Financial Market Survey 2011

May 2011

Copyright © Box IR

Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | info@boxir.se | www.boxir.se

Portfolio managers

44%

Analysts42%

Other14%

Box IR’s Financial Market Survey - 2011

Executive summary

In order to raise the knowledge on how the financial

industry view different IR activities Box IR conducted

a survey during April and May 2011, in which

financial market professional answered questions about

the investor relations work carried out by Swedish

listed companies. Although the survey was largely

conducted during the height of the Q1 reporting

season, interest in the survey was above expectations

and 106 people in total answered the questions,

representing a 20 percent response rate. The

respondents were distributed according to the chart

opposite.

The survey consisted of 10 questions all in all. Answering alternatives were made up of both multiple

choice as well as text answers, which rendered a number of interesting remarks.

On the following pages we present a summary of the answers to the survey, but let us begin with some

basic conclusions and a few interesting statements.

The respondents were asked to name the three most important factors for making an investment

decision or take up coverage of a company and CSR ended up at the bottom of the list. When asked

directly about the importance of CSR it is clear that these issues weigh relatively light. If the

survey had not been anonymous, the answers probably would have been a little more politically

correct.

The most important investor relations activities are one-on-ones, earnings presentations and the IR

web while social media, despite the explosive growth, still has a long way to go before being

adopted by the financial market professionals (partly due to the fact that Swedish companies are

not very active in terms of using social media for IR purposes).

Access to management is important, but it is crucial that it conveys the appropriate message.

"Why does IR enter into "closed periods"??? Isn’t part of the job to

communicate in a way that this is not needed!?"

Analyst

"Good IR is characterized by accessibility, prompt response and good company

knowledge combined with an understanding of how the stock market works."

Analyst

Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | info@boxir.se | www.boxir.se

Brief summary of the conclusions from the survey

Accessibility is important, but not enough With regard to the level of IR activities and the management access, it is

important to consider the difference in the resources companies spend. Among

the Large Cap companies the IR department usually consists of several people,

while the IR work in Mid and Small Cap companies is largely handled by the

CEO or CFO. Generalized, our survey shows the following:

Large Cap Good level of IR work, but poor management access. Half of the analysts

think it is difficult to access the management of Swedish Large Caps.

Mid Cap Good access to management, but one out of three thinks that the level of

IR work is inadequate.

Small Cap High management accessibility, but IR work well below par. Six out of

ten think that the IR effort is not up to standard.

”IR spend and ambition reflect quality.”

Analyst

CSR not very important For obvious reasons CSR issues are often mentioned as key investment criteria

and today there are a large number of funds with an ethical focus on the Swedish

market. No doubt that this is at least "politically correct", but when the financial

market professionals are asked anonymously CSR issues ranks low. This is

illustrated by the fact that only three respondents stated that CSR issues are very

important to their investment decisions.

This picture is reinforced when respondents are asked to specify three criteria for

a company being an attractive investment. Only two respondents have CSR

among their top three investment criteria.

17

25

39

19

3

1

2

3

4

5

Scale 1-5 where 1=not important and 5=very important

Every other analyst regards management access as poor

6 out of 10 regard the IR work by Small Caps as insufficient

How important are CSR issues for your investment decision/evaluation of a company?

CSR – is it only ”politically correct”?

Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | info@boxir.se | www.boxir.se

Annual reports, not returning value for money

It is a well-known fact that Swedish companies spend large resources on their

annual reports, in monetary terms in the order of a quarter of a billion SEK for the

public companies (see Box IR’s Annual IR Survey 2010). With a growing

importance of the IR web, the annual report’s relevance for the financial market

continues to diminish. Less than half of the respondents to our survey regard the

annual report as important or very important.

Although the PDF is still the most common format of the digital version of the

annual report, it has become increasingly popular in recent years to create a more

advanced Flash or HTML-based version on the website. These types of products

rank at the low end when the financial market ranks a number of IR-activities.

HTML or Flash based annual reports are even, by some analysts, met with a

strong dislike, which is evident in the following statement from an analyst:

”All companies that have their annual report on its website in any

other format than PDF should IMMEDIATELY STOP THIS. I am

not interested in any Flash based version which is completely user-

unfriendly. PDF is the best, period.”

The IR web is an important channel for the financial community to access

information from public companies. This is evident when asked how they prefer

to receive information. 70 percent of the financial market professionals rank the

IR web as important or very important.

It is also evident that the financial market still has very low interest in IR via

social media such as Twitter, Facebook etc. These are on the other hand relatively

new channels and Swedish companies are certainly not among the frontrunners in

using these new information channels for IR purposes.

Investors rank one-on-ones and earnings presentations as their favorite IR

activities conducted by public companies.

