View
216
Download
0
Category
Preview:
Citation preview
Contents
3. How companies fail to attract long-term investors
4. Three examples of how not to attract long-term investors
5. The competition for equity capital
6. How Hardman & Co add value
7. Client breakdown
8. Growth clients:8. What to expect
9. How to measure us
10. Value/recovery clients10. What to expect
11. How to measure us
12. Pre IPO Clients12. What to expect
13. How to measure us
15. Example of where IEA made a difference
17. Hardman Independent Equity Advice
18. Credentials
20. The Hardman & Co Team
21. Disclaimer
Page 2
Page 3
Attracting long-term investors is tough
Companies fail to attract long-term investors because…
Company management have a poor understanding of how investors operate“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things
differently.”
Warren Buffet
Systemic failure to acknowledge and act on shareholder feedback“There should be a dialogue with shareholders based on the mutual understanding of objectives. The board as
a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place.”
FCA Corporate Governance Code
1
2
3
Corporate Strategy NOT aligned with shareholder interests“A company’s track record has to be delivered with integrity so that a trusting relationship between investor
and investee can be established….”
QCA Investor Survey 2016
Page 4
Attracting long-term investors is tough
Company management have a poor understanding of how investors operatePaddy Power Betfair (2016): All-share merger accompanied by few details on how shareholders benefit. Equity likely to de-rate.
Systemic failure to acknowledge and act on shareholder feedbackJ Sainsbury (2004): Appointment of Ian Prosser as Deputy Chairman without consulting major shareholders. Decision reversed 7 days later.
1
2
3
Corporate strategy NOT aligned with shareholder interestsAlliance Trust (2015): Shareholder revolt after 10 years of poor investment performance and above average operating
costs.
Three great examples of what not to do…
Page 5
The competition for equity capital
UK small-cap universe: 1400
stocks*
Average small-cap fund:
60-80 holdings
Average small-cap fund
manager selects 1 stock in 20
Quality of management is
50% of the decision to
invest
“Fund managers are looking for open and honest companies that have a clear strategy and then under-promise and over-deliver even at modest growth rates, and continue
to do so over time. Strong cash flows, low debt and a track record are what appeals most”
QCA Investor Survey 2016
*FTSE SmallCap + FTSE Fledgling + AIM
Fund Managers have no shortage of choice:
1. Capital Markets Training
• Investors uncovered
• Analysts uncovered
• Building credibility
2. Corporate Reporting
• Incorporating shareholder value
• Proprietary best-in-class template
• Review and edit
3. Roadshow Preparation
• Investor profiling
• Q&A preparation
• Review and edit
4. Corporate Governance
• Shareholder opinion surveys
• Shareholder opinion reports
• Implementation
Intensity and depth of service that brokers & PR companies can’t match
How we add value: 4 Core Modules
Page 6
Client breakdown
Growth
Pre-IPO
Value/ Recovery
Our clients typically fall into one of three categories
Page 7
Growth clients
Page 8
What to expect…
• Bespoke education sessions for CEO and CFO
• Focus on targets, shareholder value & ‘growth traps’ Capital Markets Training
• Results reported using best-in-class template
• Results demonstrate progress on targets Corporate Reporting
• We help roadshow organisers target suitable investors
• ‘Devil’s advocate’ Q&A ahead of investor meetingsRoadshow Preparation
• Independent & comprehensive shareholder opinion surveys
• Conducted at your request & presented to wider boardCorporate Governance
Growth clients
Page 9
How to measure us…
• Management understand precisely what investors demand from growth companies
Target Outcome 1
• Blue chip/growth investors dominate the shareholder list
Target Outcome 2
• Stock-market rating is sustainably high to reflect investor confidence
Target Outcome 3
• Shareholder support for strategy and further capital raisings
Target Outcome 4
Value/Recovery clients
Page 10
What to expect…
• Bespoke education sessions for CEO and CFO
• Focus on the DNA of value investors Capital Markets Training
• Results reported using best-in-class template
• Rhetoric to target value/recovery investors Corporate Reporting
• We help roadshow organisers target suitable investors
• ‘Devil’s advocate’ Q&A ahead of investor meetingsRoadshow Preparation
• Independent & comprehensive shareholder opinion surveys
• Conducted at your request & presented to wider boardCorporate Governance
Value/Recovery clients
Page 11
How to measure us…
• Clear signs that credibility and reputation of management have improved Target Outcome 1
• Blue chip value/recovery investors on shareholder listTarget Outcome 2
• Shares are re-ratedTarget Outcome 3
• Shareholder support for strategy and corporate governance initiativesTarget Outcome 4
Pre-IPO clients
What to expect…
• Bespoke education sessions for CEO and CFO
• Focus on the spectrum of IPO subscribers Capital Markets Training
• 1st plc results reported using best-in-class template
• Rhetoric is consistent with IPO investment case Corporate Reporting
• Independent input into IPO roster
• Continual support including ‘Devil’s advocate’ Q&A sessionsRoadshow Preparation
• Independent & comprehensive shareholder survey
• Conducted at your request & presented to wider boardCorporate Governance
Page 12
Pre-IPO clients
How to measure us…
• Management quickly build credibility during investor meetings Target Outcome 1
• Post-IPO interest generated in shares Target Outcome 2
• High quality IPO book Target Outcome 3
• Post-IPO share stability
• Shareholder support for strategic initiativesTarget Outcome 4
Page 13
Pre-IPO clients
IEA service covers BOTH pre-IPO and post-IPO periods
Buy-side experience: A huge advantage
• 17 years’ experience investing in IPOs
• 17 years’ experience rejecting IPOs!
