SteelMatters more than you know

The Brandwatch digital measuring and evaluation tool has enabled Aprio and its client - the South African Iron and Steel Institute (SAISI) - to build an informed view among key stakeholders on the role the steel industry is playing in the South African economy.

 

The tool made it possible for the Aprio Digital team to conduct an assessment of the numerous conversations about the South African steel industry over the past year (Feb 26, 2021 - Feb 01, 2022) and is serving as a baseline to measure the success of Aprio’s strategic communications campaign over the coming months.

 

It has provided information about the real growth potential for the industry and where the steel industry can add value to South Africa’s much needed growth and development, while also addressing the various challenges being faced.

 

Brandwatch Assessment (Feb 26, 2021 - Feb 01, 2022)

The information has also enabled Aprio to clarify and define messaging that SAISI is using to educate and inform the sector, and other steel industry participants in the country. The channels used are largely SAISI’s social media platforms, which is ideal to motivate the carefully considered audience to share interesting steel facts among their own constituents. The platform’s following has seen steady growth over the past few months, attracting many close industry followers.

 

A monthly “SteelMatters” newsletter provides some insightful steel statistics and analysis of the current steel market, both locally and abroad.

 

There is a traditional media campaign underway and the Aprio team also prepared the first of a series of articles covering topics such as:  A healthy economy needs a healthy steel industry and A real commitment to infrastructure will revitalise SA construction and SA steel (linked to SONA).

 

An exciting development in the coming months will be the publication of the SAISI-produced ‘South African Steel Report’. This first-of-its-kind report for South Africa will provide an informed snapshot of the South African Steel Industry, its challenges and opportunities, and the sector’s outlook. We hope that the report will grow into a useful, sought-after and regularly produced resource that positions SAISI as a major contributor to the development of South Africa.

 

Waving Goodbye to 2021


 
2021 has been a challenging and chaotic year for all of us as we continue to navigate through the effects of COVID-19. It is encouraging that we have made positive strides in our efforts to combat the pandemic, specifically with the national vaccination drive. As the fourth wave crashes around us, and as we anticipate the next, it is critical that more and more people are vaccinated. This remains the most essential imperative to ensure a rapid economic recovery for South Africa, and a return to a society where the intended efforts of economic inclusion are able to resume.

 

Our Aprio (‘A’) team which is, collectively, probably the most experienced communications team in South Africa, has continued to provide significant support, appropriate guidance, exemplary advisory services, considered content generation and innovative creative delivery to our clients over the last year.

 

Aprio Credence, our crisis and issue management division has had a busy couple of months with deliverables including:

 

  • Supporting a financial services client through a criminal data breach, where Aprio Credence’s proprietary, battle-hardened cyber breach “playbook” served as an invaluable resource Providing ongoing advisory and reputation management support to a major alcohol industry player through the complex challenges of COVID-19 lockdowns and alcohol bans
  • Successfully delivering more than 100 executive media training sessions in the “new normal” of remote, video conferencing-based learning sessions
  • Implementing elements of Aprio Credence’s ARMOUR reputational risk and resilience programme – spanning vulnerability audits, policy, playbook and protocol development, crisis leadership training, and simulation stress-tests – for a range of JSE-listed and private companies.

 

Aprio Investor Relations (Aprio IR) has maintained its momentum and recently worked together with Aprio Strategic Communications to help position the rationale for the potential combination of two prominent and large-scale mining groups. Aprio IR’s deep capital markets experience helped identify certain risks that shifted our role from communications adviser to trusted partner.  The Aprio IR team assisted a client to communicate a costly outcome that impacted multiple stakeholder groups, including employees, consumers and shareholders. The division’s valuable advice was integrated across multiple communication strategies and was instrumental in ensuring the company held the narrative and maintained a strong message. Although the message was difficult and the impact material, the company was lauded for its transparency and openness towards its shareholders and other stakeholders.

Aprio IR was also appointed in an advisory, messaging and media monitoring role by two large international lenders, who had significant exposure to a South African company heading towards business rescue. The lenders offered a debt-for-asset swap deal to the company. This saw the emergence of a vocal activist shareholder group, using social media to rally support and oppose a total asset strip. The debt-for-asset swap was the first of its kind in the South African context, which is more accustomed to the debt-for-equity route. Aprio IR’s extensive understanding of the South African market coupled with lateral thinking and analytical interpretation of media coverage ensured sound and proactive advice. The assignment brought to the fore how quickly and effectively even a small band of shareholders can organise themselves into a meaningful voice, that not only has to be acknowledged by company management but can also influence the share price.

