Online2009

Zagreb School of Economics and Management
www.zsem.hr

Leslie Matthews Šulenta
Mirna Ćorić • Mirna Koričan

RESULTS OF RESEARCH
“Investor Relations Online”
Survey of Website Disclosures of Leading Croatian Firms
2009

www.zsem.hr

In the higly competitive and globalized business
market of the future, good corporate governance
a transparent reporting are the additional value of
and
every company.
e
Z
(ZSEM) is continuously trying to provide its students
high quality knowledge and skills needed to succeed in
t
the competitive global market. Among the mentioned,
w
we also try to provide our students with good ethical
a
and moral values in business, and responsibility to-
w
wards mankind, society and nature, by fostering tole-
rance, dialogue, and understanding of differences.
ZSEM also organizes Executive Education programs to increase the abilities of
leadership among individual and organizations, being fully aware of the need for
continuous investment in education. For several years, Zagreb School of Eco-
nomics and Management has been organizing seminar on Corporate Gover-
nance. The goal of this seminar is to provide its participants with skills for imple-
menting better corporate governance practices on-the-job.
Along with educating, ZSEM is carrying out research projects on corporate
governance. Once a year ZSEM monitors the extent to which Croatian firms
are providing the public, including potential investors, with the information they
need to make informed decisions about the companies’ corporate governance
and corporate social responsibility. Our overall aim is to promote an improved
investment climate in Croatia.
This year again we are presenting data and practices of best Croatian compa-
nies hoping that this will guide and inspire other Croatian companies to improve
their reporting practice.
We find good corporate governance and strengthened role of the supervisory
board important factor of economic growth and only by continuous work on
educating and researching corporate governance, results can be expected.
Hereby we present you with our research.
Ph.D. Đuro Njavro, Dean

www.zsem.hr

Jordanovac 110
10 000 Zagreb, Croatia

RESULTS OF RESEARCH
“Investor Relations Online”
Survey of Website Disclosures of Leading
Croatian Firms

September 2009

Director of consulting firm:
International Business Strategies, LLC, Zagreb
leslie.sulenta@consulting-mps.com

Mirna Ćorić
Lecturer, Department of Economics and Management
mirna.coric@zsem.hr

Mirna Koričan
Lecturer, Department of Management
mirna.korican@zsem.hr

Note:

Sincere appreciation goes to the student researchers at ZSEM who conducted
the surveys. The student researchers are: Mislav Bečejac, Eduard Beg, Marija
Buzolić, Petra Čabraja, Luka Fresl, Matea Grbić, Vedran Margitić, Darija Pavlic,
Ivan Tapavički. We would also like to thank Ivija Jelavić for helping.
This publication and the research that enabled it were co-financed by a grant
from the Partners for Financial Stability (PFS) Program, a cooperative program
of East-West Management Institute, Inc. and USAID. The opinions expressed
herein are those of the author and do not necessarily reflect the views of the
sponsors.

Director of Consulting Firm:
Međunarodne poslovne strategije, d.o.o., Zagreb
leslie.sulenta@consulting-mps.com

Leslie runs a consulting firm which specializes in financial consulting and pro-
fessional training both in Croatia and abroad. She has worked in more than a
dozen developing countries, training and advising banking and finance professio-
nals in government and the private sector. Her clients have included the World
Bank, IMF, EBRD, European Commission, Asian Development Bank, USAID, and nu-
merous central banks, private banks and corporations.

Mirna Ćorić
Lecturer, Department of Management and Marketing
mirna.coric@zsem.hr

Mirna Ćorić has been working in higher education for the past few years, in the
fields of management, marketing, operations management and strategic ma-
nagement. Career highlights include academic aspects of 8 years spent abroad
living and studying. She holds her M.Sc. in General Management with specializa-
tion in Marketing Management with Bocconi University, Italy. Mirna has research
interest in fields that combine management and marketing with technological
fields and digital developments, as well as human resource management, cross
cultural aspects of management and internationalization.

Mirna Koričan
Lecturer, Department of Management
mirna.korican@zsem.hr

Mirna Koričan joined ZSEM in 2003, after a short career in a market research
company. She started as an assistant in the Management department, now
lecturing in the field of management, strategy and human resources. She holds
her MA in the field of psychology and has an MBA. She finished several ad-
ditional executive education seminars abroad and in Croatia. Mirna Koričan is
also an author of several research papers in the field of HRM, management,
organizational behavior and strategy. She also participated in the translation of
several books.

