African Investor Relations

I am pleased to announce that African Information Solutions for Companies Online Limited “African Is Cool” is now offering our online managed website services to businesses other than listed companies in Africa.

To request our marketing pamphlet click here.

Our decision to broaden our product outreach has been largely influenced by the feedback we have received by the companies we have dealt, the feedback received from the users of our websites, and our realisation of the significant size of the communities in Africa using the internet. Whilst our online investor relations solution should really be an “add on” to an existing corporate website we have designed and implemented new websites for the majority of our clients and then incorporated our online IR solution – and this has been another indicator of the demand for good interactive websites.

There IS critical mass in Internet use in African markets and we believe significant returns may be gained by companies that identify how to offer their services and products in this arena. The question is how?

A big weakness of the current corporate website is that it is managed by companies themselves. People are busy and they are not well informed. From our anecdotal evidence, we believe that website statistics of some really large organisations that manage their own poorly populated and outdated websites are less than 1/30^th of the traffic that should be going through their websites had their sites been adequately populated and managed. Furthermore, and this is the critical bit, these websites lack the interactivity tools that are able to identify people wanting to do business with their companies. Lastly it’s not possible to grow sustainable relationships with people that companies cannot identify.

The dynamic nature of the web means that companies should outsource the whole aspect of online communications. To be sure, many businesses in Africa do not have the critical mass to employ someone full time in the online communications space. The corporate awareness levels of the issues involved are low. Few executives will realise that it is not “what” to do online but “how” to do it. They also don’t realise that they actually own the greatest strategic asset in an online communications policy: data. A simple example of the demand for online information is our portal of online African annual reports on www.africanfinancials.com – the growth in traffic to this website has been phenomenal as illustrated in the chart below:-

The question is: does your business generate information or data that is of use to a broad range of stakeholders or customers or agents etc. If it does you are sitting on a strategic asset and the internet is the tool you should be using. Who should you deal with?

AIC is well placed to deliver value added solutions in the general corporate space as we have been in the high-end interactive online communications space for some time. Yes, we have specialised in investor relations but we spend a lot of our time communicating with stakeholders rather than investors and this has reiterated the opportunity that the online presence provides. For the past year and a half we have managed the school websites of St John’s Educational Trust: St John’s College and St John’s Preparatory School. Our experience outside of the online IR space has been positive.

It’s not a generalisation to say that there is a high level of discontent with what existing corporate websites are delivering to their owners. It’s easy to do a review oneself to see that all is not well with the typical corporate website. Sites look outdated aesthetically, errors are quick to point themselves out and there is no assurance that any information on the website is actually complete and up to date. No alerts icons appear. Send an email and its not responded to.

In growing our African Is Cool business we have been privileged to have highly competent business partners and have had the time and capital to invest in keeping up to date. As relative newcomers to the Internet we have not been influenced by past structures, habits or technologies and have been able to adopt the latest technologies as they arrive. Our background in database programming has also been of huge benefit.

So who should consider using AIC as their strategic online communications partner? Here are a number of criteria:-

1. Your business should be one that generates on-going data or information that is of interest to a broad range of users, stakeholders, agents or customers online. Examples would include banks, stock exchanges, agricultural associations, any association, insurance businesses, multi-nationals, commodity traders, agricultural organisations with outgrowers or agents etc.
2. Your business should be one that has the ability to respond to online traffic / feedback efficiently and be a business whose senior management buy into the concept of online communications.
3. Your business should be one that seeks to develop a secure, on-going relationship with stakeholders.
4. Your business should be brand, service or data oriented.
5. Your business should be one that realises that if “you pay peanuts you get monkeys”. Either you are going to take an online strategy seriously or not. Cheap services will be just that.
6. Your business should be one that deals with a vendor that has a strong corporate reputation from existing clients.
7. Your business should agree that it will not be involved in the update of data on an ongoing basis. AIC has a team doing this all day everyday and we know what we are doing.

