DAVID WHITTAKER, SENIOR INVESTOR RELATIONS ADVISER
A recent survey presented at the National Investor Relations Institute (NIRI) conference in San Diego in June highlighted how giving investors useful qualitative information when presenting your company’s financial results can make all the difference to how well the numbers are received.
The institutional investors surveyed by Edelman emphasised they wanted to see company’s put their financial results in context. They liked to see them presented as part of a well-crafted story about where the business had been and where it was going.
They also gave additional points to a company that was confident enough to allow an unscripted discussion with management and that made effective use of visual information to present their numbers.
Taken together, these suggest a company has a good handle on its operations and strategy and is comfortable discussing the detail freely with investors.
However, these techniques can have the opposite effect on investor confidence if the company and management use them to obfuscate rather than explain. Unscripted discussions with investors can quickly go off the rails if management is not prepared and doesn’t have a handle on the detail. Trying to craft a positive story around a terrible set of results can be worse than saying nothing at all, and graphics and visuals will tend to be overused by companies trying to distract attention from the real story of their poor financial performance.
Trends in the US often find their way to Australia a year or two later, so it was interesting to hear at NIRI about the innovations in financial reporting emerging there, including:
- Shorter, scripted presentations with just the key messages from the result
- A move away from the formal presentation of results altogether
- More opportunity for investor Q&A
- All-in-one user friendly documents
- Providing the results in an Excel spreadsheet
- Live streaming of results presentations
Some recent US company results presentations illustrate these trends:
- 5 minute opening remarks beginning a one hour call with investors
- No formal press release. Instead a “Letter to shareholders” which is also released as an audio file
- The letter functioned as the company’s prepared remarks and was sent to investors an hour before the call
- Live video streaming
- No press release, no slide pack, no formal presentation
- 10 min opening remarks at the beginning of a 90 minute investor call
- Live video streamed
- “Investor factbook”, which included the results release, data, presentation charts and the Excel version of the financials