Chris Gilmour, Independent Investment Analyst.
Over the last few years, the number of retailers presenting their financial results to the investment community in Johannesburg has dwindled to just one – Spar. Ten years ago, Shoprite, Pick n Pay, Clicks, Truworths, Woolies and one or two others all presented in Johannesburg, even though in most instances Cape Town was their home base. They always got a good reception and plenty of interaction in terms of Q&A afterwards. The presentations were a great way of networking with top management, and in so doing being able to formulate an educated analysis of the company. One company – Metro Cash & Carry – went bust a few years ago but it always put on a great presentation and in its listed heyday, Edcon also presented well.
But today, Johannesburg is very much the poor relation, with only webcasts being offered by the major retailers. Excuses proffered by the retailers and their media relations companies for no longer including Johannesburg in their itinerary include:
a) the amount of management time taken up with travelling to Johannesburg to present
b) the cost and
c) the very low concentration of institutional fund managers in Johannesburg compared with Cape Town.
The last point may have a degree of validity when it is realized that approximately 80% of all institutional assets under management in South Africa are located in Cape Town. Even Investec, a quintessentially Johannesburg-based institution, has its fund management team based in Cape Town. The only Johannesburg-based institutional fund managers of any consequence these days are Stanlib and RMB Asset Management. And of course, there’s nothing to prevent a Johannesburg fund manager or analyst hopping on a ‘plane and flying down to Cape Town to attend a presentation.
However, this discrimination undoubtedly confers an unfair advantage on Cape Town-based fund managers, who are able to not only attend a “live” presentation in The Mother City but once can also network afterwards with one’s peers over refreshments. Best practice in the regulation arena demands that all investors, regardless of size, be given equal treatment at results time.
Companies conveniently address this regulatory requirement by hosting webcasts and telecons to allow Johannesburg to dial into their presentations remotely, and ask questions afterwards. But this is definitely a second-best option. Sadly, it is the way the investment world is going, as an ever-increasing number of time-strapped analysts and fund managers prefer the remote route rather than the live presentation. Reasons given for this growing preference mainly revolve around the amount of time it takes to drive to a results presentation venue, to park, to attend the presentation and then to come back to the office.
In my humble opinion, Cape Town based companies that choose not to present in Johannesburg should logically also not present on a live basis in Cape Town either, thus presenting a level playing field for all investors, regardless of geographical location.