African Investor Relations

Africanfinancials.com is the leading source of African online annual reports, widely used by consumers of annual report information worldwide (visitors from over 170 countries visit the portal monthly).

Improvements are planned for the portal whose objective remains to provide free access to online annual reports for investors, stakeholders and listed companies in Africa. Africanfinancials.com believes that Africa’s capital markets’ information dissemination practices are inefficient and generally fail to recognise that “information is the life blood of markets”.

Africa cannot afford to have its regulators rent seek (charge for) basic investment data in African markets and there is a significant need for investor education initiatives. Why? Because the internet is enabling a vast community of investors and ordinary people to access information online.

This (internet) is an opportunity for Africa’s capital markets to be more liquid and more efficient. It’s also a commercial opportunity for listed companies to showcase brand. Vital pre-requisites to ensure that Africa is able to raise the capital it needs and promote internal investment in order to compete in the global market place. Africanfinancials.com has launched a brief survey to its users to find out more about their information needs. Access the survey here. It’s quick – less than 10 minutes.

To further accentuate the importance of annual reports in African markets from a disclosure, design, print and many other perspectives, a Africanfinancials.com, LinkedIn Group, has been launched. Join the group here to participate in a community that’s dedicated to anything involving African annual reports. Anything annual report AND anything African. Start discussions, post jobs, read the latest annual report releases

Africanfinancials.com also has a Twitter account that tweets the release of every annual report online. Join the Twitter account here or access the data from the Africanfinancials.com Linkedin Group here.

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For investors our www.Africanfinancials.com portal is a very handy tool. In fact, its not only investors that use this platform, its everyone with interests in any African listed company so I have started blogging the updates we make.

There are a few twists to what we do: we put prospectuses online as well as annual reports of African securities regulators (the stock exchanges) since they do a relatively bad job of keeping their stakeholders (us) up to date.

The following annual reports have been recently added to AfricanFinancials.com. Also included below is a prospectus and a pre-listing statement:

Botswana

• 2010 : Cresta Marakanelo Limited
• 2009 : Cresta Marakanelo Limited (Prospectus)

Kenya

• 2004 : Diamond Trust Bank of Kenya Limited
• 2003 : Kenya Commercial Bank

Mauritius

• 2010 : Air Mauritius
• 2010 : Ciel Investment Limited
• 2009 : New Mauritius Hotels Limited
• 2009 : Phoenix Beverages Limited
• 2008 : Mauritius Leasing Company Limited
• 2008 : Mauritius Union Assurance Company Limited

Nigeria

• 2009 : Airline Services & Logistic PLC
• 2006 : Costain (W.A.) Plc

South Africa

• 2010 : Blue Financial Services
• 2010 : Ceramic Industries Limited
• 2010 : Chrometco Limited
• 2010 : Crookes Brothers Limited
• 2010 : Digicore Holdings Limited
• 2010 : Distell Group Limited
• 2010 : DRDGold Limited
• 2010 : ELB Group Limited
• 2010 : Emira Property Fund
• 2010 : FoneWorx Holdings Limited
• 2010 : Gold Fields Limited
• 2010 : Group Five Limited
• 2010 : Hosken Consolidated Investments Limited
• 2009 : Discovery Holdings Limited
• 2009 : Gold Fields Limited
• 2009 : Hosken Consolidated Investments Limited
• 2009 : IFA Hotels and Resorts Limited
• 2008 : Discovery Holdings Limited
• 2007 : Discovery Holdings Limited

Zambia

• 2010 : Pamodzi Hotels Plc
• 2006 : Pamodzi Hotels Plc

Zimbabwe

• 2010 : CAPS Holdings Limited
• 2010 : LonZim Plc
• 2010 : National Foods Holdings Limited
• 2010 : Padenga Holdings Limited (Pre-Listing Statement)
• 2010 : Truworths Limited
• 2009 : CAPS Holdings Limited
• 2004 : NMBZ Holdings Limited
• 2003 : NMBZ Holdings Limited
• 2000 : NMBZ Holdings

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We have a baby in our organisation called Africanfinancials.com. We love this baby and cherish it. We only feed it once a week (with annual reports) and that’s generally enough. She grows and grows and gets cuter by the day. And then we love her more.

