How well Latin American companies portray a successful image and document their past achievements and future potential reflects directly on the company’s commitment to attract new and maintain old investors. The annual report is the backbone of that endeavor. In an effort to recognize those that excel, and to provide an incentive for others to improve, LatinFinance is pleased to present the results of the third annual Latin American Annual Report Contest.

Cemex, IRSA and Banco de Galicia return to the top 10 for their 1998 annual reports. FEMSA, Cresud, Panamco and TV Azteca entered for the first time and quickly made it straight to the top. CCU and Brahma improved their reports over last year, and also ranked among the contest’s top 10 entries.

A few of last year’s winners simply did not receive high enough scores to maintain their positions. Notably missing from the contest are Industrias Bachoco and Altos Hornos.

Bachoco did not produce a full-scale report, and Altos Hornos has been battling a financial crisis.

In general, the judges-a group of investors, regional accounting firm representatives, investor relations professionals, and analysts-agreed that the quality of the reports had improved over last year’s entries. One reviewer concluded that the collection of reports exhibited a high quality production level, and tended to follow a traditional structure for organizing information. This judge felt that first and foremost, an annual report’s cover must be eye-catching, and is a highly visible opportunity to showcase the company’s brand and its value to shareholders, employees and potential investors.

But another judge cited a general lack of future prospective, clearly defined strategy and competitive differentiation. “They don’t look at the larger picture to position their companies within a market, an industry, among peers, within the country, and globally,” the judge said.


New Parameters
Several changes in entry requirements occurred this year. Previously a potential contestant was required to have an ADR or GDR.

LatinFinance expanded eligibility this year to include Latin American companies listed as domestic shares outside of Latin America.

Under those criteria, Panamco became eligible.

This year the competition excluded Spanish and Portuguese language reports. One mission of the contest is to see how Latin American companies compare to their peers in reaching the international investment community. More than likely, a dedicated Latin American investor would be Spanish and/or Portuguese savvy, but a non-dedicated investor might not speak those languages. Yet the global emerging markets and non-dedicated investors remain an audience that Latin American companies need to reach. English language annual reports therefore are a key factor in communicating a corporate message to that audience.

The Latin American Annual Report Contest seeks to improve and expand transparency of information for potential investors. For that reason, the competition this year includes several new categories to recognize improvements in investor relations efforts of Latin American companies. Controladora Comerical Mexicana, Banco de A. Edwards and Grupo Minsa, among others, are being recognized for their significant increases in multiple sections of the contest, reflecting more focused efforts. TAMSA and Vitro should also be mentioned for their modern approach to design and improved scores in that area.

Web sites have increased importance in today’s economy. Providing investor relations on the Web is a complementary effort to the traditional paper annual. In an effort to distinguish superior sites with respect to investor relations, there is a new top 10 category, Editor’s Choice: Top 10 Web Sites for Investor Relations. These winners met or exceeded LatinFinance’s criteria. Recognition was given to companies that provided the annual report online, investor relations contact information, updated financial press releases, updated stock quotes, a multilingual site, and good to excellent presentation and navigational tools. CCU, Elektra and Tricom are the top three winners in this category.

Ground Rules
To enter this year’s competition, a company had to have an existing ADR/GDR program or be listed on an international exchange, pay an administrative fee of $250, and submit 10 copies of its annual report by the May 28 deadline.

After two entries were disqualified because of the new language requirement, judges considered 38 entries from Argentina, Brazil, Chile, Colombia, Mexico and Venezuela.

A qualified and detail-oriented team of judges reviewed the annuals this year. The team consisted of investors and representatives of accounting firms active in the region, investor relations professionals, research analysts and a branding consultant who works with some the most well-recognized companies in the US. For four judges this was the second year of participation.

The contest was set up so that each report was judged by an investor, an accounting representative, the branding consultant, an analyst and an investor relations professional. Each report was judged based on three major categories, corporate review, financials and presentation/graphics. Within those categories a series of specific criteria focused on the level of detail in the report, the adequacy of information on the firm’s market position and corporate strategy, the level of detail in the financial statements, as well as design and use of charts and other graphics to tell the company’s story.

Categories were graded on a scale of one to five (one being the poorest rating and five being the highest).

The scores received in each category were averaged to provide the overall score, which was used to determine the winners of this year’s contest.

The Top 10 Latin American Annual Reports
1. Cemex

Overall Score: 4.461

Corporate Review: 4.550

The Financials: 4.633

Presentation/Graphics: 4.200

In an encore performance, the annual report for Mexico’s Cemex streaks across the contest finish line ahead of the pack. It is the second year that Cemex, the world’s largest cement trader, takes first place in the overall category. Given that track record, the company continues to present investors with a high level of transparency, commit itself to shareholders and position itself to take advantage of potential opportunities.