(African is Cool) has been managing the online investor relations initiatives of 17 listed companies in 5 African markets. Our online investor relations portfolio continues to grow and we are currently rolling out 5 new online investor relations clients in Zimbabwe and Botswana. There is significant scope for listed companies to take their investor communications initiatives online and this potential is matched by the commercial potential in normal commercial activities. Its from this background that we now enter managed corporate websites.

To request our marketing pamphlet click here.

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Over 63,000 annual reports were viewed by over 24,000 individual website users on www.africanfinancials.com in the past three months. Traffic to Africanfinancials.com has grown exponentially since 2007 when the portal was launched:-

Africanfinancials.com was established in 2007 by African Is Cool, to enable online viewing of annual reports by sector, year or country, as a free service to the users of financial information / annual reports in Africa. This is also a free service to listed companies who are able to send us their annual reports for scanning and publication online. This has now evolved into a useful tool for the many thousands of users of financial information on African markets and we want to take this to the next level.

Sponsorship funds raised will enable AIC to invest in procuring timely publication of more annual reports online for the benefit of African capital markets and investors alike.

Freely available information increases the investment message outreach of African companies, reduces systemic market risk and increases transparency. Noble objectives for corporate sponsors.

Recent traffic statistics for the past three months reveal the following:-

• No of countries visiting the portal      140
• Average time on site                                 4 minutes and 14 seconds
• No of annual reports viewed                  67,154
• No of individual visitors                          22,025
• Top country visitors                                 Nigeria, Kenya, USA, UK, Ghana, India, Egypt

Africanfinancials.com displays African annual reports online by year, sector and country and a weekly alert is sent to over 800 contacts that have requested notification of new publications of annual reports online. The significant traffic visiting africanfinancials.com provides sponsors with a unique opportunity to target their brand and corporate message to specific users of African financial information.

African Is Cool seeks the following sponsors for the portal:-

• “Master” sponsor: a single pan African corporate sponsor. The objective of this sponsorship is to increase transparency and promote informed investment into African markets.
• “Sector” sponsors for the following categories:-
  • “African banking”: the sponsor’s logo and message will appear in annual reports, publications and banking sector reports in which any African banking organisation appears. Africanfinancials.com greatest country traffic comes from Nigeria so any sponsor here would ideally seek exposure to or be  dominant in Nigeria.
  • “African construction”: the sponsor’s logo and message will appear in annual reports, publications and construction sector reports in which any African construction organisation appears.
  • “African beer”:- the sponsor’s logo and message will appear in annual reports, publications and banking sector reports in which any African beer or beverage organisation appears. Africanfinancials.com greatest country traffic comes from Nigeria so any sponsor here would ideally seek exposure to, or be dominant in, Nigeria.
  • “African telecommunications”: – the sponsor’s logo and message will appear in annual reports, publications and banking sector reports in which any African banking organisation appears. Africanfinancials.com greatest country traffic comes from Nigeria so any sponsor here would ideally seek exposure to or be  dominant in Nigeria-
  • “Country” sponsors for the following countries are also sought:-
    • Nigeria – a country sponsor for all Nigerian annual reports viewed online
    • Ghana – a country sponsor for all Ghanaian annual reports viewed online
    • Kenya – a country sponsor for all Kenyan annual reports viewed online
    • Zimbabwe – a country sponsor for all Zimbabwean annual reports viewed online
    • South Africa – a country sponsor for all South African annual reports viewed online

Note that there are other “Sectors” and “Countries” to sponsor besides the sectors and countries indicated above.

The electronic format of the annual reports (ipaper) provide unique opportunities to embed sponsors’ brands and corporate messages online. The professional html email distribution service which, at the current level of registrants, provides sponsors with significant targeted exposure of their brand, is again an ideal marketing tool especially if this platform is used to provide specific sectoral or country alerts.

A key attribute of the sponsorship of africanfinancials.com is that sponsors know that they are targeting users of financial information in African capital markets. These users include investors (retail and institutional), analysts, data vendors, research professionals and research academics (a growing area of users using the ease of access to data for academic purposes).

