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8/3/2019 2012 FinCom Session 4
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Reporting and financialcommunication - 4Skema - MSc Finance - 2012
p ! r convaincre vos pa " enair e message dentreprise
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Agenda
Comunication means and impact
1. Communication material
2. Direct interactions
3. Communication targeting
4. Impact of analysts forecasts
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Main communication means
Hot media\ Press release
\ Analysts meeting
\ Conference call
\ Press conference
Cold media\ Annual report
\ Reference Document
\ Shareholders letter and pedagogicaltools
Direct interactions\ Analysts relation
\ Investors relation
\ Press relation
\ Retail shareholders relation
Internet\ Corporate and financial websites
\ Dedicated websites
\ Media websites
\ Social networks
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- -
+ +
- -
Costs
One-2-One
Phone call
Financial communicationin the press
Investors days
Press release
Internet
Road Shows /Conference
Analysts meetings
Annual Report
Legal obligation
Conference call
I m p a c t
+ +
AGM
Sales force briefing
How to communicate and for which impacts ?
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Communication material
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La passion crativeLVMH
: :
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Press release : the first document to be disclosed
Official information of the company\ As a legally binding document, it focuses
a great share of legal and financial risks
\ As soon as it is disclosed, every word ilweighted, analysed and interpreted
\ In some cases, this may be the onlyinformation disclosed
Regulated rules for archivingdocuments\ Information shall remain available for 5
years
\ On the company website\ And on a national archive platform
Online disclosure and disseminationfor all at the same moment\ Outside trading hours, in order to ensure
fair disclosure
\ Via primary information providerstoward:
media agencies (AFP, Reuters...),
business information networks (Reuters,Bloomberg...)
or retail information channels (Yahoo,Google, Boursorama)
\ Via e-mails, toward targeted contacts:
journalists, analysts, investors, individuals,business partners (banks)
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A specific announcement: the profit warning
Actual performances to be releasedclearly differ from:\ previous company guidance
\ or market expectations (consensus),even if the company gives no guidance
Usually followed with a backlash onshare price\ a sharp fall in share price and high trade
volumes
\ widely echoed by the media
\ negative impact on the credibility of boththe company and the management
Can produce a beneficial effectonly in homeopathic doses !\ On the long term, the market may be
value the capacity of management to betransparent and take responsibility for it
\ Provided this would not happen everyother half-year !
Case study: Veolia Profit Warning
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Activities, products and markets
Competitive environment and
strategyKey financial figures and marketdata
Management team
Detailed financial results
Annual report
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Reference Document
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Technical document
Content is fixed by theEuropean regulation
Voluntary Publication
Allow to launch marketoperations in a shorter time scale
Web Annual report\ Axa
http://rapportannuel.axa.com/http://rapportannuel.axa.com/8/3/2019 2012 FinCom Session 4
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Material for the general public\ Abstract of Annual report
\ Synthetic le aflet
\ Letter to sh areholders\ Internet we bsite
\ Investors pr esentation
A need for consistence
Material for the general public
http://www.societegenerale.com/flipbook/vf/index.htmhttp://www.societegenerale.com/flipbook/vf/index.htmhttp://www.societegenerale.com/flipbook/vf/index.htmhttp://www.societegenerale.com/flipbook/vf/index.htmhttp://www.societegenerale.com/flipbook/vf/index.htmhttp://www.societegenerale.com/flipbook/vf/index.htmhttp://www.societegenerale.com/flipbook/vf/index.htm8/3/2019 2012 FinCom Session 4
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The best communication toolTHE issuer DATA BASE : analysts & investors presentation, press release, annual report
Group
Financial Information
Shareholders
Documents
Sustainable Development
Corporate Governance
Development of interactive tools : Webcast live, RSS news, Podcast, PDA ...
www.tf1finance.com
** Include regulated information
Financial website
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Get the company to be known, understood and appreciated is a long run\ Markets systematically tend to simplify
\ Contacts change pretty often
\ Many other speakers have an opinion on the corporation
Heterogeneous audiences, Heterogeneous concerns\ Adapt the message to the audience
\ But remaining consistent with the core corporate message
\ And be didactic
Corporate image is a long term investment\ in term of financial resources
\ in term of human rare resources
\ The return is hard to value, except when you loose it !
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Keep in mind
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Direct interactions
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Make it real !\ Meetings with the management
\ On-site visits
\ Investors days
Share a strategic vision\ On a regular basis: once a year
\ Or for a special occasion:major acquisition
strategic re-focus
new plant
Use with caution:its counter-productive to speak when you have nothing to say !
