Friday, 19 June 2015

Weekly Wrap Up: Rollercoaster rides across the Boards

In the last month, we have seen two significant disasters befall FTSE Companies. Thomas Cook, a subject already covered by this blog, apparently hit every PR pitfall possible following the results of the inquest into the deaths of Christi and Bobby Shepherd in one of its hotels in Corfu in 2006. Then, we witnessed a tragic accident at Alton Towers, which left Merlin, the park’s owner, scrambling to protect its brand.

However, the different strategies employed by the two Companies led to wildly differing outcomes, not only in public perception, but also to their share price. Thomas Cook, as stated previously, refused to apologise, failed to contact the family, and only handed over (half) of the compensation they received to charity when it became untenable for it to hold onto it in its entirety. Clearly, a omnishambles of epic proportions.

Compared to this Merlin appeared to handle its own disaster, a crash on one of its rollercoaster’s, with as much tact as was possible in the circumstances, save for the initial delay on calling the ambulance. The park did its utmost to appear open to investigators, apologised to the victims immediately and unreservedly, and its CEO Nick Varney immediately gave interviews outlining what the Group would be doing to improve safety across the board.

Indeed, the public clearly thought that the Company’s response had been sufficient because when Kay Burley, a Sky News presenter, used aggressive interview tactics in an attempt to unsettle Varney which spectacularly backfired, as almost 2,000 people complained to Ofcom about her conduct. On top of this, an online petition calling for Sky to sack her received 50,000 signatures. If Kay had done this to Peter Fankhauser, CEO of Thomas Cook, such is public feeling, the petition may well have been for her to receive an OBE.

It was not only in the public gaze where Merlin came out on top. Investors, clearly spooked by Thomas Cook’s woeful handling of the situation, deserted the stock, seeing it fall from a high of just under 500p to 430p today. Merlin on the other hand saw lesser losses, from a high of 470p to 435p.

This, above all else, proves the positive benefits of good crisis PR. Here you have two listed Companies who broadly act within the same sector, entertainment & leisure. Both have suffered crises within the last month, and only one handled the situation correctly. Unsurprisingly that Company has come out on top. Firms, looking at tightening their PR budget, should look at the cautionary tale of Thomas Cook and realise that it may well prove a false economy.

This week, Abchaps enjoyed a multitude of events including Baker Tilly’s Mad Hatter’s Summer Tea Party soaking in the evening views from their roof terrace, a day at the races at Ascot; and the AIM 20th Anniversary Summer Party at the Artillery Garden off Moorgate.

Zeus Capital appointed Phil Walker as Head of Healthcare Corporate Finance. He most recently was Executive Director in Corporate Finance at Nomura Code Securities. Charles Stanley hired Ben Money-Coutts as Chief Financial Officer. AIG appointed Nicola Ratchford as head of external communications for Europe, Middle East and Africa. She joined from Stockwell Communications, where she was a director.

"Omnishambles" – Not a new word, with references ranging from The Thick of It to the OED’s word of the year in 2012 and Ed Milliband, but surely the only way to sum up Thomas Cook’s handling of all recent PR.

This weekend enjoy a variety of great theatrical performances and live music as the More London Free Festival takes place for the thirteenth year.

This summer Taste of London returns to Regents Park to with a “Flavors of the World” theme. In addition to deliciously prepared food, there are various beverages to swash the food down, both alcoholic and non-alcoholic.

For the second year running, Greenwich Peninsula’s The Jetty is home to an incredible performance of “Heartbreak Hotel”, so do not miss the opportunity to be a part of this exciting event.

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Friday, 12 June 2015

Weekly Wrap Up: Big banks still don't get it

Bankers are fighting back against so-called banker bashing, according to The Times. But are they taking the correct approach?

Senior bankers have decided that it’s time to mount a campaign to push back against a range of policies that have led to extra costs and regulatory burdens. Quite rightly, bankers have pointed out that Government policies are affecting their ability to compete internationally.

Banks have not been very proactive in getting good publicity and this is part of the reason banker bashing is so pervasive. In a previous blogpost, we suggested it’s time for banks to take control of their narrative and highlight the importance of the banking industry to UK economy. But even that approach may not be enough to stem banker bashing: A recent slew of negative news suggests that the behaviour that led to the banker backlash is still a long way from being stamped out.