If your organisation has pan-African outreach, has, or wishes to market its brand to users of Nigerian financial information (a significant area of online activity) and other African financial data then you should consider seriously the sponsorship opportunity provided by Africanfinancials.com. Call me on + 263 4 850735 or send me an email on ceo@africaniscool.com for more information.

Go to africanfinancials.com

Sign up to the africanfinancials.com alerts section

Go to Africanfinancials.com twitter account

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I have written about the inefficient information dissemination practices of African stock exchanges in the past.

The issue of stock exchanges not doing enough for its listed companies should be an agenda item for any listed company in most smaller African markets. The core of the problem as it relates to information dissemination relates to African stock exchange rules permitting hardcopy publication of corporate news / actions as the only dissemination medium.

In this modern day and age, hardcopy only dissemination is just not acceptable given the pervasiveness of the Internet as a communications tool. The absence of awareness at regulatory levels (and governance levels)  of the key issues surrounding information dissemination practices is also inexplicable.

There is some good news however. News that we expect to grow in significance.

I am pleased to announce the launch of www.africansens.com, a portal to promote the 100% online dissemination of corporate actions and news for listed companies in Africa. Initially our focus is on providing 100% coverage of listed companies’ corporate announcements in Zimbabwe and this will be extended to Zambia, Botswana, Kenya and Malawi.

Access to the portal is free and is RSS enabled. Users of the site can receive corporate action alerts in their email as soon as they are published online on www.africansens.com. We are currently unable to publish all the content we receive online because we are doing this for free. Users will notice however that African Is Cool clients’ corporate action material will appear online in Africansens in full or at least a link thereto will be available.

We expect www.africansens.com to grow into our largest portal and hope to offer sponsorship / advertising to organisations that want to present their brand to the investment communities interested in African listed equities. Sponsorship funds raised will be re-invested into providing information for free through www.africansens.com.

From an online investor relations perspective, this www.africansens.com initiative complements the many others that we have to get our clients’ message out to the broader investment community. We have two twitter accounts: www.Africanfinancials.com and www.africaniscool.com to complement this and our portal www.africanfinancials.com has over 22,000 annual reports viewed online every month.

We look forward to your feedback.

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Our performance this year is a sober reminder that African capital markets have not yet fully recovered from the impact of the global crisis and in hindsight the period under review has been difficult to accurately forecast. Although, the Group remains resilient, our headline results are disappointing. Revenue declined by 9% to P92.8 million, whilst attributable earnings decreased by 96% to P246 765. Although the profit for the year is below expectations, the Statement of Financial Position has strengthened with cash and cash equivalents improving by P21,89 million to P123,4 million with no borrowings.

This creates a strong foundation for a more profitable company going forward. In this respect, we have been able to protect shareholder wealth with shareholders’ equity having grown by P 8,64 million during the year.

In addition, we have been able to contain operating expenses in a difficult trading environment. Operating expenses have been contained to P82,27 million, almost P200 000 lower than the previous year. Although not apparent in this announcement, our core divisions of Stockbroking and Asset Management have generated strong revenue streams and funds under management have recovered significantly. Unfortunately, this improved performance has been partially reversed by a poor performance in the Corporate Finance division, which is partly attributable to timing issues on significant mandates which could not be closed in the year under review. However, these have now started to come through, and in addition, the group will benefit from the cost cutting measures taken in this division during the second half of this year. On the positive side, the Imara Funds have continued to grow with good inflows coming through and limited redemptions. Asset Management South Africa has become profitable this year and the flagship Imara Equity Fund SA has been well received and continues to perform well. We believe this division is now set to deliver long term growth and profitability. It is encouraging to report that income from associates has grown 12 fold to P1,92 million, a clear indication that our acquisition strategy is working and yielding positive momentum. We will continue to raise our stakes in these entities going forward with a positive impact on the Group and will continue to look for further expansion opportunities.

OUTLOOK

We remain cautiously optimistic about our future prospects. Annuity income streams continue to improve, albeit slowly, our acquisition strategy remains robust and is yielding positive returns, and the Group footprint continues to expand. Using the strong Statement of Financial Position as the spring board, we will continue to focus on improving performance in our existing footprint by extending our services and product range in individual markets, whilst also looking for opportunities in new markets. We believe the current uncertain world economies and severe slow down will continue well into 2011, so our expectation is for a quieter year ahead. We look forward to reporting better results in due course.