RESULTS OF RESEARCH
“Investor Relations Online” Survey of Website Disclosures of Leading Croatian Firms
2009

TABLE OF CONTENTS

1. Overview of Croatian Capital Markets and Survey Results 8

2. Companies surveyed and methodology 8

3. Findings of the survey 9
3.1 ‘Investor Relations Online’ Reporting in Croatia
Gets Better All the Time 10
3.2 Does the company have a web site?
And is the web site in English? 11
3.3 Is it easy to find the website? 12
3.4 Is there a separate “Investor Relations” page? 13
3.5 What is the profile and history of the company? 14
3.6 How is the company’s financial performance? 15
3.7 Who manages the company? 16
3.8 What kind of experience do they have? 17
3.9 Who is on the Supervisory Board? 18
3.10 What are the backgrounds of the Supervisory
Board Members? 19
3.11 Who are the main shareholders of the company? 19
3.12 How much is the company’s share price?
Is the trend up or down? 19
3.13 What is new at the company? 21
3.14 How can an investor contact the company
to obtain more information? 22
3.15 Summary – Improvement in Almost All Areas 23

6
Zagreb School of Economics and Management, September 2009

RESULTS OF RESEARCH
“Investor Relations Online” Survey of Responsibility by Leading Croatian Firms Firms
Reporting on Corporate Social Website Disclosures of Leading Croatian
2009

4. The Best Companies’ Results 25
4.1. PODRAVKA 27
4.2. INA 29
4.3. T-HT 31
4.4. Ericsson Nikola Tesla 33
4.5. What sets top companies apart from other companies? 35
4.6. What did they improve? 35

5. Conclusion 36

List of Companies Surveyed 37

7

RESULTS OF RESEARCH
2009

1. Overview of of Croatian Capital Markets
and Survey Results
The global financial crisis of 2007-2008 did not forget to pay a visit to Croatia.
Shareholders of the firms in this survey have suffered as a result of the painful
drop in share prices which was ushered in with the crisis. Initial public offer-
ings and new bond issues have practically dried up in Croatia, as investors stay
firmly on the sidelines. While share prices have begun to recover in 2009, they
have so far only returned to their early-2006 levels.
Despite the disappointing situation in the financial markets, our Investor Re-
lations Online research reveals encouraging news for investors. Even during
these difficult times, Croatian firms have continued to improve in terms of
transparency, corporate governance, and meeting the needs of potential in-
vestors. A catalyst for this improvement was certainly the introduction of a
corporate governance codex in 2007 by the Zagreb Stock Exchange. But we
found improvements across the board, even in areas not covered in the Codex.
Once again, several companies stand out from the others, having adopted
some world-class online reporting practices. There are some changes, how-
ever, in our list of “Top Ten” companies, with some newcomers moving into the
top of the league chart and others dropping down in the ranks. You will find all
the details in this report.

2. Companies surveyed and methodology
Starting with our first Investor Relations survey in 2004, we have surveyed the
online (website) reporting practices of about 40 of the leading Croatian com-
panies. Our objective is to review all of the most important public companies,
which we define as:
• Publicly traded companies, meaning those with shares,
commercial paper, or bonds listed on the stock market
• Companies of a ‘public nature’, such as public utilities and
major financial institutions
In each of the four surveys, the group of surveyed companies has changed
somewhat alongside changes in the markets, as some firms drop out and

8

RESULTS OF RESEARCH
2009

others move into the top tier in terms of market capitalization and trading
turnover. The companies in this year’s survey accounted for 86% of market
capitalization at year-end and 78% of turnover on the Zagreb stock exchange
in 2008. A list of the firms included in the survey is found at the end of this
publication.

3. Findings of the survey
Kindly allow us to assume that the reader of this publication is a potential in-
vestor. Further, we will presume that this investor is a modern, computer-literate
investor of the twenty-first century.

Investor
In the next pages, we shall follow this Investor as he takes a
walk on the worldwide web in search of information on which
to make a decision about investing in one or more of the top
Croatian companies. As the Investor searches for informa-
tion, he applies a simple rating scale when assessing the in-
formation he finds.

