NZ Companies Short-Changing Investors

PRESS RELEASE 16th March 2009

FOR IMMEDIATE RELEASE

NZ Companies Short-Changing Investors

Listed New Zealand companies are failing their investors by not providing sufficiently detailed, timely information via their websites.

A 50-point investor relations (IR) website analysis undertaken by an Auckland web development company specialising in IR, shows that local companies rate “poorly” compared with overseas listed companies.

Vaughan Reed, CEO of Labyrinth Solutions, says companies need to communicate effectively with their investors, whether they are investment professionals or interested people with little financial knowledge.

He believes that by not providing relevant and up-to-date company news and information, via their website, organisations are missing out on investment dollars and limiting the growth of their share price.

“IR is an important strategic management responsibility for both public and privately listed companies. Yesterday’s way of thinking: “Why should I communicate more than I have to with minority shareholders?” does not cut it in today’s tough market conditions,” he says.

Reed believes the single most effective IR communication tool for companies is their website. “The websites of most New Zealand listed companies do not adequately explain or showcase the value of their company and their vision. To achieve this, the website must focus on users’ needs,” he says.

Labyrinth’s 50-point IR website analysis covers the ease of finding information and key attributes that investors look for when they are researching a new investment. Reed advises companies with an IR focus to check that their websites:
o Have a homepage which clearly defines what the company does within a short precise sentence.
o Tell their investors a story about its potential as an investment
o Have an IR summary on the homepage including current share price and latest press releases
o Have navigational structures that are simple and easy to understand
o Contain important, timely information that is easy to find and up-to-date

Not all investors have the same informational needs. Professional investment advisors who research companies in order to advise their investor clients, look for the management’s vision of the company’s future together with an overview of relevant news and a full company background: past, present and future snapshots that tell the story behind the numbers.

Individual investors place more importance on the company website than professional advisors and tend to be more loyal, becoming advocates for the company’s products or services. Therefore, says Reed, the company website should make it as easy as possible for them to gather relevant and up-to-date information to make an informed investment decision, while at the same time building trust in the company.

A company’s website provides the ideal platform for managing IR communications because of its immediacy, low overheads and the minimal effort required to manage IR. Says Reed, “You can be sure that everyone in the investment chain, whether they are an institutional analyst, professional adviser or individual investor, will use the company website for research to gain an insight to the business.”

He says people researching companies for investment opportunities want to get in, quickly find the information they need, and move on. Therefore, financial overviews need to be quick to load and easy to understand, important information should be available and easily accessible, and the IR section must be clearly labelled, typically “Investor Relations” or “Investor Centre”.

Reed says, “New Zealand companies need to show investors that they are an important part of their business focus. It is these investors who provide the financial stability of their company. Effective shareholder communication isn’t just about satisfying the needs of existing investors, it is about showcasing the company effectively to potential investors. This makes it an indispensable part of any corporate strategy, during good times and bad.

“Listed companies need to recognise IR is an opportunity rather than a duty or obligation, otherwise New Zealand companies will continue to lag behind the main players in Australia and the US,” concludes Reed.

ends

© Scoop Media