DIRECTORATE

Philip Gray stood down as Chairman of the board at the Annual General Meeeting of the company on 26 September 2009. He subsequently resigned as a non-executive director on 14 March 2010. Roger Matthews also retired as a non-executive director at the Annual General Meeting of the company on 26 September 2009. Lethebe Maine was appointed as a non-executive director of the company on 25 November 2009. His appointment is still subject to formal approval by Non Bank Financial Institutions Regulatory Authority (“NBFIRA”) and the application is pending.

DIVIDEND

The dividend for the year has been passed.

For & on behalf of the Board of Directors

SM Ndoro       MJS Tunmer

Chairman       Chief Executive Officer

Transfer Secretaries:

Corpserve Botswana

First Floor, Block A, Unit 3, Plot 117

Millennium Office Park, GABORONE

Telephone 393 2244: email: corpserve@info.bw

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Consider this wording from the Companies Bill 2008 relating to shareholder communication:-

“Where the document or information is sent or supplied “by means of a website”, it is deemed to have been received by the intended recipient—

(a)       when the material was first made available on the website , or

(b)        if later, when the recipient received (or is deemed to have received) notice of the fact that the material was available on the website.”

This all encompassing legality provides a legal exit for listed companies not interested in providing basic shareholder rights. What common law rights do shareholders have that may overrule this sort of requirement? Will companies honestly adopt this as an easy exit?

In the US the Shareholder Communications Coalition is an advocacy organization dedicated to improving the ability of individual investors to vote their shares and communicate with the publicly traded companies in which they invest. The Coalition also seeks to educate individual investors about their rights as shareholders and the importance of participating in corporate elections. Efforts are underway to restore the direct communications links between shareholders (yes each one individually) and listed companies. The same is happening in Nigeria where corporate governance failures in public capital markets have crippled a nation.

Kenyan regulators are not taking a long term view. Not concentrating on the corporate governance issues.

Is anyone aware of any other Nation that has similar shareholder communications legislation?

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I like following the SEC in the USA for a number of reasons: they are active and progressive on a number of fronts, not least of which is that its easy to follow what they are doing. Shareholder education and active regulatory intervention are the parts that interest because niether are prevalent in the majority of African markets. And they should be. Anyway herewith the latest article lifted from their website notified to me by “push technology”.

“The Securities and Exchange Commission today announced the award of $1 million to Glen Kaiser and Karen Kaiser of Southbury, Connecticut, who provided information and documents leading to the imposition and collection of civil penalties in SEC v. Pequot Capital Management, Inc., et al. This is the largest award paid by the SEC for information provided in connection with an insider trading case.

The SEC staff previously investigated alleged insider trading in Microsoft Corp. securities by hedge fund adviser Pequot Capital Management, Inc., its chief executive, Arthur J. Samberg, and David E. Zilkha, a Microsoft employee who accepted an employment offer at Pequot, but closed its investigation without action. In late 2008, Karen Kaiser, the ex-wife of Zilkha, and her husband, Glen Kaiser, discovered key evidence that ultimately led to the filing of a settled enforcement action against Defendants Pequot and Samberg alleging they engaged in insider trading. Among other documents and information the Kaisers provided the SEC was a key email communication between Zilkha and another Microsoft employee that was not turned over to the SEC in the first investigation. Without admitting or denying the allegations in the SEC’s complaint, Pequot and Samberg consented to the entry of injunctions and orders requiring the payment of civil penalties totaling $10 million (as well as the payment of disgorgement and prejudgment interest totaling over $17 million and an investment advisory bar as to Samberg and censure as to Pequot).