A lot of people visit her every month (over 7,000) and they look at her over 24,000 times – she’s cute you see and very interesting. And very famous because people visit from over 120 countries, every month.

She wears designer apparel – our listed companies clients – the ones that live in the same neighbourhood – the internet – and these “brands” do well to be associated with her. Because some of those that visit our baby also visit the places that the “designer apparel” is resident. Our clients are a bit like a Tag Heuer watch on David Beckham.

The good news is that she is about to be visited by another neighbourhood soon – the one called the mobile phone neighbourhood. Every person accessing the internet with their phone can now visit africanfinancials.com and see what she has to offer.

In short www.africanfinancials.com is now mobile enabled adding to the visibility of african listed companies globally. And we are proud.

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Electrolux have been awarded the best annual report in the World for 2010 by Reportwatch by e.com.

Their top 2010 annual reports were rated according to the following rating parameters:-

They key thing for me is that this process is almost global and free. Most “award” initiatives entail the payment of a fee by the listed company that serves as a revenue generating project for the sponsors / appraisers. Africa needs a different approach, one that puts the objective of transparent reporting and one that rewards excellence above the need to charge companies. E.com has done it why can’t someone do this for Africa?

Reportwatch has its weaknesses in that not all annual reports might be appraised, but 1,000 – 1,500 assessments globally is high and would be sure to capture the best in the World.

The space for African annual reports awards is open for someone to come in and improve reporting. Structured correctly an initiative such as this in Africa would have tremendous indirect benefits to sponsors. But commercially who could justify this? Not a lot of companies. The big accounting firms? Regional securities organisations have a vested interest in this. The African Stock Exchanges Association in association with a donor / grant funding related to governance. The absence of an initiative of this nature in Africa points to the following:-

• absence of regulatory regimes co-operating with each other across Africa
• absence of awareness at director level of the importance of the annual report
• perceived absence of commercial opportunity

Who created the Reportwatch appraisals?

“The two “generators” of the idea were Vero Escarmelle (a marketing and communication consultant) and Mike Guillaume (an economist and financial specialist). Both were heavy users of reports in their consulting practice (“Volvo, Philips, Saint-Gobain, Canadian banks and a few U.S. industrials were among the references regarding content at that time,” remembers Mike) and had an inside experience through the coordination of annual reports for financial institutions. After the spin-off of the reporting unit renamed enterprise.com (or e.com) in 1999, the Annual Report on Annual Reports became a trademark of e.com.”

Annual report appraisals look for and benchmark best practice in order to strive for higher -and highest- standards in financial and performance reporting, investor and stakeholder information, and corporate communication. The longer term advantage is that richer report content, higher report value, better access to company information decreases the cost of capital. Mmmmmm… can this really be motivated in illiquid African markets where no empirical evidence exists?

e.com provides annual report benchmarking services comprising report evaluation tools and reporting assessment services to help companies report better or best, on paper and online. The bottom lines in any report should:

• Mirror company value
• Show investor value
• Enhance report value
• Increase stakeholder value

e.com are quick to point out that the ranking and score are based on an evaluation of the company report and output and cannot be interpreted as such as an assessment or rating of the company that releases the report. However investors are able to infer some opinions and decisions based on report content:-

Robert J. Samuelson once wrote, “Annual reports often tell us more than their authors know or intend.” (Newsweek, April 21, 1997).

“Even though a relationship may be found -or argued- between company, report and shareholder value, mind the deductions! Enron used to produce a decent annual report before its collapse, while a market leader such as Microsoft, among many, has never been capable of publishing an attractive one (even online).Good performance and even less company size don’t necessarily translate into good reports. “

Their services can compare annual reports with peers, best practices and For a complete list of services go to www.reportwatch.net/e-com/making-reports-pay-off

I am sure there is a business model that can be applied for African markets to showcase good annual reports appraised on say basic parameters to start off with. The global audience this would attract would justify the expense.

Africanfinancials.com would be the first place to assess Africa’s online annual reports offerings.

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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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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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