Investor’s Information Rating Scale

Before we begin the cyber journey, here is a quick peek at the overall results of
the Investor’s search.

9

RESULTS OF RESEARCH
2009

3.1. ‘Investor Relations Online’ Reporting
in Croatia Gets Better All the Time
The scores are not great, but the Investor, who has traveled these cyberpaths
three times previously in recent years, can see real improvement. Croatia’s top
companies are disclosing more and more information which investors need.

Figure 1:
Average “Investor Relations” score - Improving

It’s also clear that more and more companies are approaching the higher ranks
in our survey. Over the years, the number of poor companies, those with scores
of zero to 10 in our scale, has declined from 13 to zero. The number of good
companies, those which earned more than 40 points for the online disclosures
to investors, has increased from 6 to 15.

10

RESULTS OF RESEARCH
2009

Figure 2:
Number of Companies in Ranges of Scores (0=no website Max.=93)

Next, following the path of the Investor as he scans the companies’ websites,
we will examine the overall findings of the research.

3.2 Does the company have a web site?
And is the web site in English?
First and foremost, the Investor expects the companies he examines to have a
website. This year, for the first time, 100% of the companies surveyed indeed
have a website. Our investor is very pleased.

Figure 3:
Companies with Website

11

RESULTS OF RESEARCH
2009

If the Investor is a foreign investor, however, a website in Croatian will not pro-
vide much useful information. This year a very high 91% of surveyed companies
also have websites in English. These results mark a turnaround in the trend – in
the 2005 and 2006 surveys, the percentage of firms with English websites
had, frustratingly, declined. It’s clear that almost all of the top firms in Croatia
have joined the internet age.

3.3 Is it easy to find the website?
The Investor doesn’t want to spend a lot of time and effort looking for compa-
nies’ websites. Nowadays, it’s expected that by typing just a word or two – the
company’s name, in our case -- into a major search engine will quickly bring the
desired results. Here, the results could not have been better. In all cases, the
Investor was able to find the companies’ websites quickly and easily using the
major internet search engines.

Figure 4:
Company Websites found with Search Engines

2004 2005 2006 2009
100%
100% 93%
88% 90%

75%
Found

Now that the Investor has located the websites, let’s determine how much use-
ful information can be found on those sites.

12

RESULTS OF RESEARCH
2009

3.4 Is there a separate “Investor Relations” page?
Frankly, people are lazy. If a website visitor makes four or five clicks of the mouse
and still hasn’t found the information he or she is looking for, they might just
lose interest and navigate away to another website. Nowadays, the best firms
globally (in terms of investor relations) recognize this as a fact of life. These
companies go to great lengths to make their websites investor-friendly. It is
thus considered “best practice” for a company to have a separate area on the
website called, “Investor Relations,” which contains all or most of the informa-
tion an investor would need to have about the company.
Our Investor, upon visiting the sites of the top Croatian firms, this year was once
again left scratching his head. His information needs were not easily fulfilled.
While the trend is positive, still only 44% of the surveyed companies have a
separate “Investor Relations” (or similar) area on their websites. Nonetheless,
the Investor recognizes that great progress had been made by the Croatian
firms. Back in 2004, when he first surveyed the firms’ websites, only 16% of the
companies provided a separate “Investor Relations” area.

Figure 5:
Company has separate IR area

Again, let’s consider the foreign investor, who will need information in a foreign
language, most likely English. Here we find similar, rather dispiriting, results.
The trend is very good, but still only 38% of companies have separate “Investor
Relations” areas in English.

13

RESULTS OF RESEARCH
2009

Figure 6:
Investor Relations (IR) Area in English

50% 2004 2005 2006 2009
37.8%

23.3%
19%
25% 16%

0%
Company has separate IR area

This could mean, sadly, that the other 72% of surveyed firms would not even
receive consideration for investment by foreign investors.

3.5 What is the profile and history of the company?
Next, the Investor would most likely look for general information about the com-
pany – What do they do or make? Where are they located? What are their
strategic objectives?… etc. The results here are quite good. Almost all firms
(98%) provide a company profile, even in English (a high 80%). And 89% of
firms provide information about the history of their operations.

Figure 7:
Company Overview

This the Investor finds very encouraging.