The SEC approved the award earlier this week pursuant to Section 21A(e) of the Securities Exchange Act of 1934, which authorized the Commission, in its discretion, to grant an award of up to 10% of the penalties paid in a case to a person who provided information leading to the imposition of those penalties, but only in insider trading cases. That provision has since been repealed by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which added new Section 21F to the Securities Exchange Act, authorizing the Commission to award bounties to parties who provide information leading to recovery of monetary sanctions in a broader range of cases, not limited as before to civil penalties recovered in insider trading cases.

On the same day the Commission filed the settled complaint against Pequot and Samberg in the above matter, it also issued an order instituting administrative and cease-and-desist proceedings against Zilkha in connection with the conduct described above. That matter is pending before an SEC administrative law judge.

For further information, please see Litigation Release Number 21540 (May 28, 2010). [SEC v. Pequot Capital Management, Inc., et al., Civil Action No. 3:10-CV-00831-CVD (United States District Court for the District of Connecticut] (LR-21601)”

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Our latest monthly reconciliation shows 1,652 listed companies in Africa:-

There is an article below that misses a number of points about African stock markets. It is so generic as to be meaningless. I have submitted my comments below the text of the article (forgive the acerbic tone):-

Africa has ‘too many bourses, too little liquidity’ , June 28, 2010, By Ellis Mnyandu

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Africa should consider rationalising the number of securities exchanges that are on the continent in order to boost the appeal of Africa’s markets as a viable investment destination.

THE ISSUE IS NOT THE NUMBER OF STOCK EXCHANGES BUT THE QUALITY OF THE EXCHANGES. YOU TRY TAKING AWAY A NATIONAL ASSET – THAT’S HOW THE MARKET WILL VIEW IT. THIS IS WHY THE AFRICAN STOCK EXCHANGES ASSOCIATION HAS NOT ACHIEVED ANYTHING AT ALL. THESE STOCK EXCHANGES ARE NOT CO-OPERATING FOR GOOD REASON. THEY HAVE NO NEED TO.

This view was expressed by Maria Ramos, the group chief executive of Absa – South Africa’s largest retail bank.

“I think we probably need to rationalise the number of stock exchanges on the continent,” she said during a panel discussion at the Fortune Global Forum in Cape Town. “We are currently sitting with 23. Looking at these markets there is not enough liquidity to sustain all of them.”

WHETHER OR NOT THEY ARE LISTED IN GABON OR JOHANNESBURG THE LIQUIDITY / FREE FLOAT WILL REMAIN  THE SAME. YOU MAY SAY BUT ACCESS TO BIGGER BETTER MARKETS WILL ASSIST – THIS CAN BE ACHIEVED TO THE SAME EXTENT IN DOMESTIC MARKETS ALL IT NEEDS IS VISION AND MANAGEMENT. THE EXCHANGES WILL NOT BE SELF FUNDING – SO WHAT? NEITHER WILL THEY BE WHEN FOREIGN MARKETS EXTRACT THEIR RENTS.

Ramos said there had been an ongoing dialogue for quite some time about what needed to happen to integrate financial markets on the continent. But so far there had been no discernible steps to turn the dialogue into tangible real action.

DID SHE SAY WHY? THE BEST THING THAT THE JSE COULD DO IS OFFER A FREE INFO DISSEMINATION PLATFORM TO LISTED COMPANIES IN AFRICA – THIS WOULD BUILD A COMMUNITY AND ENABLE EXPERIENCES IN THIS AREAS TO BE GLEANED OVER A NUMBER OF YEARS. THEN THE ISSUE SHOULD BE REVISITED.

The call for integration comes at a time when developing markets are under the spotlight as the global financial crisis pushes investors to look for investment returns elsewhere to offset sluggish returns in the slow-growing developed world.

Developed economies like the US and Europe have bore the brunt of the global financial crisis, putting developing economies such as South Africa, Brazil, China and India on investors’ radar screens.

But a key hurdle for investors looking to put money into Africa is the continent’s disparate securities exchanges, some of which barely see meaningful trading in each of the days that they are operating due to a lack of liquidity. MANY LISTED COMPANIES SHOULD NOT BE  LISTED – THE FAULT OF THE REGULATORS HERE. EITHER YOU HAVE A PROPER MARKET OR NONE AT ALL.

