Interviews with Listed Companies Regarding English Disclosure
Recruit Holdings Co.,Ltd.
As a pioneer in the recruitment information business, Recruit Holdings Co., Ltd. has been a leader in the labor market since its establishment in 1960. The company has been at the forefront of incorporating technological innovation into their business strategy, and is constantly evolving by expanding their business domain to the promotional and global markets. As a global company listed on the Tokyo Stock Exchange Prime Market, they are constantly striving to evolve and show a strong commitment to overseas Investor Relations.
We interviewed Mizuho Shen, group manager of Investor Relations and Masahiro Ito, member of Investor Relationsabout Recruit's unique English disclosure policy and framework, as well as the company’s plans for the future.
Focusing on Quality Improvement Through Simultaneous Disclosure in English and Japanese
What is your policy on English disclosure, including the timing?
Mizuho: More than 40% of our shareholders are overseas institutional investors. Our main target for IR is overseas institutional investors, and our policy is to always disclose information in English and Japanese simultaneously.
What is the structure of the IR team?
Masahiro: We have employees in the IR Department at both our Japan and US offices. Our team is made up of nine members, including Senior Vice President of Investor Relations.. In addition to these nine, there is also an ESG staff member on the IR Team, and while we basically have a main speaker and writer for meetings with investors, we also supplement support staff flexibly.
How do you prepare English materials?
Mizuho: We have three Strategic Business Units (SBUs). Of these, HR Technology SBU has about 70% revenue in the US, and the US is its main market. For example, the content related to HR technology in the MD&A section of our earnings release is first drafted in English by the IR team in the US, and then translated into Japanese by the IR Team in Japan to ensure that the text is natural in Japanese.
While materials prepared by the IR Team are translated in-house in both Japanese and English, some materials prepared by the Accounting Department are outsourced to a translation company. When a translation company translates documents into English, it is of utmost importance that the translation be error-free, but we believe that the final confirmation of the content should be done by in-house personnel because we consider it important that the translation be easy to understand and convey the message clearly.
What are the differences in the systems used to prepare IR materials for different types of it?
Mizuho: The disclosure system varies greatly from project to project. For a simple disclosure document, the IR staff prepares it and an officer checks and reviews it for completion.
On the other hand, Annual Report are a major project, involving several people from each department, including the Accounting and Legal Department, for a total of 40 to 50 people. The IR Department serves as the PMO (Project Management Office), and the writing of each part is divided among the relevant departments. There are three steps in the preparation process. In the first step, the person in charge of each department writes the part for which he or she is responsible. In the second step, the IR members check whether the message is easy to understand for investors, and finally, Senior Vice President of Investor Relations, who is ultimately responsible for the project, checks the consistency from start to finish.
Are there any particular aspects of English disclosure that you consider particularly important?
Mizuho: If overseas investors perceive that there is an information gap between Japanese investors and overseas investors, they will certainly be less inclined to invest, and that is naturally undesirable. For this reason, we publish transcripts of all financial results briefings, which are prone to information gaps, in both Japanese and English by 24:00 on the day the briefing is held. We hold many individual meetings with institutional investors after the day following the financial results briefing, and by publishing the transcript of the financial results briefing on the same day, we are able to ensure that investors can attend the meeting after thoroughly analyzing the content of the financial results briefing. We recognize that the publication of transcripts of financial results briefings is a standard practice on a global basis.
What are you doing to improve the quality of your English documents?
Mizuho: This applies to disclosure in both Japanese and English but we actively receive feedback on disclosure materials in our daily dialogue with investors and make improvements on a regular basis. Institutional investors have to analyze multiple companies, and therefore only have a limited time to spend on each individual company. We confirm through dialogue the best way to express what we want to convey in a concise enough manner to meet their limited time frame.
Masahiro: From an operations perspective, in the preparation of documents such as Annual Reports, which are prepared in collaboration with multiple departments, IR adjusts and revises the paragraph structure and wording to ensure that the contents of each section are not broken up into separate sections and that the documents are cohesive and easy to understand.
From an IT systems perspective, where we previously provided revised files to project members each time they were created, we introduced a tool that allows simultaneous editing and viewing of documents, changing the system to allow real-time review. In addition, document files that had been managed by different departments were consolidated in a specific location to share information and lead to more efficient document creation.
From a personnel perspective, we invite several people from related departments to participate in quarterly investor interviews to gain an understanding of what issues investors are interested in, while at the same time focusing on fostering a sense of ownership among the people in charge of each department.
How are your meetings with investors going lately?
Masahiro: Four or five years ago, when we met with investors, particularly overseas institutional investors, we often started with answering basic questions such as, "what kind of business does Recruit do?” In most recent cases, however, investors have started asking us more hypothetical questions, and I feel that the quality of communication has improved. In addition, I believe that investors' understanding of the content and timing of our disclosures has deepened, and they are now more inclined to check our disclosure materials first. Although we still need to brush up our IR activities in the future, I think we have made significant progress compared to four or five years ago.
Commitment to Social Impact
How are your meetings with overseas investors going lately?
Masahiro: Most of our meetings with overseas investors are conducted in English. In addition to individual meetings, we participate in conferences organized by securities firms, and we are able to meet with a large number of investors each quarter. In addition, the senior vice president of investor relations, the president and CEO, and the heads of each SBU also meet with us, and we collaborate with ESG staff as needed.
As for ESG initiatives, are there any themes that are of interest to overseas investors?
Mizuho: To solve social issues through our business, we have made five ESG commitments. For example, our social impact commitments include supporting 30 million job seekers facing barriers to employment by 2030 and cutting the time it takes to get a job in half. Our ESG efforts are focused on how we can positively impact society and the global environment through our core business activities. We are increasingly receiving questions about the social impact of these initiatives. Since we intentionally set goals that are difficult to achieve, we try to explain not only what we are doing well, but also the challenges we face.
Disclosure is Not an Obligation, But a Marketing Tool for the Company
What improvements or new initiatives do you have planned?
Mizuho: We will work closely with top management, placing emphasis on deepening investors' understanding of our business, as this is the source of our corporate value. On the practical side, we want to make good use of the various technological tools that are now available to us to improve efficiency. In addition, we would like to spend more time on dialogue with investors, which only those with our role can do. Social conditions surrounding our company are changing rapidly. For us to change before these social conditions do, we must look around us, look at ourselves, and have a realistic perspective. We believe that the way we communicate, the way we present ourselves, the way we write, etc., will stop growing if we do not change as society changes through the evolution of technology.
Tokyo Stock Exchange (TSE) has announced a policy of mandatory English disclosure for Prime Market listed companies. Do you have any message for companies that are just starting out?
Mizuho: In the global market, it is important to convey information accurately and carefully in order to convince investors that your company is interesting and has potential. We regard it as part of our marketing efforts, not as an obligation. Although we must explain in English to approach overseas institutional investors, we believe that in return, they will see us as potential investment. This will lead to future investment and higher corporate value.
Masahiro: Disclosure requires coordination with a wide range of related parties, including legal, outside attorneys, auditing firms, and TSE. I believe it is important to proactively involve related parties and create a relationship that allows for positive dialogue. This in turn leads to improved quality of disclosure.
(Interview on December 7, 2023)
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