 

Aprio Digital has had a busy couple of months, as the demand for digital communications increased during the pandemic. This included the development of a LinkedIn strategy to position Capital Appreciation’s leadership team, and the leaders of each of its underlying investments as tech-savvy thought leaders in the Fintech industry. We teamed up with the marketing experts at Synthesis, one of Capital Appreciation’s underlying investments, to align our strategy and co-create a fit-for-purpose marketing approach for Capital Appreciation.

The shift from traditional communications methods towards more digitally led channels is well underway and our clients are already seeing the benefits of some of our cross-channel efforts. We’ve helped a number of high-profile investment clients unpack and understand the online conversations that impact their reputation and the reputation of their investments, using the powerful insights provided by Brandwatch. The team continued to deliver high-quality digital magazines that present thought-leadership in a high impact, reader-friendly and long-form medium. Absa Evolve is now entering its 10th edition – the result of a four-year partnership with the Absa team that has seen the launch of several new digital products.

It is very pleasing that despite the remote working arrangement, the ‘A’ team has continued to deliver exceptionally well throughout the year. To the ‘A’ team, thank you for your hard work, commitment, and dedication not only to Aprio, but – more importantly – to our growing client base in South Africa and on the rest of the African continent. Your significant input and industry-leading work is being recognised and has made me exceptionally proud and privileged to be working alongside all of you.

 

Aprio Strategic Communications While working remotely, the ‘A’ team continued to deliver remarkably well throughout the year. To the ‘A’ team, thank you for your hard work, commitment, and dedication not only to Aprio, but – more importantly – to our growing client base in South Africa and on the rest of the African continent. Your significant input and industry-leading work is being recognised and has made me exceptionally proud and privileged to be working alongside all of you.

 

My deepest appreciation goes to all our clients for your continued support over 2021. While we expect 2022 to be yet another challenging and turbulent year for many of us, rest assured, the Aprio team is committed to continually providing the quality of service and expert advice, as well as our exciting and innovative digital communication products, for which we are becoming renowned.

 

I wish you and your families a restful and happy holiday season. I look forward to welcoming you back in the new year, re-energised and ready to take-on the challenges that lie ahead. I believe we are all in a stronger place and better positioned for an exciting year ahead,
 
Stay safe and healthy.
 
Julian

Aprio Digital uses Brandwatch to track conversations from recent protests

The Aprio Digital team has added a nifty and insightful platform, Brandwatch to its service offering. Brandwatch is a social media analytic tool that tracks billions of conversations happening online every day, including blogs, news, forums, videos, Twitter posts, reviews, images and Facebook posts. The tool allows brands and companies to understand consumer insights, trends, influencers, and brand perception.

 

To test the tool, Aprio Digital conducted an internal project to gather data that analysed the recent protest action that took place in Gauteng and KwaZulu-Natal in July 2021.

 

We created a dashboard (see screenshot below) and started mapping the online conversation from 1 July 2021. Over the two-month period (1 July – 1 September) there was a total of 2.09 million mentions, a reach of 5 261,45 million, almost 40 million impressions and 179,77 thousand unique authors. From this, we were able to determine that men were the most active, contributing 64% of the conversation and women 36%.

 

The highest volume of mentions was between 8 – 16 July 2021 which was the peak of the protest action. We found that Twitter was the most active platform during this time, accounting for 95% of the content sources with a total of 245 331 thousand tweets at the peak of the protests. (note: Facebook was not included in the study).

 

This in comparison to news publications, there was a total of 3,984 mentions at its peak, which totals only 4% of content sourced from news channels other than Twitter. Gauteng was the region with the most impressions around the protest, with over 30 million impressions, which meant that the highest single post was seen over 30 million times, from 27 June to 29 August 2021.

 

The relatively low number of news mentions compared to the enormous explosion in tweets indicates the power of digital in extending the conversation, once it is set by the news agenda. During a time of chaos, having a transparent, factual and stable news source is essential in rectifying misunderstandings and providing trustworthy information.

 

Aprio Digital was able to track the sentiment around the protests. While all emotions were heightened during these times, ‘sadness’ recorded the highest spike, with over 60,000 mentions that deduced this emotion. Interestingly, the ‘surprise’ sentiment almost didn’t feature – might this be a worrying indicator that South Africans have become accustomed to this sort of activity in the country?

 

This analysis indicates the importance of understanding online conversations. Through our Brandwatch offering, we can provide strategic advice and direction by tracking online conversations, accessing reputations of brands or campaigns and delivering in-depth analysis and insight reports.

