Meeting Institutional Investors in Scotland A few insights

Meeting Institutional Investors in Scotland A few insights and tips Paul Heward Investor Relations Society (UK)

The rationale Repeating Owen Kelly: • • • £ 750 bn of funds are managed directly in Scotland £ 250 bn invested worldwide in equities and bonds 4 th largest investment centre in Europe Extensive fund management expertise & experience Leading firms include: AAM, BG, MC, SLI, SWIP

A few more points • Leading firms include global equity specialists (and other firms do too) • They not only hold US/global equities but have US and Canadian pension fund clients • These fund managers are long term fundamental buy and hold investors. To give an example, one institution uses 5 year cash flow projections and through the cycle valuations • You can, therefore, expect a better level of questions, more shareholder engagement and longer term interest • These are important factors when companies want to raise capital or defend themselves

A few more points • Reputation for longer-term investing (e. g. Walter Scott- 5 to 7 years) • 4 th largest investment centre in terms of “actively -managed” funds • Don’t forget “boutique” investors - Edinburgh Partners, Artemis, Aberforth • Don’t forget debt investors. These include SLI, BG, SWIP, AEGON

Investors want A few quotes…(1) • “We value co’s coming here and try very hard always to meet any company that makes the effort. ” • “Meetings with CEOs are invaluable. ” • “Our personal preference is to have a conversation as opposed to being presented to (but always good to have a presentation to hand , just in case). ”

Investors want A few quotes…(2) • “We make it very clear to banks or brokers who may be assisting with meetings that corporate access is our main criterion. ” • “We prefer for bankers and brokers not to attend company meetings. ” • “We would love to see companies being a little more proactive in terms of providing access to management to genuine long term investors, whilst restricting access to shortterm trading oriented investors. ”

OK- So what should I do? • How do I organise it? • Do I use a broker or bank? • Who should I see? • Where and when should I go? • How often? • “Do’s and Don’ts”

How do I organise it? • You know how to set up road shows • You should be able to identify the key investors, without much difficulty • But you are very busy and may be on other road shows; therefore, it may help to have UK- based person to facilitate programme • Important to do this with reasonable notice • Always allow for contingencies and remember to have a “Plan B”

Where and when should I go? • Just concentrate on Edinburgh - almost all the big firms are based here • Others (e. g. Alliance) will come to see you • Logistics -Easy access from London / short distances/ less “dead” time • One day is OK/ arrive previous evening • Most of year is OK but most importantto check first if key contacts will be there

Do I use a bank, broker or independent consultant? • May depend on your corporate relationships • Remember client lists can be restricted (due to commission/ fee arrangements) • Therefore, some will not give you access to all the investors you should be seeing • Some investors will not want the broker/ banker to attend meeting • Helpful to get feedback from meetings • What are you paying for?

Who should I see? • Does depend on your company • Initially target “BIG 5” – SLI, SWIP, BG, AEGON, Martin Currie • Then refine your target list, referring to your register, investor holdings in peer co’s, known “expertise” etc • Include “boutique” and others in lunch

How often? Fund manager quotes • “Senior management visiting, perhaps, once a year to talk about their strategy is very helpful. ” • “Visits after each quarter’s results to update on margin guidance is wholly unnecessary- this can be communicated via earnings releases and conference calls”. • “It may take us a long time to get to know the company and its management. It may require three or four meetings before we decide to invest” • “Don’t be put off if there is no instant investment decision”

“Do’s and Don’ts” (1) Do’s • Ensure “right manager” will be there • Allow enough time between meetings • Ensure that there can be a good dialogue • Try to establish a regular pattern of visits • Think about building long term relationships • Respond quickly regarding any points raised but not answered in meeting

“Do’s and Don’ts” (2) Don’ts • Be late • Assume they want presentation • Stop person with best command of English language from taking part • Leave gifts

Conclusion • “Numerous management teams have said that Scotland tends to provide different type of meeting to London- often with more focus on longer term issues” • “Meetings should be a two way process – with both the investor and the company feeling that they have something to gain in the exchange”

The IR Society Est. 1980 • The Investor Relations Society (IR Society) is a membership organisation that exists to promote best practice investor relations in the UK and beyond. It is run by IR professionals for IR professionals. • We have approximately 600 members from the UK, Europe and beyond, including representatives from most of the FTSE 100, a large number of FTSE 250 companies and a number of AIM and smaller companies as well as IR advisors and service providers • To become a part of the UK’s forum for IR professionals contact richard. knight@irs. org. uk

Paul Heward – Contact Details Paul Heward Investor Relations Society, Scotland Representative 22 Young Street, Edinburgh, EH 2 4 JB 44 (0)131 220 5995 44 (0) 7770 444340 paul. heward@irs-scotland. org. uk Also: Burvale Consultants, Scotland: Burvale provides clients with a comprehensive mix of investor relations services. 44 (0)131 220 5995 44 (0) 7770 444340 heward@burvale. co. uk