Crisis cranks up desire to keep punters in the know

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The global financial crisis has shaken up the way companies communicate with investors, says the head of the body which represents investor-relations specialists.

Ian Matheson, in Auckland last week to catch up with the association's 10 local members, says the focus on company debt has led to growth in the number of people specialising in communicating with debt investors.

Investor-relations specialists have traditionally focused on keeping minority shareholders and analysts informed about significant news at listed companies.

"There are now people who specialise in informing investors about debt and some have had to combine the two areas," said Matheson.

The crisis has also led to growing importance being placed on the consistency of the message for both shareholders and debt holders, he says.

"There is no doubt for people in investor-relations roles the time spent with analysts and investors has gone up as analysts and investors have sought to be reassured that the company remains on track.

"Even where the global economy is now for a lot of sectors it is assumed that things are through the worst, but many [companies] are still in a lot of sectors where they don't have a lot of visibility about earnings.

"That's proving one of the biggest challenges from a disclosure point of view."

Fletcher Building's Phillip King, who trained as a chartered accountant but moved into investor relations while working for Telecom, says companies are finding forecasts very hard to make but the level of inquiry by analysts and investors wanting to know where the company is headed has "gone through the roof".

Those in investor relations have to keep a close eye on analyst forecasts.

King says there are always some analysts at one extreme or another.

If the company strays out of where the average forecast is, then a profit warning may have to be announced to the market.

He says setting up the association in 2001 had been a sign of evolution for investor relations.

"There was no doubt the formation in 2001 was a sign of more sophistication in the market," he says. "When you think of the insider trading in the 1970s and 80s it was shocking."

King says management now understand their jobs could be on the line if they get things wrong.

"There is a lot more disclosure now and that's a great thing for mum and dad investors. Institutional investors have always tried to use their size to get what they want, but disclosure rules have helped even the playing field."

GOOD RELATIONS

* Keeping the market informed about timely news.
* Not wasting people's time with information that is not significant to the company.
* Interpreting events and how they will affect the business.
* Keeping in touch with analysts and investors.