Copyright © 2000 SAS EMEA
Investor RelationshipManagement
John Wilkes, SAS UK
Copyright © 2000 SAS EMEA
Introduction
! John Wilkes! Programme Manager! Business Performance Management! SAS UK
! Look at changes in the way companiesinteract with investors and how IT canfacilitate this
Copyright © 2000 SAS EMEA
Investor Relationship Management
•Pressures for change and improvement•Strategy and shareholder value•Investor needs•Benefits for investors•IT and investor relationships•Summary
Copyright © 2000 SAS EMEA
Investor Relationship Management
•Pressures for change and improvement•Strategy and shareholder value•Investor needs•Benefits for investors•IT and investor relationships•Summary
Copyright © 2000 SAS EMEA
• 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
Copyright © 2000 SAS EMEA
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
Copyright © 2000 SAS EMEA
Pressures for change and improvement
ICAEW report - “Inside Out - Reporting on Shareholder value”
www.icaew.co.uk
Summary of investor needsRecommendations on company disclosure
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Pressures for change and improvement
Company’s potential“.. want to look ahead to the opportunitiesand challenges of the future …”
Source: ICAEW “Inside Out” report
Copyright © 2000 SAS EMEA
Pressures for change and improvement
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)
Source: ICAEW “Inside Out” report
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•…..•Key groups have conflictingperformance management agendas•Information systems areperceived as underperforming•…..
Economist Intelligence UnitPricewaterhouseCoopers1999ISBN 0 86218 100 3
Corporateperformancemanagement
Pressures for change and improvement
Copyright © 2000 SAS EMEA
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
Pressures for change and improvement
Copyright © 2000 SAS EMEA
Pressures for change and improvement
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)
Copyright © 2000 SAS EMEA
Investor Relationship Management
•Pressures for change and improvement•Strategy and shareholder value•Investor needs•Benefits for investors•IT and investor relationships•Summary
Copyright © 2000 SAS EMEA
Strategy and shareholder value
shareholdervalue
companyperformance
competition
and market
shareholderpreferences
Copyright © 2000 SAS EMEA
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
Copyright © 2000 SAS EMEA
Investor Relationship Management
•Pressures for change and improvement•Strategy and shareholder value•Investor needs•Benefits for investors•IT and investor relationships•Summary
Copyright © 2000 SAS EMEA
Information useful for economic decisions
Other marketinformation
•Analysts’ reports•Industry journals•Economic statistics•News articles
Investor needs
Communication of decision-useful information
Source: ICAEW “Inside Out” report
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
Copyright © 2000 SAS EMEA
Investor needs
Recommendations on company disclosure
Source: ICAEW “Inside Out” report
•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
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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)
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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”)
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Investor needs
Private investors
Greater access to information
Understanding of company values
Pressure groups
Opportunity to influence
Copyright © 2000 SAS EMEA
InvestorRelationshipManagement
PerformanceManagement
Strategy
RiskManagement
InformationManagement
InvestmentStrategy
Company Investor
Public Information Pool
Investor needs
Copyright © 2000 SAS EMEA
Investor Relationship Management
•Pressures for change and improvement•Strategy and shareholder value•Investor needs•Benefits for investors•IT and investor relationships•Summary
Copyright © 2000 SAS EMEA
Benefits for investors
moreinformationdisclosure
reduceinvestor
risk
reducecost ofcapital
enhancesharevalue
greaterinvestor
understanding
lessvolatileshares
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Benefits for investors
ethicalinvestorinterest
change insharevalue
changein
company
changein
reputation
Copyright © 2000 SAS EMEA
Investor Relationship Management
•Pressures for change and improvement•Strategy and shareholder value•Investor needs•Benefits for investors•IT and investor relationships•Summary
Copyright © 2000 SAS EMEA
IT and investor relationships
Value Chain
Capabilities and Knowledge
Performance Management
Strategy
Investor Relationship Management
Suppliers Customers
InvestorsGovernmentRegulators
Competitors Markets
Enterprise Performance Management
Copyright © 2000 SAS EMEA
IT and investor relationships
Value Chain
Performance Management
Strategy
Investor Relationship Management
Suppliers Customers
InvestorsGovernmentRegulators
Competitors Markets
Enterprise Performance Management
Capabilities and Knowledge
Copyright © 2000 SAS EMEA
IT and investor relationships
Store andshare
information
Store andshare
information
Web space Call centre
Share register
Customer marketingManagement reports
External reports
Copyright © 2000 SAS EMEA
IT and investor relationships
Value Chain
Strategy
Investor Relationship Management
Suppliers Customers
InvestorsGovernmentRegulators
Competitors Markets
Enterprise Performance Management
Capabilities and Knowledge
Performance Management
Copyright © 2000 SAS EMEA
IT and investor relationships
Internal alignment
Number of techniques - eg balanced scorecards
- accessing data- calculating ratios- establishing trends- finding relationships- doing comparisons- common goals- reduce waste
Copyright © 2000 SAS EMEA
IT and investor relationships
Value Chain
Performance Management
Strategy
Suppliers Customers
InvestorsGovernmentRegulators
Competitors Markets
Enterprise Performance Management
Capabilities and Knowledge
Investor Relationship Management
Brokers Fund Managers
Copyright © 2000 SAS EMEA
IT and investor relationships
Investor needsInvestor needs
Web presentationAnnual accountsFinancial updatesAGM interactionDiscussion roomsCompany modelInformation searche-IntelligenceMarket info and share priceWAP enablement
Copyright © 2000 SAS EMEA
IT and investor relationships
Company needsCompany needs
Capture investor detailsUnderstand investor profilesVisitor profilesTargeted communicationsIntegrated contactCost savingsStrategy feedPredict share movementsIRM information portalEnable long term goals
Copyright © 2000 SAS EMEA
Investor Relationship Management
•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
Copyright © 2000 SAS EMEA
Investor RelationshipManagement
John Wilkes, SAS UK