself are announced to the investment audience. 'There are no buffers for management to hide behind,' Palsson says. 'The market has had to learn that these are tough and aggressive goals; sometimes we achieve them and sometimes we don't.'
If there is one common quality shared by almost all award-winning companies worldwide, it is senior management's conviction that IR is a strategic function, not just a PR exercise. Nokia, the Grand Prix winner in the Nordic region, exemplifies this (see Ascendant Europe, page 52).
So does Ossur. As Palsson describes, 'Our strength lies in the character and philosophy of our CEO - openness and honesty. That character flows through the structure and culture of our company. It's the ground to build on.'
Click here to see the winners.
How the winners won
The annual Investor Relations Magazine Awards comprise a series of events and research studies in the UK, the US, the Eurozone, Latin America, Canada, Asia, South Africa, Australia, Central and Eastern Europe, and the Nordic region.
In each region an independent research company surveys portfolio managers, buy-side analysts and sell-side analysts to identify the award winners, explore general attitudes towards investor relations, and produce a comprehensive Research Report.
For Australia in 2002, the Financial Research Company of Sydney interviewed over 230 investment professionals while Aegis Equities Research surveyed retail investors for best IR to the retail market. In the Eurozone, Netherlands-based TNS Nipo conducted 531 interviews, while WILink surveyed retail investors and Mary Maude Research used Thomson Financial's database to identify the winner of best IR in the US market by a Eurozone company. London-based Mary Maude Research also conducted the Nordic research, surveying 200 investment pros across the region and in the UK using samples supplied by Citigate Dewe Rogerson and the Iceland Stock Exchange.
A Research Report for each region can be purchased at IRontheNet.com.