An IR look ahead to 2018
As we welcome in the New Year, we talk to three top IR professionals – Steve Nightingale, IR director at Britvic, Fiona Tooley, executive director at TooleyStreet Communications and Simon Whittington, head of IR at Merlin Entertainments – who share their views on what 2018 has in store for IROs.
Elite Connect: What are the main industry issues on your agenda for 2018?
Steve Nightingale: ‘We face two main issues. For Britvic, we have the arrival of a sugar levy in the UK and Ireland in April 2018. This will be the single biggest event that our industry has faced and has the potential to revolutionise the soft drinks market. As an IRO, these big events are what make the job so interesting and exciting. For IROs generally, Mifid II is the big issue. At this stage it is hard to call exactly how this will play out and what research and corporate access will look like in the future.’
Fiona Tooley: ‘With the changes in the research landscape it is critical for small companies to keep their profile in the eye of the investment community so I expect to see more marketing required through both the house broker and third parties – including IR teams – supporting management.
‘Due to regulatory changes in 2018, we are working with our clients to ensure that we continue to have the opportunity to profile their business, strategy and objectives to investors and the media. These projects include reviewing the whole IR investor programme and activities, studying how we do it now, can this be improved, what materials we should enhance and revamp [as well as] how we can ensure that everyone is able to continue to have the opportunity to be kept up to date of developments and opportunities. Our clients’ websites remain a key investor tool and there should also be more thought given to using the London Stock Exchange RNS Reach distribution channel alongside the regulatory channel and wire services to an extent too.’
Simon Whittington: ‘I think the issue which has the greatest potential to affect us is of course Mifid II. Will this be the seismic shift in the ecosystem between banks, investors and corporates that some are predicting, or will it be a ‘Y2K’? A lot of market participants appear to be taking the view that nothing will change. It will be fascinating to see how it pans out.’
EC: What can IROs expect in 2018?
SN: ‘More work, with the same or less budget! The role of the IRO continues to grow and the expectations both internally and externally reflect that. Mifid II, whilst uncertain, will definitely result in more emphasis on the IRO to deliver quality investor meetings.’
FT: ‘There is expected to be an ongoing Brexit focus but we also know that many UK businesses are dynamic and run by entrepreneurs who see opportunities both with or without Brexit. We will still see successful businesses look to the markets for funds and to build a strong shareholder base. We need to actively support our clients to deliver a PR strategy that is forward-thinking and ensure we use the teams’ skills to help in presenting it in a clear and concise way that makes market commentators and investors feel well informed on the business, its people, strategy and future and, overall, understand the investment proposition.
‘As the broking model evolves and the research landscape changes, we need to examine what this does to the profile and opportunities for UK business. What we already recognise is that it will be very important for companies, particularly small caps, to remain or become more proactive in their IR marketing programmes. This will ensure that they continue to remain under the spotlight at the top of the pile and that those businesses are recognised, respected and listened to.’
SW: ‘While we aren't planning on doing anything differently from January 3, we are braced and ready for any changes Mifid II brings. We’re happy to have more direct contact with investors, which is something many say they prefer anyway. We are also trying to better understand how and where sell-side research will be disseminated. In a way, the sell side can be thought of as outsourced IR function – putting us on the radar of new investors we may not have met, and educating the market about the company. Does a reduction in the availability of research therefore result in an information ‘gap’? That might be a concern, and would of course create more work for us.
‘To be efficient with our time, we will have to understand which analysts investors are listening to. I assume this will continue to be the top-ranked analysts, but will those less well ranked but at the top houses become relatively more important as explicit pricing is introduced and the current market dynamic disrupted?’
EC: Where do you feel IROs should consider placing their focus for 2018?
FT: ‘The focus should remain on what we all do best – working with clients to deliver the best possible outcome for the relevant situation. The partnership and work ethic on both sides that is also strong and respected will, in most cases, deliver objectives and positive returns for all stakeholders, within a business and externally.’
SN: ‘Know your investor base, build direct investor relationships and use a range of brokers to support you and develop your investor engagement. I’m looking forward to 2018 – I love my role and the privilege it gives you to represent your company and fellow employees. Trying to deliver a bigger and better plan in 2018 is what motivates me every day – and a rising share price, of course!’