W e won’t be happy until we’re number one’, is the Jefferson Smurfit reaction to its performance in last month’s FINANCE survey of Irish publicly-quoted companies. Jefferson Smurfit plc was singled out by the surveyed fund managers as having ‘most improved’ their investor relations strategy since last year. Mark Kenny, Smurfit’s investor relations manager, accepts such praise lightly, saying that the company always wants to ‘be better than the best’. Kenny suggests that the company’s success in the survey may come down to an increased. Investor relations effort on the domestic institutional side in recent times. He says that in previous years, more effort went into ‘peddling our wares overseas’, resulting in limited time being available for Irish institutions. ‘I’d suspect that we’d be number one for US investors’, says Kenny.
Also receiving much praise for its investor relations campaign in this year’s survey was AIB. Maurice Crowley, the bank’s head of investor relations says that the bank has been working on improving its relations approach for a number of years, and that his appointment fifteen months ago was directly related to this.
‘We’ve redoubled our efforts’, says Crowley. ‘We set ourselves a target fifteen months ago of offering two meetings a year to all investors of any scale’. Crowley acknowledges that ‘not everyone wants two meetings a year, but at least the offer’s there’.
Colm O'Nuallain, finance director, Grafton Group agrees that success in investor relations has a lot to do with getting mucked in. Grafton is, according to O’Nuallain, ‘probably one of very few companies where the chief executive will go and do investor relations’ himself.
Ryanair took third position in this year’s investor relations category, improving on last year’s already strong performance. Michael Cawley, the company’s chief financial officer says that simplicity is key to success.
‘Frankly, there’s nothing to it. We deal with questions as they arise and are proactive in the information given out. We hope to be truthful and not pull any punches. Fundamentally, you’ve got to keep investors in the know’, says Cawley.
Barry Walsh, general manager for corporate finance, Irish Life & Permanent, is pleased to see that the integration of Irish Life and Irish Permanent has been viewed positively by the fund managers. On investor relations, he said that there was little overlap in the two companies’ strategies, since the amount of ‘free float’ available to institutional investors in the old Irish Permanent was so restricted. ‘With 55 per cent of their register in the retail market, in terms of institutional IR, they had a limited programme’, says Walsh.
‘More proactive’
While Irish Permanent had little in the way of ‘fully fledged’ IR strategy, the newly merged Irish life & Permanent is much more proactive, according to Walsh, by putting more resources into the area. He says that David Went, group chief executive of the new company is also ‘to the fore’ on IR, and suggests that Irish Life & Permanent’s strong performance across most categories is probably a recognition of that. Innovations are constantly being sought, according to Walsh.
‘On things like financial reporting, we’re constantly looking at ways to improve’, he says. ‘On the retail side, we’d like the option of abbreviated financial reports. Something has to be done ‑ I suspect it’s just a question of getting it on the legislative agenda’.
Ultimately, Walsh agrees with Michael Cawley on the question of simple communication: ‘the challenge is communicating more efficiently with investors’, he says.
‘If you have a good message at a particular time, it’s hugely influential’.
Maurice Crowley says that one of AIB’s investor relations priorities is communication with investors through technology.
‘We’ve certainly put a lot of effort into our internet site’, he says. On the day of AIB’s results, releases available are available immediately on the group’s internet site, while on the afternoon of results, the investor relations team holds conference calls with US investors.
Acknowledging that AIB’s changeable share performance in the past year has required particular attention, Crowley says that ‘the sheer level of effort has doubled’.
‘Investors just want more now. We have also put a lot of energy into increasing the number of UK analysts who cover us’ says Crowley. ‘It’s a long list, making results days lengthy!’
Acquisitions Capability
IAWS mixed with the best of them in this year’s Acquisitions Capability category, taking sixth position overall, just shy of big hitters like CRH and AIB. This placing comes after more than thirty IAWS acquisitions since the company went public in 1988. David Martin, the company’s finance director says that a refocus of IAWS’s overall business five years ago to concentrate more on food than agribusiness has been met with a positive reaction in the marketplace. ‘It’s very encouraging from the strategic positioning point of view’, says Martin.
According to Martin, the past five years have seen IAWS increase not only absolute profits, but also the ‘quality of profits’. ‘Operating margins have increased from 3.5 per cent to 5.5 per cent’, he says.
At the end of July, IAWS announced its acquisition of Delice de France plc, a UK-based food services company. Martin says that this acquisition complements IAWS’s 1997 acquisition of Cuisine de France, the retail bake-off foods business, by giving IAWS a presence in both the retail and trade food sectors.
‘We see ourselves as having a clear growth strategy ‑ we’re a growing European food company’, he says.
A European impact is something the company has been targeting, according
to Martin.
‘We made a decision last year that we would have to develop our investor relations strategy’, says Martin. ‘From that point of view, it’s good to see that the effort we’re putting in has been paying off. We are seeing interest from Europe - in the last twelve months, we have worked very hard in that area and have invested a lot more time. Focussing on Europe and the US has been one of the factors in driving the share price where it is today’.
AIB took second place in this year’s Acquisitions Capability category. Maurice Crowley says this has much to do with the structure of AIB’s June strategic alliance deal with Keppel TatLee in Singapore.
‘While the acquisition in Singapore surprised people to an extent, what they liked was the way the deal was structured. We didn’t take equity on day one - we took options over three years’. This, according to Crowley, means that AIB is ‘not overly committed’ in Singapore.
With the September acquisition of eighty per cent of Bank Zachodni SA, a second Polish bank for AIB. Crowley says that this makes the bank ‘a national player’, in Poland, where ‘aggressive development’ will be AIB’s goal in the next year.
As for next year, Crowley expects AIB’s structure to be similar to the current model, although he says that if a retail commercial banking acquisition suddenly became attractive in the UK, this could change. Apart from geographical expansion, AIB’s main current priority, however, is the internet.
‘All the real energy is going into the internet’, says Crowley. ‘Could we use it, or something like it, to crack new markets which we can’t reach now?, he wonders.
*All Irish institutions were invited to take part, and all Irish Association of Investment Managers members did participate in the 1999 Finance Survey of Irish Stockbrokers and the 1999 Finance Irish Public Companies Survey.
*Ryanair currently has a market capitalisation of £1289.17 million and according to the DAVY weekly book, this places Ryanair as ninth largest Irish plc. (source: DAVY Stockbrokers October 29th 1999) |