Contest judges praised the report for its management descriptions, easy-to-read graphs, and given the industry, said one reviewer, “The graphics and layout make this an interesting report.” While the Cemex report stood out from the competition, one judge noted that “as usual for Latam annual reports, there is not much discussion about competition, what they are up to, and the impact on Cemex market share/sales.”

Nonetheless, the investor relations department at Cemex appears dedicated and is working with well-qualified contributors who have put a lot of work into the financial reporting and analysis, style and design, as well as maintaining a focus that exposes investors to the Cemex brand.


Overall Score: 4.387

Corporate Review: 4.394

The Financials: 4.367

Presentation/Graphics: 4.400

Striking report. Striking cover. The front cover of the FEMSA annual report asks, “Thirsty?” It’s catchy, and reviewers liked the clear message coming from the Mexican beverage company. With high scores across the categories, the FEMSA report is an excellent example of how an established Latin American company with a new ADR should market itself to investors and provide a high level of detail and disclosure.

Features of the FEMSA report that judges appreciated were the coverage of brands and strategy both domestically and abroad, organization and photographs. One of the realities of the annual report is that investors and analysts want charts, and as many as they can get. One of the contest judges remarked that FEMSA could have included more charts, and in particular five-year bar charts for all major ratios.

One reviewer summed it up best, “Overall, it was quite comprehensive. I was able to get a good idea of the company’s strategy, how it fit into its competitive environment, and where it is going.”

3. Cresud

Overall Score: 4.322

The Corporate Review: 4.188

The Financials: 4.278

Presentation/Graphics: 4.500

A first-time contestant, Cresud, one of Argentina’s biggest agricultural companies, takes a creative and colorful approach to its 1998 annual report. The cover is “arresting,” according to one judge, and the sophisticated reader, whether it be an analyst or investor, would be hard pressed to find a book so filled with expectation of good days, good profits and a good investment.

The report was very well laid out, and as one reviewer put it, “This annual report does an excellent job of leading the reader through its business.” The judge added, “It is thorough in terms of information and provides the new reader with a complete understanding of what the company does, market size, growth issues, pricing and all the factors one would need to start to ask questions about the company.”

One area for improvement would be more information on the company’s use of technology, for which it received low scores.

A reviewer would have liked more information on distribution and how products get to market.

A final comment, “One of the best!”

4. Compañía Cervecerías Unidas

Overall Score: 4.308

Corporate Review: 4.325

The Financials: 4.667

Presentation/Graphics: 3.933

Chile’s Compañía Cervecerías Unidas has succeeded in its efforts to produce a top-tier annual report. Whenever possible graphs were used, significant events in the company’s history were highlighted. And the overall beverage theme kept the focus on CCU and its strategy.

From a design standpoint, the report is thematic and well-organized. Judges had mixed reviews about the overall level of creativity, however. The photos are industry relevant, and small artistic elements such as bottle caps from the different beverages in the CCU repertoire, from Croatia to Argentina, add an extra bit of detail and color.

Quite often a straight forward, brief description of the company’s business is at the beginning of an annual report. Why CCU doesn’t have such a description up front was puzzling for one judge.

Based on the overall scores, however, reviewers liked what they saw. Financial disclosure was ranked among the highest in the group of contestants, along with the corporate review marks. Undoubtedly a dedicated investor relations effort by CCU is behind the success of the 1998 annual report.


Overall Score: 4.240

Corporate Review: 3.719

The Financials: 4.708

Presentation/Graphics: 4.292

IRSA is back again in the top 10 with an annual that is classy, professional, and by all accounts an excellent follow-up to last year’s winning report. This year, IRSA’s biggest strength was its high score in the financial section, which included more than 60 pages of in-depth financial reporting.

Visually, the report fared well among its competitors. Architecture is an obvious focus for the Argentine real estate development company. Photos of hotels, shopping malls, wharfs and construction sites offer a view into IRSA’s operations and future strategic developments. The front-gatefold was informative, offering a business description, maps of principal properties and a chart and graphs of financial highlights.

Some annual reports do a better job than others when offering English and Spanish in the same copy. In IRSA’s case, the layout of the text made the reader wonder if the same information was provided in both languages.

Still, IRSA took a logical approach to its annual report: invite the reader with a dramatic front cover, keep interest with informative text and charts and graphs illustrating the important points, and close with the required financial data.

6. Panamco

Overall Score: 4.217

Corporate Review: 3.900

The Financials: 4.500

Presentation/Graphics: 4.250

Founded in 1941, Panamco is the largest soft drink bottler in Latin America. One need only read the first page to find out that nugget of information in the business description. You can also find out in which countries Panamco has operations, its franchise population and its per capita consumption.

