On 5 September 2013, Newcrest Mining Limited released the results of an independent review of its disclosure and investor relations procedures conducted by Dr Maurice Newman AC.

The review was conducted in response to concerns that the Company may have engaged in “selective briefings” with analysts prior to the company’s public announcement of its results. Of particular concern were meetings with analysts on 29 and 30 May and on 5 June 2013, just prior to the release of the Company’s results on 7 June 2013. By letter dated 12 June 2013, the Company denied that it had breached its continuous disclosure obligations under the ASX Listing Rules, in response to queries raised by ASX Compliance on 7 June 2013.

While it has made no public statement, it is understood that ASIC’s investigation of the Company has been ongoing.

Despite the fact that Dr Newman’s report found no “smoking gun” or that there was a lax approach to investor relations, he made a number of recommendations to the Company to enhance its existing procedures and to enable it to address any future ASX concerns. Dr Newman found that while the Company released a large volume of information to the market, that information did not always appear to have been understood in the marketplace. Dr Newman also identified that there were two instances where the Company’s own internal policies had not been strictly complied with:

  • The Company’s investor relations policy required two Company people to attend all significant meetings and briefings conducted pursuant to the Company’s investor relations program, however if the analyst meetings were “significant meetings” then this requirement had not been met.
  • The Company’s investor relations policy also stated that the Head of Investor Relations shall be the sole point of contact with analysts and investment advisors, on a day to day basis. However the analyst meetings were conducted by the Manager – Investor Relations, and therefore this requirement was not met.

However, it is important to note that Dr Newman later stated: “It should be noted that it is not unusual, or inconsistent with market practice, for a member of a company’s investor relations team to have one-on-one clarifying meetings with the investment community. However, this carries risks which at least go to perception.”

Dr Newman’s report contains a series of 17 recommendations to enhance and tighten the Company’s policies and procedures. Other ASX-listed companies concerned about their ongoing disclosure obligations may do well to consider Dr Newman’s recommendations and whether they can be applied generally to enhance existing compliance procedures. However, it is important to note that the recommendations are based on and tailored to Newcrest Mining’s circumstances described above. Accordingly, the recommendations may not be appropriate to all listed companies. Companies should therefore seek their own professional advice on how they could improve their continuous disclosure compliance procedures.

The recommendations are reproduced in summary form below.

  1. The Company’s Investor Relations Policy should provide guidance as to the appropriate course of action by the Company where analysts have failed to appreciate the significance of previously released material information.
  2. All external presentation materials (or at least those materials that have an investor or analyst focus) should be released to the ASX Company Announcements Platform in addition to being placed on the Company’s website to avoid any argument as to whether or not the Company has complied with its continuous disclosure  obligations.
  3. The Company should, at significant investor relations events, webcast or record proceedings so that analysts who cannot attend in person, and the Company’s shareholders, can access the information discussed.
  4. The Company should impose a “blackout period” prohibiting investor relations activity in the lead up to significant Board meetings and material announcements (such as the release of results).
  5. The Company should ensure that at least two Company representatives attend every investor relations event, including meetings with analysts.
  6. The Company should ensure that there is a formal vetting process by the Company’s General Counsel (or his or her delegate) for the agenda and materials for all investor relations events to confirm that no new material information is to be disclosed (or if new material information is to be disclosed, it is released to the ASX Company Announcements Platform prior to the investor relations event).
  7. The Company’s Continuous Disclosure Policy should make clear that it is acceptable for the Company’s investor relations team (and other employees of the Company) to be privy to non-public material information (which falls within the exceptions to disclosure contemplated by the ASX Listing Rules) so long as it is kept confidential. The Company should consider whether the location of the investor relations team within the Company’s head office should be physically separated from the location of senior Company management. However, to avoid any ambiguity, the Company’s executive management and investor relations team should work together in relation to key Company communications.
  8. To ensure no post-facto misunderstanding, the Company should establish written key principles for dealing with the investment community, including who is responsible for responding to day-to-day queries from analysts and benchmarks for frequency of contact with individual analysts.
  9. The Chairman should meet with the investment community on a regular basis.
  10. To ensure that the Board is kept abreast of investor relations issues and the market’s perception of the Company, the investor relations team should report regularly to the Board.
  11. The Company should conduct a post-event audit to verify that no new material information has been inadvertently disclosed at an investor relations event.
  12. The Company should codify conditions of access to the annual planning process materials prior to the Company’s relevant scheduled Board meeting.
  13. Only Executive General Managers (and other people authorised by the Chief Executive Officer and Chief Financial Officer) should have access to consolidated information relating to the Company’s annual planning process and profit figures.
  14. The Company’s training of its investor relations staff should be ongoing and include regular scenario based training.
  15. The Company should consider whether or not it continues to provide a five year or other longer term outlook as opposed to a twelve month outlook.
  16. The Company should ensure that all Company policies are renewed and updated as necessary following organisational change.
  17. The Company should consider whether it should change from a proactive approach to contact with the investment community to a reactive approach.