14

RESULTS OF RESEARCH
2009

3.6 How is the company’s financial performance?
Having found the website and an overview of the company, if the Investor is still
interested, he naturally turns his attention to the company’s financial perfor-
mance. How big is the firm in terms of sales? How profitable? How fast is it
growing? These are important pieces of information which any investor would
need.
Our Investor finds the information - annual reports - but only for about half of
the firms. This year 51% of firms provide annual reports on their websites, the
same level as in the previous survey. The lack of financial information for nearly
half of the top firms leaves the Investor feeling frustrated.

Figure 8:
Companies showing Annual Reports on Website

Let’s say the Investor becomes keenly interested in some of the firms. He has
found the annual reports, scoured them, and wants more up-to-date informa-
tion. What are the chances of finding half-year or quarterly reports on the web-
sites of the leading Croatian firms?

15

RESULTS OF RESEARCH
2009

Figure 9:
Companies Half-Year, and Quarterly Reports on Website

100% 2004 2005 2006 2009

75%
47%
50%
31%
25%
8% 9% 9%
2% 2% 6%
0%
Quarterly Reports Half Year Reports

This year there was a substantial increase in the number of firms providing
quarterly and half-year financial results on their websites. Quarterly reports are
now provided by 47% of all firms, up from 9% in the most recent survey and
just 2% in the first survey in 2004. It appears that if the Investor succeeds in
finding the company’s annual report, there is now a very good chance that the
quarterly or half-year reports can also be found on the firm’s website.

3.7 Who manages the company?
If the financial data is encouraging, the Investor moves along. Next he would
very likely want to consider who runs the company and whether they have the
right type of experience to make the company successful. Here, the results are
pretty good. While only 24% of the firms provide the names of their Manage-
ment Board members in the “Investor Relations” area of the websites, another
64% of the firms provide the names elsewhere on their sites. That is 88% of all
firms which provide the names of their Management Board members.

16

RESULTS OF RESEARCH
2009

Figure 10:
Management Names Shown on Website

100% 2004 2005 2006 2009

72%
75% 64%
54%
50%
47%

24%
25%
7% 2% 2%
0%
M. names listed on IR M. names shown
pages elsewhere

3.8 What kind of experience do they have?
While the Investor is very pleased to find the names of Management for such
a high number of the firms, in order to make an informed investment decision,
he will probably need more information than just the names. Any serious invest-
or would want to know something about the backgrounds of the Management
Board members – how long they have been with the firm, where they worked
before, whether they have international experience, and so on.
For the first time so far this year, the Investor is forced to award a “thumbs
down” rating.

Figure 11:
Biographical Information about Management Shown on Website

2004 2005 2006 2009
100%

75%

50% 36%
28%
21%
25% 9%

0%
M. team bios shown

17

RESULTS OF RESEARCH
2009

Unfortunately, the Investor found that this type of information is provided by
only 36% of the top firms. However, that is a big increase from just 28%, the
proportion of companies which provided biographical information about their
Management Board members in the most recent survey.

3.9 Who is on the Supervisory Board?
Assuming the Investor is still interested in the company, he might next turn
his attention to the Supervisory Board. Who is on the Board, and what sort
of people are they? The Investor would probably want to know if these were
imminent persons, insiders, etc. and something about their backgrounds and
other business ties.
The Investor is pleased to see that a high 78% of the firms do provide the
names of their Supervisory Board members. The trend, once again, is upward
and quite encouraging. In the most recent survey, only 47% of companies pro-
vided this important information.

Figure 12:
Names of Supervisory Board

18

RESULTS OF RESEARCH
2009

3.10 What are the backgrounds
of the Supervisory Board Members?
The Investor is forced to use the “thumbs down” rating again here. Only 18% of
surveyed firms provide information about Supervisory Board members other
than their names. However, the Investor makes of a note of the improving trend
and moves forward in his analysis.

3.11 Who are the main shareholders of the company?
In this year’s survey, for the first time more than half of the firms provide infor-
mation about their shareholders/ownership structure on their websites. And,
once again, this trend, too, is increasing.