The point here is that within a few seconds of glancing, the flip of a page and reading two sentences of text, Panamco has already explained who they are, where they are and what their main product is. The fact that the presentation is well laid out, the inclusion of cute truck charts and informative timeline really make this one of the most memorable entries this year.

Two of the most critical comments from judges were: use a different font for the text, and publish the report earlier in the year. That is relatively light criticism.

According to one judge, Panamco delivered the message that, “We understand our markets, we know how to operate in these markets and we have everything under control-the message all companies want to communicate to the financial community.”

7. TV Azteca

Overall Score: 4.170

Corporate Review: 3.635

The Financials: 4.542

Presentation/Graphics: 4.333

TV Azteca certainly doesn’t lack for subject matter to photograph. Soap opera heroines, news anchors, actresses being prepped by make-up artists-these are all scenes from the television industry, and the company’s 1998 annual report. As noted by one reviewer, the book is a capabilities overview as well as an annual review.

This report could be this year’s most colorful entry. On the one hand, the vivid images draw attention to the visual aspects of charts, graphs and industry relevant photos. However such an emphasis also tends to distract the reader from the text. Since the overall report design isn’t traditional to begin with, the effort of reading the report for content becomes a bit cumbersome, judges concluded.

One judge particularly liked the “candid” chairman’s letter, noting its sincerity even in the light of some negative topical matter.

Another judge thought the inclusion of the entire 20-F would be a good addition to the overall financial disclosure.

Extremely modern and bold, the TV Azteca report tries hard to explain its operations, the market in which it provides service, and communicate its success.


8. Banco de Galicia

Overall Score: 4.158

Corporate Review: 3.850

The Financials: 4.725

Presentation/Graphics: 3.900

For the second year, Banco de Galicia is the only financial institution in the top 10. Once again, it consistently placed near the top for financials, and design improved significantly over last year. Dependability is a highly regarded attribute of a bank, and Banco de Galicia’s report conveys that message.

This report has one of the most innovative photos of management, as was mentioned by several judges. Each member of the committee is looking up in the photo, a nice metaphor for looking to the future.

Judges were clearly mixed overall on whether they preferred an all English, or English/Spanish report. In Banco de Galicia’s case the report is entirely in English. One judge said that it should be that way; and another thought that readers would appreciate a bilingual edition.

“Financial disclosure is among the best and should be used as a benchmark by other banks in the region,” commented one expert, high praise for Banco de Galicia.

9. Brahma

Overall Score: 4.153

Corporate Review: 4.025

The Financials: 4.533

Presentation/Graphics: 3.900

The cover may look the same as last year, but the content in Brahma’s annual report is different, and better. Several judges who follow the brewing and beverage company noted that the report is much improved over last year, and “now has the look and feel of a US style report.”

Brazil’s Brahma focused special interest on employees in the front of the corporate review area. It is an interesting approach, and projecting the image that each employee acts like an owner makes the reader think that the company must be well-run. An expert judge agreed, “This is one of my favorite reports.

It’s also one of the best run companies.”

The financials scored well. There does seem to be some room for improvement, according to judges. More charts, as with so many other entries, was an issue. One reviewer who looks for detail wanted a description of the market as well as charts on package/channel mix and product lines.

From a design standpoint the report was clean, bright and the photos reinforced the brand.

Several companies used glossy photos, more so than last year. They really look nice and seem to make the images stand out from the page.

10. LanChile

Overall Score: 4.146

Corporate Review: 4.188

The Financials: 4.292

Presentation/Graphics: 3.958

Well-written with an excellent presentation, LanChile’s report flies into the top 10. There is a sense that the company is on solid ground, noted a judge. Indeed, the report is elegant, not flashy, and reflects a stable and serious operation.

One judge commented that the LanChile report discussed, “strategy and most importantly, the things the airline has to do to grow and implement its strategy. It also addressed interesting areas like competition.”

And while the reader knows what an airline does, a brief up-front business description was absent and would have been helpful.

LanChile is the first airline to ever enter the competition. As far as offering photos, the company has an advantage because airplanes can be quite dramatic and airport scenery is a new background.

The Contestants
Apasco, Aracruz Celulose, Banco Bradesco, Banco de A. Edwards, Banco de Galicia, Brahma, Brazil Realty, Bufete Industrial, Cemex, Central Costanera, Companhia Siderurgica Belgo-Mineira, Compañía Cervecerías Unidas, Controladora Comercial Mexicana, Corporación Financiera del Valle, Cresud, Desc, Elektra, Enersis, FEMSA, Fondo de Valores Inmobiliarios, Grupo Continental, Grupo IMSA, Grupo Minsa, IRSA, LanChile, Luz del Sur, Marcopolo, Panamco, Sivensa, Sol Petróleo, TAMSA, Telecom Argentina, Transportadora de Gas del Sur, Tricom, TV Azteca, Unibanco, Vitro and YPF.