 

The graph below illustrates the heightened emotions experienced during the time of the protest action

 

 

The dashboard below was created for the protest action during July-September 2021

 

 

 

Text box -Key insights from our Brandwatch analysis of the mid-July 2021 protests in KwaZulu-Natal and Gauteng:

 

  • Aprio Digital created a dashboard using Brandwatch and started mapping the online conversation from 1 July 2021.
  • Over the two-month period (1 July – 1 September) there were 2.09 million mentions, a reach of 5 261,45 million, almost 40 million impressions and 179,77K unique authors.
  • Interestingly the highest volume of mentions was between 8 – 16 July, at the peak of the protest action.
  • We found that Twitter was the most used platform during this time, accounting for 95% of the content sources with a total of 245,331 thousand tweets at the peak of the protests.
  • This in comparison to news publications, there was a total of 3,984 mentions at its peak, which totals only 4% of content sourced from news channels other than Twitter.
  • Gauteng was the region with the most impressions around the protest, with over 30 million impressions, which meant that the highest single post was seen over 30 million times, from 27 June to 29 August 2021.
  • The main topics around the protest were Jacob Zuma, looters, President Zuma, Looting, malls, shops businesses, government, support president, court and Nkandla.
  • We were also able to track the sentiment around the protests. ‘Sadness’ recorded the highest during this time, with over 60,000 mentions that deduced this emotion. Interestingly, the ‘surprise’ sentiment almost didn’t feature (see graph).
  • Men were the most active with 64% of the conversation while women led 36% of the online discussion.

 

For more information about Aprio Digital’s service offering, contact Thomas McLachlan on thomas@aprio.co.za or the team at Aprio Digital on digital@aprio.co.za .

 

Cyber threat the No 1 item on the risk registers of SA’s leading listed companies

Given the growing number of cyber breach incidents reported in South Africa over the past 12 months, it’s no surprise that cyber breach concerns have overtaken regulatory risk as the number one concern for risk officers. This is a key finding in Aprio Credence’s latest annual review of JSE Top 40 companies’ published risk statements.

 

According to the review, which is based on research into the risk statements in the companies’ latest integrated reports, 86% of the JSE Top 40 enterprises say that cyber-attacks and data breaches are a top tier risk concern – while just more than half of the same companies list regulatory and compliance risk as one of their biggest risks going forward.

 

The research findings spanned 72 different categories of risk. There were five new entries into the Top 40 list for 2021, with close to 90% of the companies from the 2020 research project featuring in this year’s review by Aprio Credence.

 

COVID-19 related risks remain a prominent concern on companies’ risk registers for 2021 and beyond, featuring as a top tier risk for seven out of 10 enterprises in the review. Interestingly, only 21% of the JSE Top 40 companies listed the pandemic as a primary risk in their integrated reports published 12 months ago.

 

Based on the latest integrated reports, the five most prevalent concerns for C-suite executives around South Africa appear to be cyber risk, followed by pandemic-related impacts, the macro-economic environment, operating risks, and marketplace competition and disruption.

 

“It’s encouraging to see that reputation risk is increasingly being viewed by South Africa’s top companies as a standalone risk item alongside the usual suspects such as safety, liquidity, compliance and market risks, with 30% of the Top 40 companies now viewing reputation as a top-tier, separate risk item rather than a risk-of-risks or an outcome of other articulated risks,” says Alan Arguile, partner at Aprio Credence.

 

“Other notable findings include climate-related risk now featuring on the risk radars of more than half of the top companies, compared to a 26% prevalence 12 months ago. As a water-scarce country, access to water resources is also featuring more prominently in the risk reporting, with almost a quarter (22%) of the Top 40 companies now raising this as a concern,” says Arguile.

 

While safety remains a strong concern, particularly for mining companies, this year’s research revealed that identifying, recruiting, and retaining top people and skills, is a more prevalent concern compared to employee safety in terms of top tier articulated risks. 54% of the Top 40 presented human resource challenges as a top tier risk, while just under half the same companies listed safety as a primary risk going forward.

 

At the other end of the spectrum, just one of the sampled companies presented the impact of Brexit as a top tier risk; social media risk also featured on the top tier risk register of a single Top 40 company; and social unrest was raised by three top companies as a primary risk concern in their integrated reports, which were published a few months ahead of the unrest which devastated parts of South Africa in July.

 

To find out more about our 2021 research into Top 40 companies’ articulated risks and how you can practically mitigate the reputational impacts of these risks, please contact Esme Arendse on esme@aprio.co.za or Alan Arguile on alan@aprio.co.za

Alternative Stock Exchanges. The catalyst for a K-shaped economic recovery?

South Africa has seen the emergence of several alternative stock exchanges over the last five years.

