Communicating Business Agenda to Investment Community

Sahala Sianipar

Managing Director, Corporate/Financial Practice, Asia Pacific

Burson-Marsteller

Twitter: @ssahala

Singapore, 26 September 2011

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Content

Trends in financial communications

Developing financial communications plan

Discussion

Trends in Financial Communications

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Asia Pacific as Global Capital Raising Centers

US$53 Billion raised via IPO in Hong Kong Stock Exchange in 2010 (Financial Times, 2011) Pictures courtesy of www.bloomberg.com

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Asia Pacific Companies Influence Global Merger & Acquisition

110.31

35.12 84.07

65.57

37.21

Top Target Countries by Volume 2010 (US$ billion) Source: Bloomberg

China Hong Kong Australia Japan US

Bloomberg 2011 M&A Outlook Report: 2010: 8,700+ deals announced worth US$594 billion Highest M&A activity in financial industry Largest deal by Asian company was Bharti Airtel’s purchase of Zain Africa (US$10.7 billion)

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Active Buying by Asia Pacific Companies in 2011

45%

13%

22%

7%

7% 3%

Where active buyers are expected in 2011? Source: Bloomberg Poll (2010)

Asia Pacific

Central Asia

North America

South & Central America

Western Europe

Affrica & Middle East

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Transparency Demand

Picture: www.thedailybeast.com

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Real Time and Multiple Channels

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Case Study

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Rapid Evolution of Issue into Crisis

It is more difficult to plan for a crisis given the changing communications landscape Source: Burson-Marsteller & Penn Schoen Berland Global Crisis Preparedness Survey 2011

50%

37% 35% 31% 29%

25%

Need to respondextremely quickly

Overall challengesof digital

communications

More globalizednature of

communications

Increased publicdemand for

transparency

Increased anti-corporate

sentiment in publicand/or media

Rise of citizenjournalism / social

media (e.g.Facebook, Twitter)

Global

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Asia Pacific Companies Likely to Encounter Crisis

Source: Burson-Marsteller & Penn Schoen Berland Global Crisis Preparedness Survey 2011

59% 61% 55%

Have experienced a crisis

GL

OB

AL

AP

AC

EU

US

LA

TA

M

46%

67%

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Impact of Trends

Understand Asia Pacific, its diverse constituents and influencers as well as operating landscape

Connect the dots – global and locally

Invest to align internal and external communications that support business objectives

Developing Credible Financial Communications Plan

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

“A corporation managed by responsible managers will be a responsible corporation; a corporation managed by irresponsible managers will be an irresponsible corporation. It is individuals who are responsible for what corporations do.”

Harold Burson Founder Chairman, Burson-Marsteller

November 2008

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Financial Communications Plan – An Overview

Define your objectives that are aligned with corporate/business objectives

List core/priority stakeholders and influencers

Develop messages

Identify communications channels

Define monitoring approach & tools

Identify issue or crisis triggers related to your company and industry

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Issues Mapping

Operational

Service quality

Data security

Business partner

Employee relations

Transparency

Business competition

Stakeholders & Influencers

Regulators

Customers

Investment community

Market commentators/analysts

Local community

Traditional media

Bloggers/online influencers

Reputational

Global/local corporate reputation

Product reputation

Stakeholders’ knowledge of the company

Corporate responsibility commitment

Disclosure

Regulatory

Business competition

Environmental compliance

Business permits

Foreign investment

Compliance

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Case Study

Situation Analysis

• A state agency claimed that a major listed bank in Indonesia did not exercise prudent banking when it disbursed loans to several companies

• Loans were fully collateralized and companies were affected by 1997/98 financial crisis, which required debt restructuring

• The report by the state agency also claimed that the bank’s senior management never reported these loans to its shareholders

• The report was leaked to a couple of first-tier local media, which generated headlines even by Jakarta-based international media

• The government launched an investigation and subsequently criminal charges against senior management of the bank

• The bank’s institutional investors were concerned and rating agencies were about to issue updated ratings of the bank’s papers.

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Case Study – cont’d

Integrated approach to investor and stakeholder communications

• The bank quickly updated its institutional shareholders on the situation

• The bank pointed to its information memorandum prior to its listing that provided details of the bank’s exposure to the various companies mentioned in the report

• In other words, the bank had been transparent all along and the report did not provide any new information that investors had not known

• The bank assured its key customers of its financial and operational soundness as it had set aside sufficient and conservative provision for those loans

• The bank also reached out to its key controlling shareholders that in turn, provided public backing of the bank’s strategy and its ability to handle the situation

• The bank disseminated regular updates to media (domestic and international), which were tracked by the investment community

• Employees of the bank were regularly updated of the management’s action to address the situation.

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Case Study – cont’d

Results

• Whilst the bank’s stock price was down, no major institutional depositors/customers withdrew funds from the bank

• S&P affirmed its ratings of the bank’s papers despite the public controversy in Indonesia

• Institutional investors recognized there could be other motivations from the charges against the bank

• Key shareholders of the bank also publicly spoke in support of the bank.

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Case Study (2)

Situation Analysis

• A major Asian telecommunications company that is listed in the New York Stock Exchange was accused of committing irregular derivative transactions

• The allegation was raised by a politician in a parliamentarian hearing involving senior government ministers and chairperson of the capital market supervisory board

• First-tier national and international newswires immediately picked up the story, which became headlines

• Sell-side analysts called the company to seek clarification

• Institutional investors questioned the company’s transparency, risk management and good corporate governance practices

• At the same time, the politician threatened to file a criminal lawsuit against the company.

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Case Study (2) – cont’d

Rapid response and integrated approach to investor and stakeholder communications

• The objective of the communications program was to protect the level of stakeholders’ trust on the company

• Core stakeholders included regulators, business customers, shareholders & investors around the globe, and employees

• Company highlighted its disclosure compliance as required by the US Securities Exchange Commission in its regular filings

• Company’s executives reached out and briefed capital market supervisory board, industry regulators, investment community (sell and buy-side analysts, rating agencies), media (domestic and international) and influencers (e.g. think tanks) regarding the company’s derivative policy, which had been instituted and disclosed regularly

• At the same time, the Company issued regular statements via multiple channels (online, website, traditional media) to correct earlier media reports.

BURSON-MARSTELLER ASIA-PACIFIC EVIDENCE-BASED COMMUNICATIONS

Case Study (2) – cont’d

Results

• Chairman of the capital market supervisory board issued a statement that cleared the company from the allegation; the chairman also spoke in front of members of the national parliament

• Investors were satisfied with the explanation that the share price did not suffer from major decline

• Third parties such as research analysts and industry commentators published articles in leading local media supportive of the company’s risk management, disclosure and good governance practices.

In Summary

Asia Pacific companies are expected to be more active in regional and international trade & investment

Stakeholders including investors will demand more on good corporate governance, disclosure, and transparency from companies

U – Understand your financial communications goals and stakeholders in Asia Pacific

C – Be able to connect the dots, globally and locally in today’s digital age

I – Be prepared to invest in aligning internal and external communications capability including crisis preparedness and monitoring tools.

THANK YOU