Sponsored Research

a strategic tool for investor communications

Gabriel Didham CFA, Managing Director

www.ObjectiveCapital.com

2

Research

is the language of

Investors

3

Research defines how the market understands

your investment story

4

… and it is

Research that drives your relationship

with the capital markets

5

– 93% read pre-IPO research– 53% read research before meeting

management

Of professional investors...

6

For private investors …

Source: Communicate Research

Most relied on information sources for private investors

0%

20%

40%

60%

80%

Thefinancialmedia

Analystresearch

FinancialWebsites

The generalmedia

Stockbroker Companywebsite

Family &friends

7

Research makes a difference ...

• Researched companies can have up to double the market valuation of un-researched companies in the same industry

• Increased research coverage can double average trading volumes

• Trading costs can be as much as 10% of the share price on under research companies

8Source: JCF Factset /Objective Capital

"Valuation" of companies in the FTSE AIM All-share

0.0

2.0

4.0

6.0

No coverage 1 analyst 2 analysts 3 or more analysts

Ave

rag

e M

arke

t C

ap/N

et A

sset

s (x

)

Level of coverage preferred by Institutions

9Source: JCF Factset / Objective Capital

Trading cost for companies in the FTSE AIM All-share

0%

4%

8%

12%

No coverage 1 analyst 2 analysts 3 or more analysts

Ave

rag

e b

id-a

sk s

pre

ad (

% s

har

e p

rice

)

Level of coverage preferred by Institutions

10

… for a company and its shareholders

A lack of research means:

– raising capital is more difficult and expensive

– lack of knowledge => higher trading costs => reduced liquidity

– lower share price

Up to 80% of quoted companies could benefit from more research

11

The issue is how to get research coverage

• Companies have traditionally relied on brokers and investment banks

• But for smaller companies:

– brokers’ fragmented distribution means multiple coverage is needed

– whole segments of the market are untouched – regulation means you need separate coverage in each

market– and widely known to only be economic for brokers

when linked to investment banking

12

So how can Sponsored Research

solve these problems?

13

High quality Sponsored Research delivers:

• Reach:– professional investors– private investors– buy side– international– industry– debt and equity

• Quality coverage:– supports trading in your stock– corporate transactions– supports your other advisors– and wide-ranging generation of business opportunities

14

High quality Sponsored Research demonstrates:

• Commitment to shareholders

• Commitment to transparency

15

but most importantly…

It builds a “Strategic Relationship” with the capital markets

a relationship that supports a company now

…..and as it grows