CASE STUDY: ACTIVE ENERGY GROUP PLC (AIM: AEG.L)
INVESTOR & FINANCIAL COMMUNICATIONS CONTRIBUTED TO 300%+ INCREASE IN SHARE PRICE
I was first approached by the incoming CEO of Active Energy Group Plc in May 2012, just before he was appointed to lead the company's transformation into a renewable energy, forestry management and timber processing business.
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Active Energy Group (AEG) had suffered a dramatic reversal in fortunes, as well as two name changes, since being admitted to the AIM market in 1997, initially at a price of £0.15 (15 pence). It had failed to succeed in its previous incarnations, when it provided engineering and environmental products and services to the power generation and transport industries.
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At 1st May 2012, the company's share price stood at £0.0185 (1.185 pence), a huge fall from its previous trading levels.
My first project was to create a document (in digital and print formats) that encapsulated the new CEO's vision for the business, in order to provide all stakeholders - new and existing investors, advisors, suppliers, partners and clients - with a clear vision of the company's future business strategy.
The resulting Company Update & Strategic Review document (pictured) was released at the end of July 2012 to a clearly-defined audience, and the impact on the share price was immediate.
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On 21st July 2012, Active Energy Group's share price stood at £0.0238 (2.38 pence).
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In the second half of 2012, I was commissioned to produce several Regulatory News Stories (RNSes) - AIM stock market announcements - which further clarified the company's strategy, and the milestones that it had achieved, including new supplier and customer agreements, and shipping achievements.
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By end-December 2012, Active Energy Group's share price had fallen to £0.0175 (1.75 pence). Clearly, action needed to be taken!
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2013:
In May 2013, after a site visit to Ukraine, I was retained on a consultancy basis to produce all of the company's investor relations and financial communications materials, working alongside the Non-Executive Chairman, Colin Hill, and the firm's newly-appointed PR agency, Novella Communications.
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July 2012: Company Update & Strategic Review
My role covered everything from re-designing the company logo (which, for reasons of economy, was retained with some subtle adjustments); to writing, designing and producing presentation materials for the directors; researching, structuring and producing the company's website at www.active-energy.com; and managing all internal and external communications.
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As well as copywriting and project managing the development of the company's new website - see the 'before and after' images below - I researched and wrote a host of RNSes and press announcements, and managed the relationship with external suppliers, including ProactiveInvestors, a global investor information network.
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'Before': AEG Website July 2012
'After': AEG Website 2013 onwards
At the end of December 2013, after minimal investment in the prior six months, AEG's profile and reputation within the private investor community was dramatically improved. And the share price clearly reflected that renewed optimism in the business, rising from £0.0175 (1.75 pence) to £0.0213 (2.13 pence) during the year.
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2014:
My work continued throughout 2014, during which time I updated, expanded and maintained the company website; initiated a new partnership with a major US firm; wrote and distributed several RNS market announcements (in conjunction with AEG's Non-Executive Chairman Colin Hill, PR firm Novella Communications, and NOMAD WH Ireland); and produced and managed a major press and investor event in Ireland.
I also assumed responsibility for producing an entire range of investor communications collateral - including documents, reports, presentations and a website - for the company's 'KAQUO' joint venture in Canada; and presented for the company at a major industry event in the UK.
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July 2014: KAQUO Investment Overview
AEG's profile and media coverage continued to rise throughout 2014, with articles about the company in The Times, Mail on Sunday, Daily Mail and other publications; the CEO being interviewed on the BBC, CNN and other broadcast channels; and several video interviews on investor-focused internet news channels.
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This coverage, as well as the work I did on research notes, trading updates and market announcements with PR firm Novella Communications and Non-Exec Chairman Colin Hill (who stepped down from the Board in September), contributed to a steady increase in AEG's share price over the year, from £0.0213 (2.13 pence) on 1st January to £0.0303 (3.03 pence) on 31st December 2014.
