17 Jun CANNINGS’ TOP CONSIDERATIONS FOR COMPANIES THIS REPORTING SEASON
It’s almost that time of the year, when reality hits financial markets and the numbers do the talking. Yep, it will soon be reporting season.
And this time around will be like no other, thanks to COVID 19 and the social and economic policies introduced over the past 90 days or so to tackle the pandemic.
Which means that investors will expect additional information about how companies are dealing with the impacts and many will want that information delivered in new ways.
So, what should companies consider as they prepare for reporting season?
Here are Cannings’ top considerations:
1) GO DIGITAL – IT’S NO LONGER A CHOICE
Many companies are already in the swing of virtual investor meetings and they will need to continue to embrace this virtual engagement trend for the foreseeable future. There is really no choice. Investors continue to work from home or from the office with strict social distancing restrictions, so, it’s clear that virtual engagement is here to stay, at least this year, and potentially beyond. Now is the time to review your digital communications, including:
- Company website: Before the rush of reporting sets in, take the time to review your corporate website. Consider whether:
- Reports and presentations are easily accessible
- Your company information is clear and concise
- You have an investor contact point available
- Investors can sign-up for company news
- Results announcements: Review your approach to results announcements. Investors are now used to visual meetings so traditional audio only conference calls may seem out of date. Now is the time to consider whether a visual and audio format, such as a webcast, is more appropriate for your result announcement.
- Social Media: LinkedIn has seen record levels of engagement, according to its owner Microsoft. New figures confirm that as many as 80 per cent of investors use social media as part of their daily workflow. In other words, social media must be included in your investor engagement communications strategy. An infographic is a great way to condense your result into an easily digestible, social media-friendly format.
- Roadshows: Structure your investor engagement around virtual meetings and review the balance between one-on-one meetings and traditional group meetings. With virtual meetings removing travel time, companies are finding it easier to accommodate more one-on-one meetings. Brokers have been quick to adapt to the new way of working and are hosting companies for virtual roadshows, Q&A sessions, group ‘roundtable’ briefings, and fireside chats.
2) TELL THEM HOW YOU ARE MANAGING A PANDEMIC
It might seem like stating the obvious, but investors want to know what you have done to respond to the crisis from a business and operational perspective, the opportunities and challenges it has brought, and the progress you have made in this new environment.
If you announced a cost reduction program, investors will expect an update on your progress with that program. Investors will also be keen to hear what additional costs your company expects to incur as a result of the pandemic; for example, costs relating to social distancing, additional technology and health and safety.
And they will want to hear how you are managing your workforce and what your plans are for property expenditure, given work-from-home is likely to remain in place for an extended period for many.
3) IT’S ALL ABOUT THE BALANCE SHEET
In challenging times, investors will be increasingly interested in the strength of a company’s balance sheet, its ability to ‘weather the storm’ and whether it has the strength to maximise opportunities when the environment improves.
Investors are focused on the level of debt that companies are carrying and how sustainable or serviceable that debt is. It will therefore be important to consider enhancing disclosures around balance sheet and capital management, including dividend policy.
Since the COVID-19 pandemic emerged, a number of companies have reduced dividends or raised equity to shore up their balance sheet and reduce debt. These initiatives are a logical response to the challenges and uncertainty that many businesses are facing but there are trade-offs that need to be considered including the impact to shareholder returns and how much capital can be directed towards in future growth.
So be prepared to discuss how the board and management are thinking about the trade-offs between earnings and growth and security in the current environment and how some of these capital management decisions were made.
4) TELL THEM WHAT’S GOING ON IN THE MARKET
The uncertainty regarding the economic outlook and performance within sectors means that investors are increasingly seeking out information not just about your company but also about what is happening within markets.
Now is the perfect time to dedicate slides in your result pack on your market: the dynamics within it, the drivers, and of course, your market position.
5) AND HOW ABOUT YOUR CHANGE STRATEGY?
This crisis has turned some businesses on their heads, demanding almost overnight change to business strategies. Technology has now become a critical element to business continuity and is being seen as a key factor in driving operational performance.
So, what is your business doing with regards to technology? How has your existing technology fared and are you investing in upgrades? How are you managing IT security risks? How have you thought through risks in your supply chain?
These types of questions should be answered in a section of your presentation dedicated to your strategy. Investors will be paying close attention to your strategic narrative and will look favourably on those companies that can clearly articulate their strategy as they emerge from this crisis.
There you have it. The coming results reporting season will be tough; no doubt about that. But it also offers an excellent opportunity for companies to take a new or improved approach to their investor communications and engagement. Using digital communications to tell your investment story, creating new or more comprehensive presentation material, or approaching roadshows differently. These are just some of the considerations for companies as they prepare for the 2020 reporting season.
Cannings Strategic Communications is Australia’s most experienced corporate and financial communications consultancy. We partner with organisations to develop communications strategies for business-critical matters and long-term success. Our diverse and experienced team is a trusted adviser to small and large ASX listed companies, building enduring value for companies, their shareholders and their stakeholders. To speak with one of our IR consultants, contact us at [email protected]