The Judges

Howard Belk
President, Nuforia Inc.

Belk is a branding consultant with nearly 20 years’ experience developing the identities and communications practices of some of the world’s most exciting companies. With particular insight on effective branding in an Internet-influenced marketing environment, Belk has developed creative platforms that encompass the expanding range of strategic application from Web sites and extranets to graphic identity programs and corporate annual reports.

With his co-founder partner Stephen Mignogna, Belk built Belk Mignogna Associates into a leading corporate communications design firm in New York City and spearheaded its merger with Net Explorer in 1999. Belk has juried numerous design competitions, received awards from professional organizations and has lectured nationally. Belk attended the University of the Arts in Philadelphia.

Katherine Maineri
Business development manager, National Tax, KPMG LLP.

With over 14 years experience in marketing and international business in the United States and Latin America, Maineri has worked as a trade consultant and marketing manager for multinationals expanding in the region.

Maineri earned a bachelor’s degree in marketing in Brazil and an MBA from the University of Miami.

Graham B. Makohoniuk
Director of research, Globalvest Management Co.

With over 8 years experience in various capacities in the investment profession, Makohoniuk was previously senior portfolio manager with the Export Development Corporation (EDC) of Canada. He is a member of the investment committee at Globalvest, an investment manager specializing in emerging markets.

Joe Mileti
Head of international investor relations, Citigate Dewe Rogerson.

Mileti heads the firm’s international investor relations practice, and is a member of the firm’s executive committee. At Citigate Dewe Rogerson, he works closely with Latin American, Asian and European clients on message development, positioning, and strategic and crisis counseling. Mileti is a graduate of New York University, where he received his bachelor of arts degree in economics.

Faustino Montero
Partner, global capital markets group, PricewaterhouseCoopers LLP.

Based in New York, Montero is responsible for providing accounting advice to non-US companies raising capital in the US capital markets, through public offerings or private placements, as well as assisting those companies already registered with the Securities Exchange Commission. Montero holds bachelor and master’s degrees in accounting from the University of Southern California, and is a certified public accountant.

Orlando Muyshondt
Portfolio manager, Merrill Lynch Asset Management.

A native of El Salvador, Muyshondt is a portfolio manager with Grace Pineda for the Merrill Lynch Latin America Fund. Previously, he worked with KPMG Peat Marwick. He is a graduate of the University of Vermont with majors in economics and history, and received an MBA from Columbia University.

Editor’s Choice: Top 10 Web Sites for Investor Relations
As an investor relations tool, the CCU Web site excelled and gets first place for the Editor’s Choice Award for Best Web Site. Each of the required elements is present.


The 1998 annual report is available, as well as the 20-F (for many investors, the 20-F is the required financial data needed to make an investment decision). Updated stock quotes are available with a 20-minute delay, including charts mapping the previous months share price movement on the NYSE. There are direct e-mail links to the IR department at CCU, with names and phone numbers.

The site is bilingual English/Spanish. Presentation and navigation are simple, not cluttered by complicated graphics. The overall completeness of the CCU Web site as an investor relations tool makes it a clear choice for best Web site in Latin America.

The Judges
A dozen analysts from the Warburg Dillon Read Latin American equity research team judged reports from their respective sectors. They are:

Damien Fraser, CFA, Mexico analyst

Laurence Madsen, banks analyst

Zain Manekia, telecommunications analyst

Justin McGowan, retail analyst

Marcelo Mesquita, Brazil analyst

Tom Meyer, metals and mining analyst

Jamie Nicholson, steel analyst

Mary Quinn, oil and gas analyst

Alvaro Shiraishi, construction and homebuilders materials analyst

Bond Snodgrass, CFA, conglomerates analyst

Lawson Steel, utilities analyst

Jose Yordan, beverage analyst

Additionally, Tim Baker, CFA, director of research at Warburg Dillon Read, coordinated the judging effort. Other senior team members include Sebastien Chatel, Mexico media and consumer names analyst, and Robbie Sethi, Latin American strategy.

Warburg Dillon Read’s Latin American equity research is made up of 25 analysts who cover more than 125 Latin American companies through its main office in New York and five regional offices including Brazil and Mexico. The team also incorporates the experience and expertise of more than 500 other Warburg Dillon Read analysts covering 3,500 companies around the world.