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AEG Share Price 2014 (note correlation between RNS releases and share price performance)
2015:
2015 started much as 2014 had finished. I secured interviews for AEG's CEO on the BBC World 'Business Matters' and 'Outlook' shows; entirely produced a major Metis (aboriginal Canadian) community investor event and AEG joint venture unveiling in Alberta, Canada; and continued to develop the branding and communications material for the company's Canadian subsidiary, KAQUO.
At the same time, I managed the relationship with a new PR firm; and continued to develop presentations and documents for internal and external use - including RNS announcements, Interim and Annual Reports, publicity around the company's proposed 'Forestry to 'Fuel' joint venture with the Ukrainian government, and its AEG CoalSwitch coal replacement fuel technology.
'Before': AEG Website July 2012
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A selection of projects that I completed for AEG in 2015
Once again, AEG achieved significant media coverage during the year, which undoubtedly contributed to a significant rise in the share closing price at end-December 2015: £0.0570 (5.70 pence). In fact the price had reached a high of £0.938 (9.38 pence) in January 2015, and averaged around £0.060 (6.00 pence) for much of the year.
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It's worth reviewing the share price activity during 2015. The two charts below clearly demonstrate that regular, clear and concise investor communications - primarily via RNSes, but also face-to-face presentations and continued strong branding of the company's different divisions - contributed to a near doubling of the share price during the year... from an opening price of £0.0303 (3.03 pence) on 1st January to a closing price of £0.0570 (5.70 pence) on 31st December.
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AEG Share Price 2015...
... showing impact of regular RNS announcements
In just three-and-a-half years of working on AEG's corporate, investor relations and marketing communications materials, my efforts contributed to the company's share price rise from £0.0185 (1.85 pence) in July 2012, to £0.0570 (5.70 pence) in December 2015.
And that was achieved while the company continued to post a multi-million pound loss every year...
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2016:
Due to uncertainties within Active Energy Group's different businesses (which have since been entirely restructured) and the directors' decision to minimise financial and marketing communication activities (and merely publish regulatory news items for compliance requirements), my role decreased and eventually ended in March 2016.
On the day that my final RNS was released, 7th March 2016, the share price rose as high as 6.50 pence, before closing at £0.060 (6.00 pence).
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In summary, during the time that I was responsible for AEG's investor relations and financial communications, the company's share price rose by over 300%, from 1.85 pence to 6.00 pence.
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AEG Share Price Performance July 2012-March 2016 (a 300%+ increase during the time that I worked for the company)
Unfortunately, since then, AEG's share price has fallen from 6.00 pence to (at the date of writing) 1.93 pence... retreating to almost exactly where it had been when I started working for the company back in July 2012.
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AEG Share Price Performance July 2012-September 2017
It's difficult not to assume that AEG's decision to cease publishing regular investor and market updates, and to cut back on its financial and marketing communications activities, has directly contributed to that dramatic decline in the company's value.
A SALIENT LESSON?
If evidence were needed of the positive impact of professional investor relations and financial communications activity on AIM firms' market valuation - and the dangers of cutting back on that activity - it's worth looking at what happened to Active Energy Group's share price in the 18 months since I ceased working for the company.
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In an effort to reduce costs, AEG decided to produce their communications collateral in-house, employ a part-time PR agency alongside their NOMAD, and hope for the best. The chart below demonstrates that that was a false hope... the share price has fallen from 6.00 pence on March 7th 2016 (the date of my last project) to 1.93 pence at the time of writing (September 11th 2017).
Proof enough of the value of using a professional to help tell your company's story?
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AEG Share Price Performance March 2016-September 2017 (showing the fall from 6.00 pence to 1.93 pence since I ceased working for the company)
I am not, of course, taking all the credit for Active Energy Group's share price performance during my time with the firm, but the change in the company's fortunes since it ceased providing regular investor and financial communications is striking.
Interestingly, that lack of communication is regularly commented on by private investors (e.g. the London South East chat board) who have witnessed the value of their AEG shareholding decrease to less than a third of what it had been 18 months earlier... and who are all too often left totally unaware of what's happening in the company.
A salient lesson?
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