Helps to pre-empt a position of opinion leadership
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Relational communication
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Analysts meeting
Generally twice a year \ In Paris or major financial centres
\ Not a legal requisit, but a key milestone in financial communication
A major event\ Presented by the CEO and CFO
\ Audience of financial analysts,fund managers and sometimes journalists
\ Its the moment when the management give update on their goals and achievements
Key topics\ Quick view of business and strategy
\ Detailed comments on operational and financial highlights
\ Outlook and guidance
\ Q&A
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Relationship with journalists
Disclosure of press release\ Take into account closing time for the press
daily news press: closing at 6:00 PM
weekly magazines: closing on Friday\ Inform and contact the journalists following the company
\ Manage and generate specific request
Press conference\ May be a dedicated meeting or included into the analysts meeting
\ Financial press/ Business press\ How to get interviews
internet, a specific media\ even shorter deadlines and more reduced means
\ new available tools: chats, video interviews
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Annual general meeting
Retail shareholders aremainly targeted
A Communication must
and also a legalprocedure
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Premium content for investor
To highlight 3 or 4 main ideas
To give updated & more detailed information : on the activity
Focus on the strategy
FAQ dissemination
Road-show presentation
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Case study : Investors dayAgenda
Strategy discussion : where growth and value is going to come from ?Overall roadmap
Segment-specific
Financials accounts\ Main drivers of the business model
\ Comprehensive analysis of the accounts
\ Financial guidance
Develop the activity of a business segment\ Better understanding of the business model
Comprehensive approach of a new technology
Sector specific consideration
Product demos
Sites visits (studios, building site, factory ...)
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Case study : Investors dayWho should present ?
CEO and CFO are critical
Business Heads and operating manager are must have
Specific attention\ Well prepare the slides presentation with the operating manager
\ Specific brief on financial information to be disclosed
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Case study : Investors dayWho to invite ?
Buy-side investors: existing & potential investors
Sell-side analysts covering the stock
Sales team
Brokers marketing team (for site visit)
Their expectations:\ Strategy discussion: detailed, comprehensive, forward-looking
\ Access to management: especially operating managers and division heads
\ In-depth presentations on individual business segments
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Case study : Investors dayOrganization of the event
How long should it be? :\ Half-day or day events
Selection of the date:\ Take into account industry conferences or peer events and specific bank holidays
Where should the event be held?\ Company headquarter or site visit
If possible:\ Organise a web cast and/or a conf call of the event
\ Prepare a press release to summarize the main topics discussed during this event
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Communication targeting
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Different approaches\ Top /Down : Euroclear
\ Bottom / up : Thomsonone, Citigate,investors,
\ Crossing the legal or statuory thresholds
\ Historical changes
Sector specificities
How to identify further custodianstake ?
A costly process
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A key issue: Shareholder identification
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To give daily business details and focus on operatingspecificities = good knowledge of its business
To be a multi-specialist
To anticipate stakeholders needs and fears
To be aware on regulation and accounting changes,and prepare the market for that
To capitalise on interactive communication tools
Focus on short-term
To answer to irrelevant, irrationalquestion
Show-off communication style
Oversell the stock
To have an ongoing communication processbeyond market top of mind interest
Refusing to meet with analysts who havean underperform recommendation
Not travelling with analyst during road-show
Best Practices
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Responsabilities breakdown inside the IR team
who does what ? : contact with sell-side analysts only ? Investors ? Road-showactive attendance ?
A ~ 6 months process to reach an in depth knowledge of the company and itsstakes
How many people from the issuer side will attend the meetings ?
IR team members have to attend all the meetings between investors or analysts and the management
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IR Programme and annual cycle
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January February March
Board Meeting
Analysts meeting
Road show /conference
AGM
April May June
x
Black Out
x
x
x
Legal obligations FY accountsQuaterly information
AGM
x xPress release
IR Programme and annual cycle (1/2)
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July August September
Board Meeting
Analysts meeting
Road show /conference
AGM
October November December
x
Black Out
x
x
Legal obligations H1 accountsQuaterly information
x xPress release
IR Programme and annual cycle (2/2)
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Spain
Germany
Italy
Scandinavia
UK
USA
France
JapanSwitzerland
New-YorkBostonLos AngelesLondonEdimburgAmsterdamParisMadridBarcelonaMontrealGenevaZurichMilanFrankfurtMunichViennaStockholmHelsinkiTokyo
Canada Austria
Road-show and conference programme
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In 2008
Europe : 80%
incl. France : 69%
UK : 10%Others : 19%
More than 300 contacts in 2008
(BY : 43%, employees : 5.3% )
Targeting investors and financial destinations
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Equity AUM by destination (identified institutional capital) - $bn
Source: J.P. Morgan, Factset
0
100
200
300
400
London Paris Stockholm Edinburgh Copenhagen Dublin The Hague Helsinki
$1,426
Equity AUM by destination (identified institutional capital) - $bn
0
375
750
1 125
1 500
New York Los Angeles Denver Texas Kansas Tokyo Dubai Hong Kong
$2,324 $1,544
Targeting investors and financial destinations
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DefinitionPeriod before a press release (accounts, quaterly information) during which theissuer does not communicate to the market (financial or media)
In Europe : no regulation
Market pratice :\ 3 weeks before FY accounts release
\ 2 weeks before quaterly release
Disclosure process (market practices in France)\ 60% : upon request by phone
\ 25% : website\ 15% : email
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Quiet Period
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Depend on company size and the importance of the free float
If the free float > 20%\ To have an active action on the volume traded
\ To bring visibility on the stock beyond fashion (ex : brick & mortar cie during the internetbubble)
\ An ongoing and active communication programme = best way to limit the rumors & createvisibility on the stock
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How to communicate and for which impacts ?