At the beginning of this month Barclays received some unwanted attention when an email sent by a second year analyst to incoming summer interns was leaked. The email, which had the subject line “Welcome to the Jungle”, included a “commandment” telling interns "I recommend bringing a pillow to the office (yoga mat works as well). It makes sleeping under your desk a lot more comfortable, in the very likely scenario that you have to do that."

The email couldn’t have come at a worse time: It was sent shortly after the suicide of a first year Goldman Sachs analyst who was said to be overwhelmed by the pressure of the 100-hour workweeks. It was one of numerous unexpected deaths or suicides of young bankers over the past couple of years.

Then this week, JP Morgan Chase & Co. Chief Executive Officer Jamie Dimon took a swipe at US Senator Elizabeth Warren, one of Washington’s most outspoken critics of the banking industry. Speaking at an industry event in Chicago, Dimon suggested that Warren, a former Harvard Law school professor who specialised in bankruptcy law, doesn’t “fully understand the global banking system.” This condescending remark will do nothing to endear bankers to the wider public.

Bad publicity for banks this month has certainly not been limited to the US. The trial of Tom Hayes, the alleged ring-leader of the Libor rigging case, has been making headlines in the UK. The trial has also revealed some pretty disturbing information about how banks operate, including an allegation that senior UBS bosses may have condoned the rate rigging.

The real problem therefore seems to be down to banking culture. The New York Times writes that “Wall Street has always thrived, in part, on its eat-or-be-eaten culture.” And there is no doubt that there is truth in this. But if banks want to turn around their image, which is really the only way to end banker bashing, serious steps need to be taken to find a new way to thrive. And this is not just about improving their public image – if the current culture is driving employees to criminal behaviour and even suicide, surely that is too high a price to pay – even for bankers.

This week, Abchaps attended a CIPR Speaker lunch where Kamal Ahmed, Business Editor of BBC News discussed his roll at the BBC and how PR’s can interact successfully with the organisation. We were a guest of UHY Hacker Young at the Small Cap Awards Dinner at the Grange Hotel as well as the China Outbound, What next for the UK event put on by Nabarro and Baker Tilly.

Lloyds Commercial Banking appointed Adrian White as Chief Operating Officer. Walker Crips hired Alison Pickup as Senior Investment portfolio Manager from Brewin Dolphin. PwC promoted Simon Hunt to UK Banking and Capital Markets Leader. Kevin Burrowes, additionally became Global Banking and Capital Markets Leader across the PwC international Network.

“Global Banking system” – We won’t even try to define this. If a Harvard Law professor can’t understand it, the rests of us don’t stand a chance.

This weekend, why not celebrate one of this City’s greatest exports, Gin? World Gin Day has been a part of London since 2009, and this year, Junipalooza sees 24 different distilleries presenting their wares from around the world.

Soho Food Feast returns to Wardour Street this weekend, with restaurants like Arbutus, Barrafina, and Ducksoup taking the opportunity to leave the confines of their kitchens and create a street party for a good cause.

Finally, London is one of the greenest major cities in the world, and to celebrate, this weekend sees Open Garden Squares unlock some of the hidden gems of our city. In total, 200 spaces usually closed to the public are being opened, so enjoy these tranquil settings whilst you recover from the weeks excesses.

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Tuesday, 9 June 2015

Asian Companies Listing on AIM

In the past few decades, the Chinese economy has experienced phenomenal growth. And while growth had since slowed, it can’t be ignored that in 2014, China became only the second country in history (after America) to achieve economic output in excess of $10 trillion. In fact, even at the current rate of growth, China expected to surpass the US as the world’s largest economy within the next two decades.

It is no wonder then that foreign investors have been looking for ways to benefit from the Chinese success story. And there are plenty of Chinese investment opportunities right here in the UK. SMEs in China have long struggled to secure capital from Chinese banks and that has sent them elsewhere, including London’s AIM market.