12-month structured program
• Pre-IPO period
• Issuing period
• Post-IPO period
100% independent service
• Commissioned only by corporate client
• No conflicts of interest
Page 14
Shareholder additions since IEA appointed (Oct 2010)
Aviva, Henderson, JO Hambro, Schroders, Utilico,
IEA appointedroadshow
Legal challenge M&A New CEO
Minor profit warning
Augean plc – AIM listed waste management company – share price
Example where IEA made a difference
Page 15
The problem
IEA appointed
Ongoing IEA input
The difference
Small market cap (£30m) and low valuation (P/BV=0.5x) Discontented and transient shareholder base Long history of shareholder value destruction
Training programme designed & implemented for CEO and FD (Module 1) Corporate results reviewed & edited prior to release (Module 2) Management prep’d for investor roadshow (Module 3)
Buy-side appraisal of capital investments (Module 1) Training programme designed for new CEO and new FD (Module 1) Shareholder opinion feedback and advice (Module 4)
Share price doubled over 5 years Shareholder list now dominated by quality long-term names Exceptional management credibility with investors and analysts
Augean plc – AIM listed waste management company – IEA process
Example where IEA made a difference
Page 16
Designed to deliver real & tangible results
Exceptional management credibility with investors and analysts
Shareholder list dominated by high quality long-term investors
Positive and stable equity performance
Extremely cost effective solution
Typical FTSE 100 Investor Relations Team: £400k pa
Typical FTSE 350 Investor Relations Officer: £100k pa
Hardman IEA service is substantially cheaper
Buy-side experience & insight unmatched by traditional advisers
Hardman & Co has an excellent reputation for helping quoted and unquoted companies
Hardman Independent Equity Advice
Page 17
The effective solution
Hardman IEA is led by Graeme Kyle BA ASIP, Senior Advisor
• Graeme worked on the buy-side for 17 years, initially as an analyst and progressing to senior fund manager. He built a strong track record investing in global equities and conducted over 200 one-to-one investor meetings with plc management.
• Since 2010 Graeme has been advising publicly quoted and privately held companies on how to attract & retain premium quality investors.
• Graeme holds a BA (Hon.) in Economics & Maths from Strathclyde University and is an Associate of the CFA Society (UK).
Most plc advisers have no buy-side experience!