Although an integrated operational framework might bring such benefits as transparency for investors (IMPLICITLY AGREEING THAT THE INFORMATION DISSEMINATION PRACTICES OF THE EXISTING EXCHANGES ARE POOR), a key challenge might come from regulation.

There would also be an issue of regional harmonisation – bringing east Africa, southern Africa, west Africa and north African bourses under a single framework. Currently some exchanges have tended to band together by each region.POLITICS – WHY DO PEOPLE CONTINUE TO FLOG THIS HORSE? A FRAMEWORK OF WHAT – REGULATION SETTLEMENT, INFORMATION DISSEMINATION?

Trade and Industry Minister Rob Davies echoed the call for integration, noting that Africa had rather small domestic markets in individual countries. There was a long-standing observation that there was a larger potential with markets that had groups of countries behind them, he said on the sidelines of the forum. RHETORIC REGURGITATED FROM THE PREVIOUS 10 YEARS EXPERIENCE. LETS COME UP WITH SOMETHING NEW! DEAR MALAWI – YOU HAVE A “RATHER SMALL” MARKET!!

“The debate is about how we get there,” Davies said. THE DEBATE IS ABOUT HOW WE MAKE MARKETS MORE LIQUID:-

- BETTER REGULATION

- BETTER SHAREHOLDER EDUCATION

- DE-LIST NON-COMPLIANT SHARES

- BETTER INFORMATION DISSEMINATION

In South Africa the JSE Limited operates Africa’s largest bourse, the Johannesburg Stock Exchange, which is among the top 20 securities exchanges in the world and its size dwarfs that of other African bourses such as those of Malawi, Libya and Mauritius.

INTERESTING INSIGHT HERE

The 11th annual Fortune Global Forum, which ends today, brought together heads of state, ministers, and the chief executives of the world’s biggest companies to discuss business, economic and social opportunities arising from the increasing role of emerging markets in the global economy.

It is the first time that the forum has been held in Africa.

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We have recorded across the board declines in investor traffic in the 23 websites we manage.

We had speculated that the World Cup (I have put in a link here to FIFA as they need help on the traffic to their website – its now up from 20,000,000 a minute to 20,000,001 a minute) might increase traffic. How naive we were. There’s another side though.  A more interesting one – the long term effects of the enhancement of Africa’s image. I think that African leaders are cursing themselves for not taking their soccer more seriously and realising that an event such as this is the biggest PR event they could possibly ask for.

Consider Ghana. The most deserving African nation of anything good. A decent democracy. A nice people. An expensive airport. They did not deserve the idiocy of soccers rules that saw them out of the World Cup. Barack Obama visited them. Ghana is king in Africa. I love Ghana.

But their online investor relations is way behind the rest of Africa? An opportunity lost? Yes. Definitely.

That said, with only the final to go, traffic to our investor websites is picking up again.  We are going to watch the Ghana section of Africanfinancials.com closely to see if soccer helps investment. By the way the Dutch are going to win. Spain were lucky.

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My business partner just spoke to a bloke in the online sales and marketing game – very different to our business but he said some meaningful things – he said the secret to making sales online was trust, likability and knowledge (knowledge in the sense that people believe you know what you are doing).  He has been struggling a little in the online health industry (a massively competitive market).  Anyway he said his experience over the last few years this was the most important thing he ever learnt – “width in inches, depth in miles”!  I thought that said it all!!!

The same thing applies to an online IR programme. Exchange the likability for transparency and you have the same principles that should form the foundation of a communication platform.  Specialise in building an online community from every aspect of your business’s interaction with investors, employees and stakeholders. Width in inches, depth in miles.

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The annual reports of African telcos, most of which appear here, provide interesting insights into African telco markets and the growth drivers within them. Zain has just released its annual report viewable here.  A good read and insight into African telco markets.

African Is Cool has two mobile telco clients: Econet Wireless and TNM Malawi. Online investor relations solutions are particularly powerful for telcos because they typically have a broad range of shareholders through which integrated communications enhances brand and corporate reputation.

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