But more recently, the reputation of Chinese AIM listed companies has taken a serious hit. It seems that after a few scandals involving Chinese companies, the market has lost faith in all of them. The problem for most Chinese companies therefore seems to be the result of suspicion and rumour. Of course, this is unfair – the Quindell and Tesco scandals have not resulted in investors blacklisting every UK Company.

So the question is, what can Chinese companies do to increase their appeal to UK investors and continue to tap a valuable source of funding through the AIM market? The simple answer: Transparency. After all, the best way to quash suspicions and rumour is by getting the truth out. So for any Chinese companies listing in London, effectively communicating to potential investors from the beginning is critical – and there are plenty of ways to do this.

The suspicions surrounding Chinese companies listing in London are largely fuelled by a literal lack of visibility. So first and foremost, Chinese companies seeking admission to the London Stock Exchange need to bear in mind that potential investors are based abroad and therefore not able to directly observe the day to day operations of the business. Transparency, achieved in part through increased publicity, is therefore key to bolstering investor confidence.

But an effective communications program requires much more than reaching out to the UK national and investor press only briefly ahead of the IPO. Companies need to communicate through wider media outlets and for a longer period of time in the build up to Admission in order to achieve a successful and hopefully oversubscribed fundraising.

One way to do this is by launching Corporate profiling exercises on the home front. Even when targeting a predominantly overseas audience, the relevance of local and trade press coverage should not be underestimated before an IPO.

This is particularly salient for smaller companies. UK journalists are unlikely to have heard of an Asian based SME considering an AIM IPO. If British journalists can discover an existing profile through good trade and local press coverage (and where appropriate a social media profile) as they go online for further information, it will increase the likelihood of positive UK press coverage at IPO.

Local media coverage is also important for investors, as it plays a key role in reassuring their confidence. If a company attempts to promote itself amongst UK investors without an already established press profile, it could make a company’s story, no matter how compelling, harder to believe. And given the current climate of suspicion, that is risk Chinese companies simply can’t take.

Simply put, a proactive communications program is strong evidence of a company’s willingness to honour its commitment to new and existing shareholders. And, perhaps more importantly, increased transparency will help reassure investors and help regain trust of the market. This strategy will not only help Chinese companies: With London seeking to cement its status as the world’s leading financial centre there is simply no way investors here can dismiss companies operating in a country set to become the world’s economic powerhouse.

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Monday, 8 June 2015

Corporate Communications: The double-edged sword of Social Media

There’s a big reason why corporations should be monitoring social media. The Wall Street Journal recently reported on the increasing number of retail investors using social media to discuss and research their trades. The fact that the average investor can now easily access and share information about a stock means companies need to be aware of what is happening. Unlike the chatrooms often used by retail investors, social media reaches a much wider and mainstream audience.

Social media has undoubtedly changed the way the world communicates. So why are many corporations ignoring or misusing what is arguably the most influential means of communication in the twenty-first century?

The corporate communications industry has arguably been slow to embrace social media. Perhaps that’s because this channel of communication is not taken seriously enough – it’s often still associated with embarrassing Facebook profiles. But social media has evolved in the last decade to the point where a lack of social media strategy is not only a missed opportunity – it’s risky and perhaps even irresponsible.

Consider the many benefits of having a corporate social media presence. Social media can be used to respond swiftly, and very publicly, to an unforeseen crisis. The recent example of the GermanWings crash demonstrates this: The Company was able to immediately respond to media reports that one of its planes had lost contact, and they continued to use Twitter to update the public as soon as the information became available.

This points to perhaps one of the greatest benefits of social media for corporate communications: Control. Social media can and should be used to get the message you want out to a wider audience without an intermediary such as a journalist. Newsfeeds and blogs offer the opportunity to create, and control content on what a corporation is doing, how it does it and who is doing it. It increases transparency and is helpful for everyone – clients, investors, potential investors and the media.

Social media’s widespread reach is also why this channel of communication is a double-edged sword. Just ask the investment bank JP Morgan Chase, who once invited the public to “Tweet a Q using #AskJPM.” It was meant to give career advice but ended up going viral, with twitter users asking questions such as, “Did you have a specific number of people’s lives you needed to ruin before you considered your business model a success?” and “What section of the poor & disenfranchised have you yet to exploit for profit, & how are you working to address that?”

