WO2016157202A2 - A novel system for enhancement of global investor relations practices in 400 hours - Google Patents

Abstract

Companies depend on investors for their capital requirement and fair valuation. So it is critical for them to maintain a healthy relation with investors for which they have been traditionally dependent on intermediaries such as investor relations agencies and financial brokers. To enhance relationship with investors and other stake holders, a novel system known as Investor Relationship Enhancement Program (IREP) has been invented which comprises of fifty five (55) modules to enhance investor relations in four hundred (400) working hours, depending on the requirement of the company. This will reduce their dependency on intermediaries, build direct relation with investors, bring in more transparency in the company's Investor Relations (IR) practices and also help companies systemically deliver IR activities throughout the year.

Description

TITLE: A NOVEL SYSTEM FOR ENHANCEMENT OF GLOBAL INVESTOR RELATIONS PRACTICES IN 400 HOURS

THE FOLLOWING SPECIFICATION PARTICULARLY DESCRIBES THE INVENTION:

Field of invention

The present invention is in the field of Investor Relations (also referred to as IR). This invention is aimed at enhancing investor relations practices followed by companies listed on stock exchanges across the globe.

Area of application

This invention is useful for the corporate finance department, investor relations department (also referred to as IRD) and corporate communications department of companies listed on stock exchanges across the globe. It is also applicable for those listed companies who do not have their own IRD but have external agencies who manage their investor relations.

Background of the invention

Companies listed on stock exchanges across the world want to maintain healthy relationships with all its stake holders, be it internal or external. Investors in the company are one of the most important stake holders.

These investors, both individual and institutional, are an essential source of capital for companies to grow and prosper.

To maintain current investors and attract new investors, companies need to communicate with investors and give them details about their vision & mission, long term business strategy, managerial ability, financial data and information required for investment decision making.

Currently, there is a gap in the quality and quantity of disclosures that investors want from companies and what the companies provide. Not all companies are fully utilizing the available resources to initiate and build relationships with investors. Further, majority of the companies are not fully aware of the benefits of leveraging best global IR practices. l Also there is lack of two-way interaction with investors and other stake holders who can aid the company management by way of feedback, knowledge about their peers, business introductions etc. This shows companies are not utilising their resources properly. Further, majority of the companies consider Investor Relations as a cost centre rather than an opportunity to create value for the company. Our invented system is intended to solve all problems associated with IR practices.

Generally, companies provide information like company overview, financial information, stakeholder services, news and events, corporate governance, help etc. Following example explains information provided by companies to investor.

Financial Information provides overview, financial reports, financial snapshots, stock charts, investor calculator, historical stock price look up etc.

Stakeholder services include overview, investor services programs, annual meetings of stakeholders, new investor updates, FAQs, printable forms and contact information etc.

News and events include event calendar, events and presentation, articles and view points, selected account acquisitions, RSS feeds etc.

Corporate Governance includes providing detailed information about board of directors, board committees, executive officers etc.

All these above information sections and their sub sections vary with companies.

Also now companies have started using interactive analytical tools, visual aids and social media platforms to disseminate information to investors. Ob ject of invention

1. The principal object of the invention is to help companies in enhancing investor relations by making use of 55 modules provided in our invented system.

2. Another important object of the invention is to make companies become more transparent and enable two-way interaction with investors and other stake holders. This can aid the company management to get feedback, knowledge about their peers, suggestions by seasoned investors, introduction to international partner by common investors etc.

3. Further object of the invention is to provide the company with better control in building direct relationship with investors.

4. Yet another object of the invention is to assist companies to systematically perform IR activities throughout the year.

5. Yet another object of the invention is to help companies reduce dependence on external agencies for performing IR activities.

Summary of invention

• The invention is a one month fast-track investor relations enhancement program (also referred to as IREP) that is conducted in 400 working hours, with onshore implementation & offshore support. It involves implementation of 55 IR modules which are benchmarked to best global IR trends and practices. Further it is a cost effective solution in enhancing a company's IR practice.

Detailed description

Investor Relations nowadays plays a strategic role and covers the whole range of activities through which a company engages and communicates with its current and potential investors. An effective IR helps the firm to:

1. Raise funds: One of the main IR roles is to initiate dialogue and build relationship with the investment community on a consistent basis. IR can then leverage its strong relationship with the investors to make them aware of the company's investment proposition and ensure higher investor participation in the fund raising exercise and at better valuations so that effective cost of the capital to the company is minimized.

