African Investor Relations

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

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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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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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As a corporate adviser carrying out valuations or seeing valuations of others in the industry, for example,analysts, I always applied a two stage methodology: use forecasts to project future free cashflows, discount them to present value and adjust for debt and existing cash on hand.

Then, in stage 2, to balance this out (or to perform a “reasonableness test”) I compared the resulting valuation parameters with the discounted cash flow figures. The figures were always miles apart (discounted cash flows always being much higher than peer relative valuations), so back we go to the discount to rate to find some economic reason to justify why they were too low or we went back to the business model to see whether there were any errors in managements assumptions.

Nearly always the projected performance of the company would exceed its historical performance and any suggestion to management that the past was an acceptable basis to value cash flows in the future would be a personal insult to the management team. “This is about the future, not the past! They would say.” We always looked on the brighter side of life.

Here is an extract from my favourite book The Intellient Investor in its chapter, Security Analysis for the Lay Investor. I recommend you buy this book.

“The higher the growth rate you project, and the longer the future period over which you project it, the more sensitive your forecast becomes to the slightest error. If, for instance, you estimate that a company earning $1 per share can raise that profit by 15% a year for the next 15 years, its earnings would end up at $8.14. If the market values the company at 35 times earnings, the stock would finish the period at roughly $285. But if earnings grow at 14% instead of 15%, the company would earn $7.14 at the end of the period—and, in the shock of that shortfall, investors would no longer be willing to pay 35 times earnings. At, say, 20 times earnings, the stock would end up around $140 per share, or more than 50% less. Because advanced mathematics gives the appearance of precision to the inherently iffy process of foreseeing the future, investors must be highly skeptical of anyone who claims to hold any complex computational key to basic financial problems. As Graham put it: “In 44 years of Wall Street experience and study, I have never seen dependable calculations made about common-stock values, or related investment policies, that went beyond simple arithmetic or the most elementary algebra. Whenever calculus is brought in, or higher algebra, you could take it as a warning signal that the operator was trying to substitute theory for experience, and usually also to give to speculation the deceptive guise of investment.”

“All investors labor under a cruel irony: We invest in the present, but we invest for the future. And, unfortunately, the future is almost entirely uncertain (more so in Africa). Inflation and interest rates are undependable; economic recessions come and go at random; geopolitical upheavals like war, commodity shortages, and terrorism arrive without warning; and the fate of individual companies and their industries often turns out to be the opposite of what most investors expect. Therefore, investing on the basis of projection is a fool’s errand; even the forecasts of the so-called experts are less reliable than the flip of a coin. For most people, investing on the basis of protection—from overpaying for a stock and from overconfidence in the quality of their own judgment—is the best solution.”

My key point in all of this is the absence of readily available information to carry out a more Benjamin Graham type valuation or indeed, a more educated investment decision. I have never completed a valuation with 10 years of historical statistics for the peer group with which I was working. I should have. Its about access to information.

My message to listed companies today is to track the long-term performance of your peers, ensure that your long-term performance table is at the back of your annual reports (10 years of balance sheet, income statement and cash flows and say, 5 bullet points summarising the performance of each year). Also ensure that you have submitted your past 10 years of annual reports to Africanfinancials.com. If your financial performance is NOT ahead of your peers, do something about it!

Africanfinancials.com is a good place to start to get an idea of comparing yourself with peers. So is buying the Intelligent Investor and reading it.

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As our population of annual reports on africanfinancials.com grows (2,268 at the last count), so does the opportunity to carry out research on a broad array of African companies. Long-term research. The Intelligent Investor, by Benjamin Graham and updated commentary by Jason Zweig should be a bible for anyone interested in investing in Africa. One of Benjamin Graham’s insights is

“the investor who permits himself to be stampeded or duly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage”.

Zweig points out the Graham’s basic advantage is the full freedom to think for your self in whether to follow the market or not. To have this independence though you need information.

There are 1,500 listed companies in Africa and Africanfinancials.com seeks to put the last 10 years annual reports of each of these online. Call it 15,000 in total.  We have just over 2,200 annual reports online. We have made reasonable efforts to do this, with some success, but it’s clear that the information is just not there. Using the annual report as an investment bible proxy less than 15% of the information that should be available online is online.

Is there a single organisation that has correlated the long term earnings of listed companies in Africa? Not sure. Perhaps the likes of Thompson Reuters and Bloombergs have and to be sure this information is not readily available in market at low cost. Hard to find information is valuable because you can charge for it. Stock exchanges are natural repositories for this sort of data and making this available to the market is, in my mind, one their basic obligations. But alas this is not to be.

When asked what keeps most individual investors from succeeding, Graham had a concise answer:

“The primary cause of failure is that they pay too much attention to what the stock market is doing currently”.

This is all very well, but when finding out what they (African companies) did in the past 3 – 5 let alone the last 10 years is not possible investors are left to concentrate on market sentiment and what the stock market is doing currently. Africanfinancials.com is slowly addressing this enabling investors to access information that they can digest themselves with or without the influence of others.

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Investor traffic on www.Africanfinancials.com measured by visits is almost 8,000 a month. Actual visitors are in excess of 5,800 a month.

The UK leads in visits at just under 1,000 a month. Not surprising as the London is a financial capital. In the next month or so we intend to add over 800 additional annual reports and more.

Why do we love www.africanfinancials.com? It introduces investors to our clients, it gives investors what they want (f0r free), it encourages studies into African capital markets, it increases transparency, it enables educated investment decisions, it achieves the basics. It’s ahead of the Governance Curve.

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Searching for annual reports on Africanfinancials.com has just got easier. A simple Google search bar now enables investors to search our portal directly and immediately.

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Our portal of African annual reports www.africanfinancials.com recorded almost 5,000 visits from over 82 countries last month. Top of the visiting country list was Nigeria primarily viewing, you guessed it, Nigerian annual reports. The UK and South Africa came second and third respectively.

Africanfinancials.com is Africa’s largest online portal of freely viewable, sortable annual reports. Our portal offers a free service to African listed companies to scan their annual reports into PDF and publish them online. Our portal also attempts to assist investors in  sourcing annual reports from listed companies but this proves challenging given African listed companies’ low levels of  awareness of the level of investors’ needs for information.

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