Information for Investors
Equity and fixed income investors are to a large extent looking for the same information about issuers. Investors are interested in strategic, operational and financial information that will help them predict how the company may perform going forward.
Disclosure of company information
Information investors are looking for include the issuers' market fundamentals and competitive position, business model, strategy and targets, governance, growth potential and risk profile and profile of management.
Investors are also looking for an in-depth understanding of the (underlying) financial performance, capital structure, working capital and required investments, and cash flow generation, while an increasing number of investors is also looking for disclosures on corporate social responsibility aspects.
Depending on their investment strategy, different investors will focus more on different elements of information disclosed.
Whether information has a (potential) impact on the share price will depend on specific characteristics of the business model and the markets the company operates. Another item to consider is how newly disclosed information relates to previously provided data.
Disclosures to shareholders
There are a number of considerations to determine the level of disclosure to (individual) shareholders:
- All shareholders are to be treated fair and equal;
- Legal obligations regarding disclosure (timely, price-sensitive, material);
- (Controlling) shareholders may also be member of the (Supervisory) Board of a company, Consequently, they will have insider knowledge, but are also bound by insider trading rules;
- The IRO needs to treat carefully but firmly on guarding the processes around disclosure, but will need to do this in close collaboration and consultation with the Board;
- Controlling shareholders are indeed shareholders (who need to comply with and be treated according to the relevant regulations and governance), but they often also have a great strategic added value for the company.
IROs are in frequent contact with analysts (both sell-side and buy-side) who are interested in strategic, operational and financial information that will help them predict how the company may perform going forward.
Informing the market
Bearing in mind that the clearest single element of an IR programme should be keeping the market informed of developments and events that may influence the share price, it is good use to balance your information stream to markets on the aspects of visibility, consistency and credibility.
Elements of information that are taken into account consist of:
- (Corporate) Governance
- Remuneration methods
- Financial results
- Sales, EBIT / EBITDA, net profit
- Balance sheet: net debt, debtors, creditors, credit ratings
- Cash flow
- Financial covenants
- Business case
- Products and markets (geographical and demographic)
- Market share
- Developments / technology / innovation / trends
- Economy in general: unemployment, GDP, mortgage application, consumer confidence, etc
- Company specific
- Organisational set-up and culture
- Geographic locations etc.