2. Attract liquidity: Another important objective of IR is to attract higher liquidity into company's stock_. i.e. increased frequency of trading in the shares. With higher amount of interaction with the investors on the continuous basis, describing them more about the Company and its future goals, IR can build sizeable number of buyers and sellers in share trading to attract liquidity.

3. Attain fair market valuation: By communicating company's strategies appropriately, IR can manage investor expectations with respect to their current and future performance.

4. Maximizing market value: In a competitive market, IR helps the firm to differentiate it from peers by maintaining regular communication with investors that is likely to generate premium in the stock price over long term.

5. Maintain stock price: By providing timely and transparent updates, an effective IR help to balance investors' sentiments thereby preventing excessive volatility in share price even during bad times.

6. Save valuable senior management time: IR department acts as a primary contact point to convey company information, address investor queries and receive investor feedback, thereby saving valuable time of Chief Executive Officer. (CEO) and Chief Financial Officer (CFO).

7. Gain recognition and credibility: Good investor relations can help the company gain appropriate recognition within the financial community.

Also there is a gap in the quality and quantity of disclosures that investors want from companies and what the companies provide. Not all companies are fully utilizing resources available to them to initiate and build relationships with investors. Further, majority of the companies are not fully aware of the benefits of leveraging best global IR practices. Current scenario of information inflow, is highly skewed and unbalanced which are as follow. The current in-bound information that an investor receives is through three key sources:

1. Investor's own research

2. Disclosures made by the listed company

3. Brokerage firms & Intermediaries

However, currently, the majority of the information is disseminated through brokerage firms & intermediaries, which has resulted in investors and companies being highly dependent on them.

All the three sources of information have issues which are listed as below.

1. Investor's issues:

a. Higher dependence on brokerage firms & intermediaries for information dissemination

b. There are limited disclosures from companies and key information especially the ones which could have a negative impact are usually not shared immediately c. They have limited direct relationships with company's top management which provides them with a clear perspective and company's future direction 2. Company's issues:

a. Higher dependence on brokerage firms & intermediaries for information dissemination

b. They have limited control over investor and other stakeholders perception, especially during crisis

c. They have limited ability to have the desired mix of shareholders which provides them with stability and long term capital

3. Brokerage firms & intermediaries issues:

a. They are going through a consolidation phase due to high operational costs and shrinking margins

b. There is a shrinking equity research coverage of companies

c. Senior analysts are shifting to investor community or to corporate finance departments in companies

The present invention provides a solution for the above mentioned issues faced by an investor, company and brokerage firms or intermediaries. The present invention is a result of in-depth research of best IR practices followed by companies, globally, panning across various sectors.

Here disclosed invention provides a system for imparting best IR practices to companies by making use of 55 modules provided in the invented system. The execution of this system is not limited to software or application but can also be executed in any other suitable form. Best IR practices mean implementation of 55 modules effectively as explained and shown in these modules. By these invented modules for IR activities, we mean to say that depending on size of the company (whether it is large capitalisation (also referred to as cap), mid cap, small cap), company should follow required modules/actions which are shown in IR planner by our invented system.

These 55 modules were invented and designed to help IRO or any other person of IRD to understand best IR practices. These modules introduce the concept of investor relations & investor relations activities. They explain in detail what and how companies need to do for best practices in investor relations are in the form of pre designed templates and tutorials. These modules might be in the form of audio, video or in text form. The number of these modules is not limited to 55 but it might be increased or decreased for further improvements in IR practices. So with the help of these 55 modules, one can understand the concept of IR in detail and also learn how to conduct IR activities and communicate with investors and other stake holders.

Investor Relations Enhancement Program (IREP) has following features which distinguish it from any other IR program in the world.

• Provides solutions to challenges faced by companies in right information dissemination.

• Exhaustive in its nature as it encompasses 55 aspects of investor relations.

• Customized program which deals with company specific IR challenges and accordingly provides solutions, which are readily executable.

• Interactive program which is conducted onsite (company's premises) and offshore (outside company's premises).

• Provides fast-track enhancement in a period of only 400 hours.

• Integrates various channels of information which are available to a company.

• Aimed to give better control to a company in disseminating information directly to the investors.

• System driven to the extent that an annual planner can be prepared to perform IR activities.

• Introduces ways which help companies save their time and cost.

• Empowers companies to become more transparent and conduct two-way interaction with investors and other stake holders.