Figure 13:
Details on Ownership Structure Shown on Website

2004 2005 2006 2009
100%

75%
51%
42% 37%
50% 28%
25%

0%
Owners hi p s tructure on webs i te

3.12 How much is the company’s share price?
Is the trend up or down?
Presuming that the Investor is impressed by what has been found so far, natu-
rally he might next turn his attention toward the company’s share price. How
much is the share price, and what is the trend in price movement? Unfortu-
nately, for the vast majority of firms the Investor is left wondering. Just 22% of
the surveyed companies provide their current share price on their websites.

19

RESULTS OF RESEARCH
2009

Figure 14:
Company Share Price shown on Website - in Croatian

The survey results about recent share price movements are even worse. Only
15,6% of the top Croatian firms disclose historical share price information on
their web pages.

Figure 15:
Share Price - shown historically

Perhaps the disappointed Investor pauses to reflect on the reasons why com-
panies don’t uniformly disclose the sort of information needed to make an in-
vestment decision. He could be forgiven for wondering if indeed some of the
firms intentionally withhold the information because they are not interested in
pleasing outside investors.

20

RESULTS OF RESEARCH
2009

3.13 What is new at the company?
Let’s say that after all the searching he’s done, the Investor is still interested in
investing in “Company X.” (We would suppose that Company X is one of those
roughly 51% of companies which so far does provide most of the information
investors need.) The Investor now knows a good deal about the firm, its financial
performance, its management, board, and shareholders. Next he might logi-
cally wonder what is new with the company. Perhaps a new product has recent-
ly been launched? Or a new market has been penetrated? Or the workforce
has gone on strike?
Surprisingly, here the results are not so good, and even the trend is negative.

Figure 16:
Online news/Press Releases

While 67% of firms have company news on their websites, that is a decline
from 79% in the previous survey. The results for news in English are even
worse and are also declining.

21

RESULTS OF RESEARCH
2009

3.14 How can an investor contact the company
to obtain more information?
Once again the survey reveals good news, at least on the surface. Every com-
pany, 100% of those surveyed, provides some mechanism on their websites for
a website user to contact the company by e-mail.

Figure 17:
Contact Information

Looking at the data more closely, however, it appears that there might be room
for improvement. Only 49% of firms have a special form somewhere in the
website by which a website user can e-mail a question directly to the company.
And the number of companies which have a ‘mailing list’ type feature, where
a user can register to regularly receive information such as a newsletter, has
fallen off to only 9%.

22

RESULTS OF RESEARCH
2009

Figure 18:
FAQs

And, as shown above, only a small number of the top firms have a “Frequently
Asked Questions” section on the website.

3.15 Summary – Improvement in Almost All Areas
Overall, the Investor rates the top firms with a “thumbs up.” The cyber-walk
through the companies’ websites resulted in much positive news, and only a
few “thumbs down” ratings were given. The relentlessly improving trend gives
our Investor hope and perhaps confidence that next time he looks for a possible
investment in Croatia, the data needed will be even easier to obtain.

23

RESULTS OF RESEARCH
2009
Overall results of the survey
Figure 19:

24

RESULTS OF RESEARCH
2009

The above chart shows the overall results of the survey. The percentage of
firms which provided each of the items we’ve discussed is shown, starting from
the worst overall results on the left hand side (the percentage of firms which
give possibility to see information about share prices historically), to the best
results (percentage of firms having a website) on the right.
A detailed look at this chart makes it clear that in nearly every category, the
results are consistently improving over time.

4. The Best Companies’ Results
For the third time in a row, Podravka leads our survey with the best results. Of
the maximum possible 93 points, they scored 77. They were followed by INA
with 67 points, T-HT with 60, Ericsson Nikola Tesla with 57, Privredna banka
Zagreb with 55, and so on as shown in the chart below. INA is a newcomer to
the highest ranks. HBOR, the Croatian development bank, was included in the
survey for the first time this year and scored an impressive 51 points.

Figure 20:
Best 10 companies

25

RESULTS OF RESEARCH
2009

As the above chart shows, it’s interesting and encouraging that most of the
best firms continue to improve their investor relations reporting year after
year. Another clear positive indicator from this data is that the “best” scores
go up every year. That shows that more and more firms are doing better and
better.
By tradition, we also highlight the firms which improved by the greatest number
of points from one survey period to the next. This year, the “most improved” firm
is INA, whose score jumped from 37 to 67 since our last survey. That’s the bi-
ggest improvement we’ve ever recorded. VIRO Tvornica šećera, Atlantic Grupa,
Nexe Grupa, T-HT and Belje followed with impressive increases in their scores.

