Institute for the Development of Financial Markets (IRFR) Annual Russian IR Forum: 26 September 2008 “Positioning the I

1. Institute for the Development of Financial Markets (IRFR) Annual Russian IR Forum: 26 September 2008 “Positioning the IRO for success”

2. Positioning the IRO for success • Importance of the IRO role • Key objectives • Strategic positioning • Defining the IRO role • Management’s responsibilities • IRO’s responsibilities

3. Importance of the IRO roleKey IRO objectives • Optimise understanding and rating of your stock in any given market conditions – thereby minimising the cost of capital • Support the share price • Maximise management’s degree of business freedom to pursue its strategy • Promote an orderly and liquid market

4. Importance of theIRO roleStrategic Positioning • Know objectives, set additional goals and work to achieve them… • The IRO role within the organisational structure should be carefully considered… • Investor Relations is a strategic function of senior management therefore… • Responsibility of BOTH management and the IRO to position the role for success!

5. Defining the IRO role … Management’s responsibilities “Benchmark, position and support”

6. Defining the IRO roleOrganisational positioning • Clearly define the reporting structure to eliminate conflicts: • IRO reports to the CFO - IR seen as a financial role requiring communications expertise (often the most logical arrangement given the questions analysts ask) • IRO reports to the CEO – IR integrated with communications and marketing and reports to the CEO • IRO reports to a different senior executive – usually in smaller companies

7. Defining the IRO role Convergence: IR/Financial PR • Co-operation between IR and Corporate Communications on financial media relations • Increasing tendency for IRO to speak to journalists • Dotted line reporting between Corporate Communications, CFO and IRO CFO CEO Head, Corporate Communications Financial media spokespeople Head of IR IRO

8. Defining the IRO roleSelecting your IRO • IR requires a multi-disciplinary approach - successful IROs come from a wide variety of backgrounds • Consider that the nature of the IRO will determine the level of authority and support required • Be aware of current remuneration ranges and trends – aim to recruit and retain a quality IRO!

9. Defining the IRO roleAccommodate access • Promote ‘open door’ access to management – builds IRO’s credibility with analysts and investors • Physical proximity of IR to management aids ‘ready access’

10. Defining the IRO roleBenchmarking: global averages • Size of IR team:Micro-caps: 2.2 employees, mega-caps: 6.3 (EEMEA: 3.2) • Reporting: 50-55% of IROs report to the CFO, 30% to the CEO • IRO communication:with CEOs - 48% daily/weekly basis, with CFOs - 75% daily/weekly basis (EEMEA: 40% counsel CFO weekly, 28% daily) (W. Europe: 52% counsel CFO daily) • Budgets:annual IR budget: $742,900 • IR and PR:70% have separate IR and PR depts (EEMEA: 80%) Source: “Global Trends in Investor Relations 2007” (The Bank of New York Mellon)

11. Defining the IRO role … IRO’s responsibilities “Promote IR and aim to achieve credibility.”

12. Defining the IRO rolePromote the role of IR • Continually educate management about the role and value of IR • Aim to earn the commitment of the CEO and the senior management team • Understand your corporate culture and structure • Promote informal access to management to complement formal ‘open door’ policy

13. Defining the IRO roleEnhance through planning • Create an IR plan which reflects structure and objectives of team • Should fit company’s market cap, sector, business model and the investment characteristics of its share • Should be sensitive to the company’s current stage in its life-cycle

14. Defining the IRO rolePromote integrated communication • All communication originating from a company affects corporate value – creation/destruction • Unified messages increase investor confidence - build a good relationship with communications colleagues before a crisis or big event occurs

15. Defining the IRO roleCo-ordinate internally • Work with colleagues to ensure ‘one-voice’ policy through: • Limited group of agreed spokespeople • Formal agreement on ‘material information’ • Queries from analysts and investors referred to IR • Regular meetings between the IR and PR department • Ensuring all messages at divisional level echo IR and Senior Management messaging • Best practice: adopt a disclosure committee approach

16. Defining the IRO roleMaximise the efforts of the IR team • Negotiate the position of IR within the organisational structure • Define components of budget and maximise fully • Delegate to expert colleagues • Share internal resources • Outsource to agencies: as well as Shareholder ID which has an external focus use outsourcing for internal health checks! • Benchmark, conduct perception studies and improve communication skills through expert coaching to achieve BEST PRACTICE

17. Defining the IRO roleAchieve personal credibility • Position yourself in a strategic role • Attend board meetings! • Be visible and knowledgeable about your company • Expand skills: finance, regulation, corporate governance • Project an executive presence! • Identify and attempt to meet award winning IROs Achieving credibility creates platform for future access to resources and further success!

18. Louise Slater M:Communications Tel: +44 (0)20 7153 1276 Mob: +44 (0)7968 792 391 slater@mcomgroup.com Bree Schuette Simon M:Communications Tel: +44 (0)20 7153 1530 Mob: 8 903 782 9822 schuette@mcomgroup.com 18