BC Chapter Update

CIRI National hosted a roundtable in Vancouver in October entitled Demystifying the Analyst Valuation Process.  Presenter George Kesteven took a complex topic and broke it down into a very thorough but manageable subject for the allocated time, covering three common valuation approaches (Dividend Growth Model, Discounted Cash Flow Model and Net Asset Value) and best practices when dealing with analysts.

Kesteven asked this question: “How well do you know the analysts who cover your company?” 

Who are his/her clients? Is the analyst’s firm focused on retail or institutional clients? Has the analyst worked directly in the industry he or she covers? What is the individual’s experience level as an analyst? What is the structure of the firm where he/she works and the relationship with the investment banking side of the firm?

Key points made were that knowing the answers to these questions will put the IRO in a much stronger position to understand the needs of analysts. Ensure you are familiar with their deadlines…and yes, they have deadlines too.  Stay in touch on a regular basis, communicate openly about the good and sometimes contentious issues that arise, and be proactive.

The presentation, in its entirety, is available at: http://ciri.org/Education/Webcasts/Archives.aspx?webcastID=75a91583-f4dd-4e5c-ac58-94788675d230.

Alberta Chapter Update:

CIRI Alberta hosted its semi-annual Brains-Over-Beers event in October. In November, Gord Lambert, Senior Sustainability Executive in Residence, Ivey Business School, spoke about Sustainable Development in Alberta.

Lambert highlighted a number of points:

• The major change in sustainability over the past 20 years is that it is now a key component of corporate business plans and strategy.
• The Climate Leadership Panel was an “intense” process. A key consideration for Lambert was the balance between aggressive targets (scare off investment) and weak targets (potentially viewed as greenwash).
• The election of a new U.S. administration should not be allowed to overly influence our long-term climate policies. The Alberta climate policy recommendations are designed to drive creative tension, which will lead to innovation. Positioning our oil sands resource to be competitive (economics and carbon footprint) is essential. The status quo (playing defense) wasn’t an option.
• Lambert is optimistic about the game-changing role of technology. Industry groups such as Canadian Oil Sands Innovation Alliance (COSIA) need to promote their achievements better. The oil sands emission cap is not a cap on production. For many years, industry treated land and water as free resources. Reducing inputs such as water and energy can improve costs and reduce environmental impacts.
• The climate panel recommended against revenue neutrality because it recognized the need to fund capital-intensive technology. The panel also recognized Alberta’s trade exposure in recommending the carbon tax. World demand for oil will not change as a result of Canadian policy.
• Polarization is enhanced through social media because the calibre of dialogue is poor (silos of like-minded people, sharing misinformation). However the engagement among stakeholders in the climate panel discussions was very good (no media, fact based dialogue, common objectives, ground rules). Lambert believes through good climate policies the industry will gain the support of the “pragmatic middle”.
• An economy-wide price on carbon is better than regulating a solution. It reframes the issue (doesn’t make it about good guys and bad guys) so that everyone is part of the solution and the problem. The market picks winners and losers and the costs are more transparent. Energy efficiency is the most obvious low-hanging fruit.