• Helps companies reduce dependence on external agencies such as brokerage firms or intermediaries for performing IR activities.

IREP is conducted in co-ordination with the company and covers IR practices under the following areas:

Introduction to Investor Relations

o There is a vast difference between IR practices followed in various geographies.

IR practices followed by a company may not be completely utilizing its full potential and can be benchmarked to global practices.

Investor relations plan & strategy

o Awareness of global IR practices can help in revamping company's IR plans and strategies.

Investment idea

o Bridging a gap between investor expectations for information and what the company is providing currently, can help in developing superior relations.

Company publications

o Each company has various avenues to share information to the stakeholders.

Publications such as annual reports, investor presentation, etc. can be rethought and redesigned to share insightful information.

Company events

o Events performed during quarterly results and even annual such as results conference calls or annual general meetings have evolved not only in terms of content but also in terms of medium of delivery.

Corporate communications

o The way in which information is shared with the stakeholders has gone through a big change from a simple press release to a broadcast over social media. Handling " these channels of communication require different skills sets. • Relations with stakeholders

o Information demands of various stakeholders have changed over the years.

Understanding needs of different stakeholders and accordingly developing right channel of communication helps to seal the gaps.

• Investor targeting

o Longevity of investment period of investors has a large bearing on targeting right set of investors by the company. Synchronization between an investors objectives and the company's long term business performance can create a right match. Handling IR issues and challenges

o Challenges and issues are part of any evolving field. Overcoming the challenges with technology, information, relationships can go a long way in arriving at solutions.

• Measuring Investor relations effectiveness

o Measurement of IR efforts can be done on various parameters viz. market value changes, investor profile, quality of analyst coverage, etc.

• Corporate social responsibility

o In a larger scheme of things, a company's CSR activities play a vital part in its perception amongst the stakeholders.

IREP is conducted typically over a period of 400 hours and the entire process is divided into activities that are performed onsite and offshore. The process has a mix of automation and manual implementation.

Majority of the companies across the world currently do not follow all the 55 modules but may be implementing only a few of these in practices. So there is a strong need to implement robust IR practice by implementing better processes and engagement methods through the use of these modules which will improve investor relations.

L0 Introduction to the system

Impact and effect of IR are shown in snapshot 1 & 2 respectively.

Snapshot 1 show how the current information dissemination is changing from the system where the intermediaries played a larger role, to a system where the companies are getting greater hold on their information flow and developing direct relationship with the investors. The Global IR theme that is emerging is that of companies are going direct to the investors.

Snap shot 2 lists out how IREP impacts company in following areas:

• Influence market capitalisation

• Helps to achieve fair valuation

• Improve investor perception

• Build a financial brand

• Articulate vision of company

• Increase visibility of company

These parameters are not limited to this but these are just for information.

Snapshot 3 shows how IREP can help in conversion of existing IR program to an enhanced IR program. IREP involves providing offshore support and onshore implementation of best IR practices at company's end thereby optimally using their limited IR resources. Here offshore support means assisting the IRD from a remote location to improve investor relations activities. Onshore support means assisting IRD in execution of IREP. Using IREP, investment relations officer can benchmark company's investor relations plans with best IR practices over the world. In this way present invented system will help company to migrate from existing IR program to enhanced IR program.

Snapshot 4 provides technical features and components of invented IREP solution like server, database, user dashboard, communication, built in CRM, IR modules, IR planner. Snapshot 5 shows the first view of system after the client logs in. This first view after log in is known as user dashboard and explained below.

The first view of IREP after log in is shown in snapshots and the first view of our system after log in is known as user dashboard. Details about options available in workstation (user dashboard) and how the system looks like are given below:

• My account

My account is with sub section like credentials, my files, resources etc. In this user can upload detail data about their activities and also do other related things.

• CRM

CRM is with sub section like project status, work orders, action plans etc.

Through CRM, can keep watch over user's activities and suggest those required actions.

• Score card

This score card is with sub section for current score, standard score by system, activities needed to be followed by company, target range of activities etc.

• IR planner

IR planner shows various previously and currently planned activities. IR planner shows suggested best IR plan to company for better communication with investors.

• Modules

Modules include 55 modules and are either tutorial or deliverables. These modules are in form of audio or video format.

• Live chat

Live chat is provided with option like chat, call, video or any other form of communication.