In the post-credit crunch era, it should have been obvious that this Twitter campaign was a bad idea. But that doesn’t mean JP Morgan should have avoided social media entirely. Social media is also a useful way to measure sentiment. This process of identifying and assessing what is being said about a corporation or brand is known as social media listening. Had JP Morgan done this first, it would have been able to predict the results of #AskJPM.

Simply put, a corporate communications strategy can’t ignore social media but also has to be very careful when it comes to execution. It gets down to the heart of the purpose of PR: Enhancing and protecting reputations. And in the digital era, it’s pretty obvious this can’t be done without a well thought out social media strategy.

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Friday, 5 June 2015

Weekly Wrap Up: Please don’t increase my wage

The honeymoon appears to be over for the newly elected Conservative government. After basking in the glow of an unexpected majority win in the recent elections, the UK’s Tories have become caught up in a media firestorm - although it may not be one they could have avoided.

Before the election, David Cameron had described a 10% pay increase for MP’s – from £67 060 to £74 000 – as unacceptable. And on the surface, it does look bad for a government that is rumoured to be planning an additional £12 billion in welfare cuts to bump up their own pay. But the government has little choice when it comes to the pay rise – it’s decided by an independent body.

Nevertheless, in the UK media, taxpayer money is a hot button issue. Just ask the banks that received bailout money: banker’s salaries and bonuses have come under intense scrutiny and the media likes to suggest that taxpayer money is being used to pay for them. And there’s no class discrimination when it comes to receiving a taxpayer funded salary: welfare recipients who are deemed to be receiving too many benefits are also popular subjects in some major UK publications.

The lesson here is that when people are giving you their hard earned money they will want to know exactly what you are doing with it and why. This is as true for taxpayers as it is for shareholders. The unavoidable reality of increased scrutiny therefore requires increased transparency. Clearly communicating what is being done with the money and why will not only prevent the media from sensationalizing the story, it will also help win the trust of those who are providing the funds.

In the case of the MP pay rise, the government actually appears to be at least trying to do right by the taxpayer. Earlier this week a spokesperson explained that David Cameron could not do anything to prevent the pay rise. Ironically, the process of having an independent body decide on MP pay was put into place to prevent politicians from being paid excessive salaries on the taxpayer dime. Downing Street has followed this explanation with a letter to the authority that decides on MP pay to appeal the increase. At the very least, Downing Street has attempted to show that they are trying to protect taxpayer money.

So while most people living in UK would be thrilled to get a 10% wage increase, for politicians that extra money is likely not worth the public backlash – especially since after tax that £7000 won’t go very far for MP’s based in London.

This week, Abchaps attended the Watson Farley & Williams Commodities Summer Reception at The Salt Point Bar and the London Stock Exchange Summer Advisory Drinks at the Marchant Taylors’ Hall, where we caught up with lots of familiar faces. We also hosted a market lunch that discussed various topical subjects affecting the IPO market.

EY appointed Klaus Woeste, of KPMG, as a Partner and Head of the HR advisory team in its financial services human capital practice. Andrew Charnley joined Lloyds Bank’s Global Transaction banking business as Regional Head of the Trade and Working Capital Team from Barclays. Lloyds also appointed Paul Smith, who has worked at the bank for over 31 years, as Head of Trade Finance. Finally Gareth Lewis joined PwC’s real estate practice as Director, moving from a consultant role at EY and the Urban Land Institute.

“Hot button issue” – an issue that elicits a strong emotional reaction, such as MP’s who receive a 10% pay increase while the wages of those who pay that salary stagnate.

Enjoy Sunset Safari, where London Zoo opens its doors until 10pm, allowing guests to witness nature whilst the sun goes down.

Polo in the Park returns to the Hurlingham Club in Fulham. Nothing gives better excuse to Champagne before lunch than polo, so enjoy the atmosphere as the England team plays its first match there since 1939.

Over in east London, Field Day marks the start of festival season, being held in Victoria Park. With names like Caribou, Clarence Clarity, and Django Django, this promises to see the season kick off in style.

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