VICTORIA GEDDES, EXECUTIVE DIRECTOR
Following on from Part 1, published in our April 2019 Newsletter, this second part of the overview of Investor Days looks closely at what the audience wants to hear i.e. the content most commonly covered and how to put together an effective presentation.
What your audience wants to know
Bearing in mind the financial detail that is typical in results presentations and the focused nature of ASX Releases around specific events, what is often not talked about is the day to day realities of operating the business.
Each company will be different in terms of what topics it chooses to focus on at an Investor Day. They should be led, to some extent, by what investors are telling them about their own needs. Conducting a Perception Study in the early stages of planning the event will bring to the surface any knowledge gaps and misconceptions about the business. It will also reveal how well the company’s strategy and investment thesis is understood.
So, management and IR teams should consider these events as educational in nature, filling in identified knowledge gaps and enabling analysts and investors to learn more about the company than they would otherwise from their own research.
This includes a clear articulation of the corporate strategy and business model, an overview of the market dynamics in which they operate, how the business is positioned for growth and, importantly, its sustainable competitive advantage(s). Providing milestones and longer term financial guidance also helps investors understand how the company is viewing its growth profile and what can realistically be expected in terms of a timeline.
It is important to keep in mind that these are Investor Days, not trade shows or open days for customers, so attendees need to come away with a clear idea of how the company has and is creating value for its shareholders.
Putting together the Presentation Pack
88% of surveyed professionals report they frequently refer to investor presentations as a leading source of information, so understanding best practice is critical when putting together the company’s presentations for the Investor Day.
Each presentation should ideally stand on its own so that an investor or analyst, not present, can read the content and understand the messages without having to listen to management’s commentary.
If the presentations cannot standalone, consider placing a video of the presentations on your IR website.
Common positioning statements should link the presentations so there is a clear sense that all parts of the business are aligned with the corporate strategy. Techniques that help this include:
— establishing the overarching key messages and referencing these in each presentation, particularly where there are multiple business units;
— ensuring that strategy is consistently communicated and that each business unit’s plans are tied back to the group strategy;
— demonstrating that the company’s financials, capital structure and capex initiatives – are consistent with the implementation of its long term strategy.
Addressing industry and macro trends is important as it provides context around both strategy and approach to risk management. Introduce ‘what if’ scenarios and the impact of different assumptions on pricing, growth, competition, weather events or whatever is relevant toyour business. Include how you would or have responded to certain situations and describe the levers that are available to actively manage such scenarios.
Presenting a balanced message that addresses both opportunities and challenges shows investors a preparedness to be open and transparent. It will reassure them that as a company, you will provide the facts and not try to spin or present a one-sided view.
If possible, highlight the company’s execution track record and provide some longer term milestones which investors can reference. We suggest caution however in locking in long term financial targets. In our experience this can be problematic despite the very reasonable arguments for doing so. Markets tend to get fixated on the financial targets despite the reality that plans and forecasts are only as good as the macro economic assumptions that underpin them and these will almost certainly change.
Operational efficiency is a key focus for investors, so this must be addressed at both a business unit and group level, referencing relevant financial metrics e.g. free cash flow generation, improvement in working capital, return on assets/equity.
Finally, but most important of all, point out what gives the business a sustainable competitive advantage. How does the company’s strategy and business model translate into an investment thesis which is able to demonstrate a capacity to deliver superior shareholder returns over time?
Some Final Housekeeping
There are some protocols that are generally well understood in relation to how companies conduct themselves and the territory that should not be covered in an Investor Day. Mostly they are common sense but worth repeating nonetheless:
- Do not concurrently announce quarterly or half yearly results. This equally applies to releasing bad news or delivering a negative trading update during the course of the day.
- Tempting as it might be, particularly if pushed during question time, avoid disparaging competitors. Stick to the script and resist any urge to speak ‘off the cuff’.
- Make sure there is access to Wi-Fi and, for those that can’t attend in person, webcast the event and make it easily available.
- Conduct Q&A throughout the day and at the end. Repeat questions before answering. Don’t cut the Q&A short or be defensive when answering difficult questions.
- Provide sufficient breaks during the day and start and finish on time.
- If you are planning on providing a ‘giveaway’, keep it low value and connected to the company or event. They are generally regarded as nice but not necessary.
- Lodge the presentation pack and webcast with ASX and post on the company website