2012 fincom session 4

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Reporting and financialcommunication - 4Skema - MSc Finance - 2012

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Skema 2012 - Reporting & Financial Communication - Session 4

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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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4

- -

+ +

- -

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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7/33Skema 2012 - Reporting & Financial Communication - Session 4


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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8

Activities, products and markets

Competitive environment and

strategyKey financial figures and marketdata

Management team

Detailed financial results

Annual report




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/




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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.htm




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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




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




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


How to communicate and for which impacts ?