Credentials
Page 18
Example IEA Basic Service for a growth company: 12 days per annum
Number ofDays
1 Initial company analysis from buy-side perspective 1.5 One-to-one training for CEO - preparation work 3 x 0.5 days (Module 1)1.5 One-to-one training for CEO – training seminars 3 x 0.5 days (Module 1)0.5 Interim results: review and edit (Module 2)1 Interim results: one-to-one consultancy session (Module 2)1 Interim results: roadshow materials review and edit (Module 3)0.5 Interim results: ‘Devil’s advocate’ Q&A preparation by adviser (Module 3)1 Interim results: roadshow one-to-one consultancy inc. Q&A (Module 3)0.5 Final results: review and edit (Module 2)1 Final results: one-to-one consultancy session (Module 2)1 Final results: roadshow materials review and edit (Module 3)0.5 Final results: ‘Devil’s advocate’ Q&A preparation by adviser (Module 3)1 Final results: roadshow one-to-one consultancy inc. Q&A (Module 3)
Appendix/ IEA Basic Service
Page 19
Page 20
Management Team+44 (0)20 7929 3399John Holmes jh@hardmanandco.com +44 (0)207 148 0543 ChairmanKeith Hiscock kh@hardmanandco.com +44 (0)207 148 0544 CEO
Marketing / Investor Engagement+44 (0)20 7929 3399Richard Angus ra@hardmanandco.com +44 (0)207 148 0548Max Davey md@hardmanandco.com +44 (0)207 148 0540Antony Gifford ag@hardmanandco.com +44 (0)7539 947 917Neil Pidgeon nrp@hardmanandco.com +44 (0)207 148 0504Vilma Pabilionyte vp@hardmanandco.com +44 (0)207 148 0546
Analysts+44 (0)20 7929 3399Agriculture BondsDoug Hawkins dh@hardmanandco.com Brian Moretta bm@hardmanandco.com
Yingheng Chen yc@hardmanandco.com
Meghan Sapp ms@hardmanandco.com
Building & Construction Consumer & LeisureTony Williams tw@hardmanandco.com Mike Foster mf@hardmanandco.comMike Foster mf@hardmanandco.com Steve Clapham sc@hardmanandco.com
Financials Life SciencesBrian Moretta bm@hardmanandco.com Martin Hall mh@hardmanandco.comMark Thomas mt@hardmanandco.com Gregoire Pave gp@hardmanandco.com
Media MiningDerek Terrington dt@hardmanandco.com Ian Falconer if@hardmanandco.com
Oil & Gas PropertyStephen Thomas st@hardmanandco.com Mike Foster mf@hardmanandco.comMark Parfitt mp@hardmanandco.com
Services Special SituationsMike Foster mf@hardmanandco.com Steve Clapham sc@hardmanandco.com
Paul Singer ps@hardmanandco.com
Technology UtilitiesMike Foster mf@hardmanandco.com Nigel Hawkins nh@hardmanandco.com
The Hardman & Co Team
Page 21
Disclaimer
Hardman & Co provides professional independent research services. Whilst every reasonable effort has been made to ensure that the information in the research is correct, this cannot be guaranteed.
The research reflects the objective views of the analysts named on the front page. However, the companies or funds covered in this research may pay us a fee, commission or other remuneration in order for this research to be made available. A full list of companies or funds that have paid us for coverage within the past 12 months can be viewed at http://www.hardmanandco.com/
Hardman & Co has a personal dealing policy which debars staff and consultants from dealing in shares, bonds or other related instruments of companies which pay Hardman for any services, including research. They may be allowed to hold such securities if they were owned prior to joining Hardman or if they were held before the company appointed Hardman. In such cases sales will only be allowed in limited circumstances, generally in the two weeks following publication of figures.
Hardman & Co does not buy or sell shares, either for its own account or for other parties and neither does it undertake investment business. We may provide investment banking services to corporate clients.
Hardman & Co does not make recommendations. Accordingly, we do not publish records of our past recommendations. Where a Fair Value price is given in a research note this is the theoretical result of a study of a range of possible outcomes, and not a forecast of a likely share price. Hardman & Co may publish further notes on these securities/companies but has no scheduled commitment and may cease to follow these securities/companies without notice.
Nothing in this report should be construed as an offer, or the solicitation of an offer, to buy or sell securities by us.
This information is not tailored to your individual situation and the investment(s) covered may not be suitable for you. You should not make any investment decision without consulting a fully qualified financial adviser.
This report may not be reproduced in whole or in part without prior permission from Hardman &Co.
Hardman Research Ltd, trading as Hardman & Co, is an appointed representative of Capital Markets Strategy Ltd and is authorised and regulated by the Financial Conduct Authority (FCA) under registration number 600843. Hardman Research Ltd is registered at Companies House with number 8256259. However, the information in this research report is not FCA regulated because it does not constitute investment advice (as defined in the Financial Services and Markets Act 2000) and is provided for general information only.
Hardman & Co Research Limited (trading as Hardman & Co)
11/12 Tokenhouse Yard
London
EC2R 7AS
T +44 (0) 207 929 3399
Follow us on Twitter @HardmanandCo (Disclaimer Version 2 – Effective from August 2015)
Recommended