'Investor-relations poor in N.Z.’

Press, 29 April 1978, Page 19

'Investor-relations poor in N.Z.’

PA Auckland Many New Zealand companies had a long way to go in improving their investor relations said the four speakers at a seminar in Auckland, organised by the Institute of Chartered Secretaries and Administrators.

A Wellington sharebroker. Mr H. J. Radford said that investor-relations went much further than a company’s contacts with its ordinary shareholders. In the United States this term embraced all who had financial relations with the company, particularly the providers of long-term debt finance by way of debentures, mortgages, and unsecured loans. Mr Radford gave as an example of good relations the Dow chemical group, which left no question unanswered, and ensured that the full facts about its current position, outlook and forward planning were known to the widest possible range of investors. Its officers spent much time talking to institutional investors.

Companies should induce existing shareholders to retain their shares, buy more, and attract new shareholders, try to ensure that holders of maturing debt

would renew their investment and increase it, and try to attract new debenture holders, he said.

“People often fail to appreciate that good share prices, and active share-trad-ing help every other area of a company’s financial relations, particularly when so many public companies number among their share and debenture holders the same financial institutions,” Mr Radford said. Senior executives should make themselves more readily available to address groups of potential investors, and investment advisers reports should be more newsy and basic, he said.

The secondary market was bigger thgn the primary (new issues) market, and it tended to dictate the terms for new issues in respect of dividend and earnings yields, and investor acceptance.

Mr Radford said that the secondary' market would be best served if New Zealand had one national stock exchange (a view not shared by the Stock Exchange Association of New Zealand). Mr J. S. Marsh, the investment manager of the South British Insurance I group, stressed the need for

full information. There were still quite a few companies whose reports were too short — “an insult to shareholders,” he said. Mr J. Rose, the managingdirector of Marac Holdings, Ltd, also advocated fuller disclosure in annual reports. In addition, companies could, perhaps, provide investment analysts and institutional investors with information not contained in the annual report, as was done in the United States, he said. Mr A. A. Sturman, the financial editor of the “Auckland Star,” said too many directors and executives were too inward-look-ing. When they complained that their companies’ shares were “too low” they did not realise that the market looked at each company in a different way and often it did not have sufficient information to bring its view closer to that of the management. If, as Mr Radford suggested, sharebroking firms were allowed to spread their wings . nationally, there would be a danger that the relatively small . market would be dominated by uch a small number of big firms that it would no longer be a true market, Mr Sturman said.