Also user dashboard is supported with auxiliary section like log in, help, IR application, IR news, published reports etc. These auxiliary sections are not limited to this but it might be increased or decreased for further improvements. This Increment or decrement depends on new invention in current system. Snapshot 6 covers the 15 key areas that encompass the 55 modules of IREP such as Introduction to IR, Annual Plan, and Relations with Stakeholders etc.

Snapshot 7

Snapshot 7 shows workflow of IREP which is explained as follow:

1. User Inputs

The company's IRO (User) logs in and uploads detailed data about their IR activities and policies.

2. Global Standards

Our invented system assigns weightage to all uploaded IR activities.

3. Report Generation

Generation of report based on inputs and weightage.

4. Standardized IR Score

Standardized IR Score as determined from the report will help to assess current scale of IR activities. This is a score generated by our invented system automatically as per company's IR activities.

5. Action Card

This action card suggests the activities that company needs to follow to enhance its IR practices.

6. IR Planner

Our system will provide suggested IR planner for company as per information provided by them and previously stored data.

Now let us consider two examples to better understand the importance of IREP and it's implementation.

Example 1

This example shows how IREP is used by company and how it helps company in IR planning. Suppose there is a company XYZ which runs IREP. Now the user or client can conduct the following activities for enhancing its IR practices:

1. Login to the system

2. Upload detailed data about the current IR activities

3. Our invented system assigns weightage to all uploaded IR activities.

4. A report is generated which shows the score of current IR activities.

Suppose XYZ got a score of 30 which means inadequate IR practices.

5. Based on the company's desired target score, XYZ needs improvements in current IR activities. These improvements and activities are shown in the action card.

6. Now the system provides an action card to XYZ which will help XYZ to do other extra activities which will bring it from a score of 30 to the desired score.

7. Finally, IREP provides suggested IR planner for XYZ

Example 2

The present invention is also effective for large-cap firms that may have a well established IR department. Though the IR depaitments in large cap companies follow many of the global best IR practices, they may not be fully aware of the recent trends and practices.

Take the example of company 'ABC which enjoys wide visibility, large market capitalization and large investor base.

This company is also required to follow best IR practices to maintain its market capitalization and prevent volatility in its stock price during crisis or in uncertain times. Such companies being large also face opposition or activism from minority and institutional investors with respect to their resolutions on utilization of cash, M&A activities, executive remuneration, etc.

The present invention helps the company to quickly ramp up the standards of its IR activities by providing fast paced yet exhaustive and interactive solutions to these issues. The invention not only provides the company 'ABC in finding out the right set of investors that are aligned to it's long term goals, but also helps it to build relationship with all its stake holders, thereby reducing instances of activism.

Claims

I claim

1. A novel system for investor relations enhancement for listed companies in stock

exchange and external investor relations agencies.

2. A system as claimed in claim 1, wherein said system comprising:

• My Account: wherein users can enter detailed data about their IR activities

• CRM: Built in Client Relationship Management for simultaneous action plan with client.

• Score card: Wherein the state of current IR activities are rated using terms such as average, good, very good, excellent, etc. Score of current IR activities, desired IR score, plan of activities & suggestions to fill gap between actual IR score and desired IR score.

• IR planner wherein IR planner shows optimized planning of various activities, wherein the said IR planner stores data of previously planned activities, current plans and planning of future activities.

• Modules: wherein the said modules include tutorials and deliverables for investor relations activities.

• Live chat which helps in direct communication between IR service provider and clients by the medium of chat, video, call, etc.

• IR application for mobile devices and tablets

• News and published reports

3. A novel system as claimed in claim 1, wherein said system is in software or an

application form.

4. A novel system as claimed in claim 1, wherein a system comprises of fifty five (55) modules.

5. A novel system as claimed in claim 1, wherein said modules are in audio, video and/or text form.

6. A novel system as claimed in claim 3, wherein the system can generate reports on demand.

7. A novel system as claimed in claim 1, wherein system provides the company the ability to enhance direct communication with investors.

8. A novel system as claimed in claim 1 comprising of the following work flow

• User provides data about current IR activities and relevant parameters

• Standard weightage is assigned to all the IR activities

• A report is generated based on user data and weightage assigned to all IR

activities

• The report generates current score of the company to help analyse IR performance of the company

• Based on the current score and the score desired by the company, an action plan is generated to help the company reach the desired score

• Also an IR planner is suggested to ensure that the company regularly conducts IR activities to reach the desired score

• On a periodic basis, the performance of the company is assessed and score

generated to compare with desired score and if required further action is suggested