 

  • 4AX (now known as the Cape Town Stock Exchange), received its trading license in August 2016 and had its first listing in September 2017. It now has nine companies listed, with a combined market cap of almost R9bn.
  • A2X Markets, received its trading license in April 2017 and had three companies listed by October 2017. There are currently close to 40 companies listed on A2X and 16 ETFs, with a combined market cap of R5.2 trillion.
  • Equity Express Securities Exchange (EESE) received its trading license in September 2017 and by December 2017 had its first listing. The exchange currently has seven listed securities with combined market cap of almost R11bn. It caters specifically for BEE schemes.

 

 

The rationale for companies listing on any exchange is to raise capital while listing on our alternative exchanges is mainly based on cost and less onerous listing requirements. Companies that opt for secondary listings do so to provide investors with access to additional trading platforms and their related benefits.

 

4AX went through a major revival this year, moving operations to Cape Town and re-naming itself the Cape Town Stock Exchange (CTSE). Speed, ease and cost of listing are its competitive advantages, and it will most likely attract pools of capital looking for the same returns.

 

A2X is primarily a secondary market. In Europe, these platforms are referred to as Multilateral Trading Facilities (MTF). MTFs are well-established and account for 45% of market activity across the world. Similarly, as of October 2021, the market capitalisation of the JSE was at R19.4 trillion (US$1.28 trillion), with A2X’s R5.2 trillion market cap accounting for 27% of that.

 

 

Alternative exchanges are a global phenomenon

 

Established in 1971, Nasdaq rivalled the almost 200-year-old New York Stock Exchange (NYSE) with lower listing fees and cutting-edge technology.  As a result, it is now home to technology giants such as Apple, Google, Amazon, and Microsoft. The US currently has 13 registered stock exchanges, including the Chicago Board Options Exchange and the Miami International Securities Exchange.

 

The UK has its fair share of alternative exchanges, with the best-known being the Alternative Investment Market (AIM), established in 1995 with a focus on smaller companies.

 

Aprio IR has been asking if the alternative exchanges are the answer to a K-shaped economic recovery in Africa?

 

A K-shaped recovery occurs when, following a recession, different parts of the economy recover at different rates, times, or magnitudes. This contrasts with an even, uniform recovery across sectors, industries, or groups of people.

 

In the short-term, South Africa’s macro prospects remain subdued and highly reliant on structural policy reforms. To this end, the landscape for alternative exchanges may be to seek pockets of opportunity, exploit their niches and/or compete on cost or ease of doing business. In the longer-term, provided the structural reforms needed to drive superior and inclusive growth are implemented, alternative stock markets may prove to be the ideal home for small start-ups that will emanate in such an environment.

 

Some of the exchanges, such as the Cape Town Stock Exchange may already have an advantage as it is targeting a high-tech market, which to some extent is not constrained by general economic or industrial growth and a sub-market in itself. Exchanges which gain access to the rest of Africa will also have some form of insulation from South Africa’s muted outlook. With capital inflows from these alternative sources, one might even see an unexpected knock-on effect on South African economic growth and the emergence of South Africa’s own version of Nasdaq.

 

Implications for Investor Relations (IR)

 

The international example has shown quite clearly that these alternative exchanges can be highly successful. At a minimum, they provide increased competition and choice for corporates and investors alike.

 

Increased activity is an exciting prospect for the IR function. It elevates the need for strong IR capabilities and presents the perfect training ground for the next generation of IROs.

 

At the heart of IR is a dialogue. It leads to a mutual understanding between providers and users of capital, resulting in reasonable and informed expectations from investors. Moreover, it brings the long-lasting benefit of building trust between management and investors, allowing both to focus on the long term.

 

Communicating a compelling investment case, concisely and credibly, supported by a targeted and active programme is vital if companies are to graduate from small cap to large cap status.

 

Do you have a story to tell? Let us help you. Contact Nikki Catrakilis-Wagner at Aprio Investor Relations on nikki@aprio.co.za for help with developing a compelling and effective investor relations programme or visit our website on www.aprioir.co.za

How fintechs can build a firm base for expansion across Africa

In 2020, as the world was ravaged by the coronavirus, investment into financial technology (fintech) companies in emerging markets decreased as funders sheltered against a volatile, risky environment.

 

Except that’s not the whole story. True, funding in Latin American and Indian fintech companies declined, but investment in African fintech actually soared, according to research by Briter Bridges and BFA Global.[1] Africa saw fintech funding, including mergers and acquisitions, grow to $1.35 billion in 2020 from $1 billion in 2019.