Figure 21:
Best 10 companies according to biggest difference
between 2007 and 2009

To illustrate what these companies are doing differently and better than other
companies, we will show you some examples directly from their websites. To
save space and your time, we will focus on the websites of the first 4 compa-
nies. But our readers are encouraged to visit the websites of the other top
companies for more details. Their websites can be easily found with the most
popular internet search engines. We know, because that was one of the things

26

RESULTS OF RESEARCH
2009

we checked when we conducted the surveys.

4.1. PODRAVKA

Figure 22:
Podravka’s Investor relations “front page”

27

RESULTS OF RESEARCH
2009

Figure 23:
Plenty of finantial data
Figure 24:

Information on SB bord members

Figure 25:

28

RESULTS OF RESEARCH
2009

Additional presentations

4.2. INA
Figure 26:

IR pages

Figure 27:

29

RESULTS OF RESEARCH
2009

Data on shares

Figure 28:

Information on shareholders

Figure 29:
FAQ for Investitors

30

RESULTS OF RESEARCH
2009

4.3. T-HT
Figure 30:
g
IR pages

Figure 31:
Information on shareholders

31

RESULTS OF RESEARCH
2009

Figure 32:
Information about the market

Figure 33:
Strategy information

32

RESULTS OF RESEARCH
2009

4.4. Ericsson Nikola Tesla
Figure 34:
IR pages

Figure 35:
Information about shares

33

RESULTS OF RESEARCH
2009

Figure 36:
Additional p
publications

Figure 37:

34

RESULTS OF RESEARCH
2009

Contact information
4.5. What sets top companies apart from other companies?
Definitely these companies are managing to post on their websites plenty of
needed information and are using their websites to show their creativity and inno-
vativeness. Few examples what these companies did better than other compa-
nies in our sample are:
• Separate “Investor Relations” area on their web site
• Details about their ownership, supervisory board, and management
• Financial results (annual, semi-annual, and quarterly)
• Current and historical share price
• “Extras” such as company presentations, Questions and Answers for
Investors, outside technical analyses of the company, or a copy of their
corporate governance policy
We are of opinion that actually every company that thinks about their inves-
tors and is following a policy of a good corporate governance and disclosure
can manage to do this. Use this information and rethink how you can improve
transparency of your company.

4.6. What did they improve?
Compared with the previous results, we found some similarities in improving
the companies’ websites. The most common areas of improvement were the
addition of:
• Separate Investor Relations page
• Share price data
• Management names and biographical data
• More information about the company’s mission, vision, strategy
• More annual reports

35

RESULTS OF RESEARCH
2009

5. Conclusion
Although we had one year in which we did not conduct these surveys, we are
happy to see that transparency of Croatian companies is improving. We are
more than satisfies to notice that certain Croatian companies have truly ex-
celled in adopting best practices in online reporting for investors. We hope that
these good practices will continue and inspire other companies to improve their
websites also.

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RESULTS OF RESEARCH
2009
List of Companies Surveyed

37

RESULTS OF RESEARCH
2009

38

RESULTS OF RESEARCH
2009

Two databases with
detailed results of
surveys are available
online in downloadable
Excel format at the
following web address
www.zsem.hr

39

Jordanovac 110, Zagreb
Croatia

List of Companies Surveyed 2009
Adris Grupa HVB Splitska Banka Petrokemija
Agrokor Hypo-Alpe Adria Bank Pliva
Atlantic grupa HUP (luksuzni hoteli) Podravka
Atlantska plovidba INA Privredna Banka Zagreb
Belišće INGRA Reiffeisenbank Austria
Belje IGH Riviera Poreč
Croatia osiguranje Istraturist Umag T-HT
Dalekovod Jadranplov Tankerska Plovidba
Dioki Končar-Elektroindustrija Tehnika
Đuro Đaković holding Konzum Uljanik plovidba
Ericsson Nikola Tesla Kraš Veterina
Erste&Steirmarkische Bank Luka Ploče Viadukt
Euroherc Luka Rijeka Viro tvornica šećera
HBOR Magma Zagrebačka banka
HEP Nexe
HPB Plava Laguna

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