1,76

2,57

2,81

3,71

3,75

3,78

3,97

4,16

4,19

Social media

News letters

HTML-based annual …

Webcasts

Capital markets days

Roadshows

Informative IR web

Report presentations

One-on-ones

Scale 1-5 where 1=not important and 5=very important

Low interest in social media

The HTML based annual report is rejected

…but less than half regard it as an important IR tool

2 out of 3 regard the IR web as important or very important

A quarter of a billion SEK are spent on annual reports...

One-on-ones when the market gets to choose

Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | info@boxir.se | www.boxir.se

What characterizes good and poor IR?

”Accessibility, accessibility, accessibility and knowledge of operations.

MUST be part of the management team to be of interest for analysts.”

Analyst

When the financial market professionals in their own words describe what

characterizes good IR, accessibility is mentioned most often. However, none of

the respondents believe management access alone is sufficient. That is clear when

we summarize the questions regarding IR level and management access above.

”Open and honest communication. Being prepared to discuss the

company’s weak areas.”

Portfolio manager

It is apparent that the market demands openness, transparency and honesty in the

financial communication. But in order to excel in IR, thorough understanding of

the financial markets as well as good knowledge, not only about the company, but

also about the business environment as a whole and the competition are equally

important.

”Thorough understanding of the work and perceptions of analysts and

portfolio managers. Good knowledge about the company as well as

competitors.”

Portfolio manager

Poor IR is mainly perceived as being the opposite of the above, however a few

statements are well worth quoting:

”A lot of info in good times, hardy any in bad times. Information hard to

interpret, only conveyed by employed communicators that is emotional or

of the type ‘corporate bull shit’.”

Portfolio manager

”Limited information, unrealistic targets.”

Analyst

”Another bad habit is when IR boycotts critical analysts who don’t

maintain a buy rating on the share.”

Portfolio manager

”Only pouring coffee during presentations; cannot do a good company

presentation by themselves. Unfortunately, in order to fulfill the female

quota, they have put in a ‘blonde’ as IR and it is not sufficient!”

Portfolio manager

33

19

12

11

8

5

Accessibility

Knowledge about company/industry

Openness

Timely information

Transparancy

Consistency

What characterizes good IR?

Management access is important, but good IR also requires…

…openness, transparency och honesty, as well as thorough financial market understanding.

Holding back on bad news is not appreciated

As well as boycotting critical analysts

Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | info@boxir.se | www.boxir.se

What is most important for the investment decision? Professional investors and analysts regard share liquidity and profit growth the

most important criteria for investing or initiating coverage.

In this context it is worth mentioning that IR and communication is considered as

equally important as valuation or investment case.

40

34

22

19

18

18

17

11

10

2

Market cap, liquidity

Prospects, growth

Management

Investment case

IR, communication

Valuation

Business concept, strategy, …

Key figures, financial

Track record, history

CSR

Name three criteria in order for a company being interesting to start covering or make an investment

IR as important as investment case or valuation

Please contact us for

a more in-depth

presentation!

Box IR, Norrmalmstorg 14, 111 46 Stockholm | Phone: +46 8 21 41 00 | info@boxir.se | www.boxir.se

About Box IR

Box IR is a financial communications firm specializing in investor relations and strategic corporate

communications. Our offer is based on advice from senior consultants with vast experience in equity

trading and research. Combined with our experience in communications, public relations and media

relations, we can offer an integrated range of services built on industry knowledge and first-hand capital

markets experience from some of the leading Nordic Investment Banks.

Box IR is owned and operated by Mikael Zillén and Tomas Öqvist. With over

30 years joint experience in the financial sector and over 10 years of financial

communications, our vision is to become the leading communications agency

for companies and organizations who demand excellence in financial

communications, combined with financial expertise.

In order to be cost effective and being able to offer our customers a full range of services Box IR has

formed strategic partnerships with a network of specialists, including Sjö & Berg for graphic design, print

production, etc.

Short about the founders: Mikael Zillén holds a B.Sc. in Business and Economics from the University of

Stockholm. He has since 2005 Worked with financial communications and

investor relations, both as self-employed and as senior consultant at Citigate

Stockholm. Mikael has a solid Financial Market background from investment

banks including SHB, Nordea and Danske Bank, where he during 15+ years

worked in institutional sales. Mikael has had a large number of major Swedish

and US institutions as well as hedge funds as clients and also has experience

from several IPOs.

Tomas holds a B.Sc. in Business and Economics from the Stockholm School of

Economics and has more than 15 years of first-hand Capital Markets

experience as equity analyst at Carnegie and Alfred Berg including several

years as top ranked within the Software & Services sector. Tomas has been

advisor and speaking partner to large Swedish, European and US institutional

clients and also participated in a number of IPOs and M&A deals. Since 2007,

he has worked as a consultant within financial communication and investor

relations.

For further information please call us on +46 8 21 41 00 or visit our website.