 

[1] https://bfaglobal.com/catalyst-fund/briter-catalyst-fund-state-of-the-fintech-industry-report/

 

The trend reflects the increasing potential for growth in the continent. Africa has a growing population of 1.3 billion people, rising smartphone ownership and falling data costs. Several African nations have made digital transformation a priority, with a parallel investment in telecom and data infrastructure. Fintech investors also see opportunity among its large unbanked population – only 40% of adults in sub-Saharan Africa had a bank account in 2017.[1]

Most investments on the continent flowed to Nigeria, Kenya and South Africa, according to the Briter Bridges report, which surveyed 177 start-ups and 33 impact investors across emerging markets. South Africa led the way with $112m in investments, followed by Nigeria, which raised $74m, Kenya at $62m and Egypt at $51m.

 

The Briter Bridges research also breaks down investment by product category, and shows that in Africa, payment solutions receive the bulk of funding, followed by credit, insurance, financial infrastructure and neobanks.

 

Payment platforms have seen the most visible success in Africa, and there is huge remaining potential to formalise payment systems and reach the unbanked and underbanked. The benefits of financial inclusion to the unbanked and underbanked are significant, and could kickstart an era of more secure, more productive economic activity across the continent.

 

For many venture capitalists, Africa represents a blank canvas; a new frontier waiting to be conquered. This idea of the continent as a single potential market has been supported by the implementation of the African Continental Free Trade Agreement (AfCFTA), which looks set to usher in a wave of multinational fintechs looking to take advantage of more uniform trading conditions.

 

The reality is far more complicated, and far more interesting. Success in Africa still requires expert knowledge of its disparate markets, effective stakeholder engagement, local capacitation and a strategic reputation management strategy.

 

The potential of fintech, as well as its primary challenge, lies in its ability to scale. This has as much to do with marketing, reputation enhancement, partnerships, stakeholder relations and brand building as it does with the underlying product. In an increasingly competitive market, a fintech’s ability to differentiate itself and establish a public persona strong enough to carry it across a continent is an advantage as powerful as an innovative product. Companies can stand or fall based on their ability to develop and maintain a coherent, attractive brand proposition.

 

Laying a firm foundation for continental expansion, with a corresponding strategic approach to reputation management and stakeholder relations, can help prospective multinationals avoid many of the pitfalls that have stopped promising companies in the past.

 

To expand across a continent, partnerships need to be forged across a disparate set of geographies and operating conditions. There is also the expectation that multinationals will support local employment, industries and value chains. This requires communications competencies in terms of working with governments, regulators and communities.

 

Fintech moves quickly, and partners are on the lookout for newsmakers and growth. Make sure your successes are broadcast where potential collaborators can see them. In this regard, localised and centralised communications strategies need to take place concurrently. Knowledge of media landscapes and contexts within individual countries is crucial, as is an ability to tie individual stories together to craft compelling, organisation-wide narratives.

 

There is tremendous potential in Africa, and it is more accessible than ever for companies looking to expand. But as always, it rewards those who take a considered, strategic approach, and who keep the integrity of their brand and reputation top of mind.

 

[1] https://data.worldbank.org/indicator/FX.OWN.TOTL.ZS?locations=ZG

 

Who are the Social Media ‘king-makers’?

Chat forums – Reddit and Discord

 

Chat forums like Reddit and Discord have made it easier for retail investors to gather with likeminded people who share their appetite for risk or strategy. With group names like “Stock Dads Discord”, “Options Trade Club” or “Wallstreetbets”, these informal gatherings have quickly gathered momentum, even triggering local ‘copycat’ platforms on smaller global markets like Reddit’s “JSEbets”.

 

These short-form discussion groups make it very easy to share information and the more convincing the information, or the more influence the person who is sharing it has on that particular forum, the quicker it will gain favour and start to create momentum.

 

Wallstreetbets is now made up of 10.6 million people and was a catalyst behind the massive surge that very nearly broke the market during the GameStop frenzy.

 

 

 

 

Traditional Social Media – Twitter

 

As far as retail investors are concerned, Twitter has become the established news network of our day. Once a piece of news has leaked out of the focused investor groups and subreddits and made it onto Twitter, it’s very much gone mainstream. If it’s worthwhile, it will get noticed by heavy hitters and investment ‘influencers’ who have the power and the leverage to sway even more retail investors, traders, analysts, and of course the ‘old school’ mainstream media brands.

 

The impact of large-scale influencers on social media is undeniable. For example, when Elon Musk tweeted his now infamous one word post “GameStonk” to his 57 million followers, the price of GameStop shares immediately rallied over 60% in after-hours trading, having already closed 92% higher on the day.

 

 

 

To find out more about Aprio Digital’s offering and to schedule your next strategy session contact Thomas McLachlan or visit our website.