Investor Relationship Management - sasCommunity€¢News articles Investor needs Communication of...

Investor RelationshipManagement

John Wilkes, SAS UK

Introduction

! John Wilkes! Programme Manager! Business Performance Management! SAS UK

! Look at changes in the way companiesinteract with investors and how IT canfacilitate this

Investor Relationship Management

•Pressures for change and improvement•Strategy and shareholder value•Investor needs•Benefits for investors•IT and investor relationships•Summary

• External information providers

• Strategic direction

• Satisfying internal needs

•Annual report

• Unknown

•IT systems

Pressures for change and improvementNot what

investors need

But what are you going

to do?Never therewhen you

want it

Pressures for change and improvement

Key themes

Company’s potential to create shareholder value

Valuation gap between internal and external perceptions

Different agendas between shareholders and company

Technology increasing expectations

Globalisation and increasing speed of business

ICAEW report - “Inside Out - Reporting on Shareholder value”

www.icaew.co.uk

Summary of investor needsRecommendations on company disclosure

Company’s potential“.. want to look ahead to the opportunitiesand challenges of the future …”

Source: ICAEW “Inside Out” report

Valuation gap

• “many managers believe that a gap exists betweenthe internal perception of a company’s potentialand that of the stock market.”

• “34% of UK senior executives believed the sharesof their company to be undervalued”(Reporting gaps in the UK: The Chief Executive’s PerspectiveProcewaterhousecoopers 1998)

•…..•Key groups have conflictingperformance management agendas•Information systems areperceived as underperforming•…..

Economist Intelligence UnitPricewaterhouseCoopers1999ISBN 0 86218 100 3

Corporateperformancemanagement

Conflicting agendas•Key groups have conflicting performance management agendas

•between Board of Directors and -•external financial analysts - 32%•shareholders - 28%

Technology•Information systems are perceived as underperforming

•63% dissatisfied with their access to real time data•62% are concerned about systems flexibility•56% believe their systems have inadequate report writingfeatures•54% consider that systems are insufficiently integrated

Globalisation

• Competition for capital• International portfolio diversification• Consolidation of investment management ...• … but also growth in personal investing• Investor to company contact increasing

(Christopher PearceGroup FD Rentokil Initial plc)

Strategy and shareholder value

shareholdervalue

companyperformance

competition

and market

shareholderpreferences

Strategy and shareholder value

shareholdervalue

companyperformance

competition

and market

globalisation

governments

economies

dividend policy

company branding

communicationstrategy

choose theright strategy

implementthe strategy

shareholderpreferences

risk profile

reputationof Board

technology

Information useful for economic decisions

Other marketinformation

•Analysts’ reports•Industry journals•Economic statistics•News articles

Investor needs

Communication of decision-useful information

Corporate reporting

Other means ofcommunicationby the company

•Investor and analystbriefings•Websites•Interim and quarterlyreports•Letters to shareholders•Press releases

Annual reportsAccompanyingthe financialstatements

•Operating and FinancialReview (OFR)•Historical summariesand trends•Non-financialinformation

Financialstatements

•Statements of financialperformance•Statements of financialposition•Cash flow statements•Notes

Investor needs

Recommendations on company disclosure

•Strategic ambitions•Targets and milestones•Decision making process•Performance management process•Preferred measures•The key drivers of value

•eg- markets, competitive position, future trends, future competitive movements

Investor needs

Breadth of information

•Items of background data held• UK - 80• US - 250• Japan - 1000+

•Access everything on chosen industry …. not throughan intermediary(Peter JobChief Executive, Reuters Holdings plc)

Investor needs

Understanding of intangible assets

•Gap between book value and stock market value•intangibles•change associated with intangible investments

•Alternative ways of looking at intangibles•balanced scorecard•EVA•intellectual capital, etc

(Charles Leadbeater“New measures for the new economy”)

Investor needs

Private investors

Greater access to information

Understanding of company values

Pressure groups

Opportunity to influence

InvestorRelationshipManagement

PerformanceManagement

Strategy

RiskManagement

InformationManagement

InvestmentStrategy

Company Investor

Public Information Pool

Investor needs

Benefits for investors

moreinformationdisclosure

reduceinvestor

reducecost ofcapital

enhancesharevalue

greaterinvestor

understanding

lessvolatileshares

Benefits for investors

ethicalinvestorinterest

change insharevalue

changein

company

changein

reputation

IT and investor relationships

Value Chain

Capabilities and Knowledge

Performance Management

Strategy

Suppliers Customers

InvestorsGovernmentRegulators

Competitors Markets

Enterprise Performance Management

Value Chain

Strategy

Suppliers Customers

Competitors Markets

Store andshare

information

Store andshare

information

Web space Call centre

Share register

Customer marketingManagement reports

External reports

Value Chain

Strategy

Suppliers Customers

Competitors Markets

Internal alignment

Number of techniques - eg balanced scorecards

- accessing data- calculating ratios- establishing trends- finding relationships- doing comparisons- common goals- reduce waste

Value Chain

Strategy

Suppliers Customers

Competitors Markets

Brokers Fund Managers

Investor needsInvestor needs

Web presentationAnnual accountsFinancial updatesAGM interactionDiscussion roomsCompany modelInformation searche-IntelligenceMarket info and share priceWAP enablement

Company needsCompany needs

Capture investor detailsUnderstand investor profilesVisitor profilesTargeted communicationsIntegrated contactCost savingsStrategy feedPredict share movementsIRM information portalEnable long term goals

•Pressures for change and improvement•globalisation, competition and poor information

•Technology a major enabler•making possible today different forms of interaction with investors

•Benefits to investors•reduced cost of capital, more stable share price and increase in company value

•Those who do it first and best will win

Summary

Investor RelationshipManagement

John Wilkes, SAS UK

Investor Relationship Management - sasCommunity€¢News articles Investor needs Communication of...

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