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Sunday Business: Logged off: UK firms deliver poor online data
11/11/2001
Corporate websites are not keeping investors in the know
by Matthew Guarente, Associate Editor
BRITISH companies are lagging behind US and European rivals when it comes to using the internet to keep their investors informed.
A new survey by internet investor-relations specialist Investis shows that big-cap companies in the US and Germany rank higher than FTSE 100 companies, while investors in UK small-cap companies are more poorly served by the investor relations functions of the corporate website than almost all other developed markets.
"German companies have the most comprehensive sites, especially at the top end, and have extra content with improved navigation," says Rupert Spiegelberg, European development director for Investis.
The reason for this is partly commercial and partly cultural. "On a historical basis, German companies look to the US for capital so they focus on websites as a communications medium because it is harder for them to communicate with overseas investors," he says.
"Looking at companies that come high up in the rankings, most have full US listings or large American Depositary Receipt programmes. Improvements in sites came about as a result of a drive to get US capital," Spiegelberg says.
But development has also gone hand-in-hand with the broader spread of the web. "In Germany, internet take-up has been quick, but France and Italy have been slower," he says.
Also, companies listing on the Neuer Markt are required as part of the listing regulations to publish their details, including results, in English and German.
The British, though, are getting better. "Without a doubt, the quality in the UK has improved," says Al Loehnis, Investis business development director.
Loehnis, who previously worked as an equity analyst in the food and beverage sector, says the change has been visible in just a short period of time. "When I left the City two years ago there were three or four companies in the sector that had no site at all. Now, in many instances, you’ve got a full online filing system that’s kept up-to-date and have webcasts and everything else."
Europe-wide, the quality is likely to keep improving. According to a survey of 400 companies by Taylor Nelson Sofres, the most common response to the question of what they will target in the coming year in terms of their investor relations (IR) effort was to improve the website.
In recent years, IR departments of various companies have turned to the internet as a cheap and efficient way of communicating with shareholders. Investors have become far more proactive in seeking information on the companies they own and companies now need to present financial information, news, share price data and a host of other information to their shareholders.
Small shareholders are more informed and the resources they have, and use, to research their investments have never been more sophisticated or easily available. Companies, therefore, need to raise the bar to satisfy demand for information.
"The internet is a cheap way of enfranchising shareholders wherever they may be," Loehnis says. "If you have lots of retail shareholders there are huge savings to be made and this is encouraging them to migrate to an electronic format."
Proprietary data can be assembled, formatted and presented more easily than ever before. So, why are some companies still not performing?
The 400 companies around the world whose websites were assessed by Investis were graded according to four criteria: content, navigation, IR essentials and interactivity.
IR essentials – items such as share prices and basic financial information – should score 100% because it is the bare minimum that companies should include on their websites. But none of the constituents of the indices reviewed came even near full marks. The German Dax 30 companies fared best, with 79%, while FTSE Small-Cap companies scored 57% and FTSE 100 companies managed just 68%.
The level of content offered was judged to be even worse. Five markets failed to score more than half marks and the FTSE Small Cap was the worst of the bunch, scoring just 37%.
In terms of navigation, it appears that companies are not adhering to the three-click rule – that anything on the website should be accessible within three clicks from the home page. The German companies again topped the table, while the small and mid-cap sectors of the UK market were at the bottom.
Interactivity, where site visitors can, for example, call up audio-visual presentations or create custom share price charts, was judged by Investis as the weakest of the categories, with a global average score of just 34%.
In the top 10 rankings of all the categories, only six UK companies are mentioned, half the number of German firms.
The good news is that, overall, BP is the company with the best online IR resource in the world, with Centrica figuring in the top 10 in every category.
| Top of the class: how BP’s site outguns rivals
BP’S website is seen within the industry as exemplary and the investor relations part of it was ranked by Investis as the best of the 400 companies surveyed. It scored 83% on content and 85% on navigability, underlining the point made by Rupert Spiegelberg, of Investis, about the best sites being a blend of good design and rich content. With its logo redesign and corporate message of "beyond petroleum", BP, under its chief executive, Sir John Browne, is making a concerted effort to communicate with both the public, who buy its products, and its shareholders, who own the company. But like the German companies that are ranked in the top 10 lists, BP has a significant shareholder base outside the UK and the website is a perfect medium to communicate with them. This kind of commitment may not be cheap but, unlike traditional shareholder communications, the marginal costs are zero – one more investor looking at the site costs nothing, but sending out a prospectus or annual report is relatively expensive. "BP has spent large amounts of money," says Al Loehnis of
Investis. "You get the impression that it wants to involve all its
shareholders. Over a long period, the share price has achieved a
premium to its peers and this openness has played a central part in
that." |
© Sunday Business 2001
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