box ir financial market survey 2012 summary

© Box IR 2012

Financial Market Survey 2012Financial Market Survey 2012

• A total of 185 respondents have� named listed companies and commented on their communication and investor relations efforts

� answered questions regarding the Swedish equitymarket

Approx 90 fund managers and 100 analysts & brokers participated in the survey

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Survey respondentsSurvey respondents

Fund managers3 AP-fonden, 4 AP-fonden, 7 AP-fonden, Alcur, Alecta, Alfred Berg, AMF Pension, Brummer & Partners, Capman, Carnegie Asset Manangement, Catella Fonder, Cicero Fonder, Didner & Gerge, DnB Nor, Futuris, Granit Fonder, Gustavia Fonder, Handelsbanken Fonder, HealthInvest, Humle Kapitalförvaltning, IKC Fonder, Kåpan Pensioner, Lannebo Fonder, Madrague, Manticore, Meetoo, Nordea Asset Manangement, Norron, Origo Capital, PSG Capital, QQM FundManagement, Scientia, SEB Asset Management, Skandia, Strand Kapital, Swedbank Robur, Svolder, Ture Invest,Öresund

Investment BanksABG Sundal CollierCarnegieCredit SuisseDanske BankDeutsche bankErik PenserHandelsbankenJRS SecuritiesNordeaPareto ÖhmanRedeyeRemiumSEB EnskildaSwedbank

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Table of contentTable of content

• The communication impact on valuation� Who is successful and what do they have in common?

� What is considered as sub par communication?

• Quartely earnings reports or not?

• Does the market care about CSR?

• Is Capital Markets Days important?

• Appendix� Survey question

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IR – importance to valuationIR – importance to valuation

• The financial pro’s were asked to mention companies where communication has had an effect on valuation

• 110 companies were named, and of those mentioned at least twice the respondents consider that� 38 companies have created value through communication � 35 companies have destroyed value through communication

Is this of any importance?

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Good communication pays offGood communication pays off

Better returnsHigher

valuation

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”Clear, straightforward and continuous communication withoutcorporate BS and euphemisms haveled to increased confidence ...”

”Higher visibility and creates an understandingof the company. Educates analysts / investors /

brokers on drivers and continuity createscomprehension and minor fluctuations of

negative events”

”IR departments of these companieshave a great understanding of the

capital market and are alsoextremely familiar with their company

and competitors”

Value creating communicationValue creating communication

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Mutual characteristics of value creatorsMutual characteristics of value creators

Open Clear Transparent

Long-term Consistent Accessible

and

Great understanding of capital markets

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”Best in class” IR”Best in class” IR

The three companies that the respondendsconsidered having created most value throughcommunications are:

1. Assa Abloy2. Hexagon3. Atlas Copco

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"Investment companies that appear to have "dual agendas" or executives that don’t want to admit bad deals until well

after the fact”

”Lack understanding of (or ignore) investors' view of the

company and the expectationsin the stock price …”

”Have problems to deliver on already made promises ”

Value destructive communicationValue destructive communication

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And some less flattering…And some less flattering…

Manipulative Misleading Arrogant

Overlyoptimistic

Unclear Unaccessible

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Companies ambivalent on quartely

reporting

Companies ambivalent on quartely

reporting

From Box IRs IR survey 2012

based on108 responses from

companies on Nasdaq OMX

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…but how about the investors?…but how about the investors?

Investors reward long-termism, but would like to keep the quarterly checkpoints

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Text & numbers tougher than presentingText & numbers tougher than presenting

” Nothing particularlycumbersome.”

”It is simply part of the job.”

”Nothing. The reportcreates a natural basis for dialogue with the market

on performance.”

”Extended IFRS requirements in the

interim reports.”

It is a time-consumingprocess, but would not call any component"overly cumbersome."

Mid Cap

Small Cap

Large CapMid Cap

Small Cap From Box IRs IR survey 2012

based on108 responses from

companies on Nasdaq OMX

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CSR – marginally more importantCSR – marginally more important

Despite the debate as of lately, but …

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Increased pressure to consider CSRIncreased pressure to consider CSR

”More questionsfrom investors”

” Increased focus in the media.

Badwill to invest in companies thatmisbehave.”

”Marginally, but maybeavoiding to a slightlyhigher degree "bad"

companies.”

Increased pressure, mainly from the media…

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Important how a CSR incident is managed!Important how a CSR incident is managed!

”What happensnext often

overshadowsthe event itself.”

To err is human, not handling it (in the media) is costly!

”Classic crisismanagement where the leadership’s

judgement is putto the test."

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4 out of 10 find CMDs better than before4 out of 10 find CMDs better than before

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Company questionsCompany questions

1. Which companies do you consider communicate with investors in a way thataffects the valuation?� Which companies created value with good communication?� Which companies destroyed value by poor communication?

2. Name companies associated with regular report disappointments? (that rarely live up to market expectations)

3. Name companies that routinely "guide" the market lower than the expectedoutcome

4. Which companies have an IR person who can "replace" the CEO at investormeetings/ presentations? (i.e. is at such a high level that investors are OK with or even prefer meeting the IR person)

5. Which company representatives or companies do you consider to be the best and worst at investor presentations? Why are these good/bad?

6. Regarding listed companies' shareholder friendliness� Clearly articulated and justifiable dividend policy (best/worst)� Directors who are more loyal to shareholders than the management (best/worst)� Limited and reasonable bonus and stock option plans for management (best/worst)� Open and transparent communication (best/worst)� Shareholder friendliness overall (best/worst)

Appendix 1

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General questionsGeneral questions

7. Some companies want to refrain from reporting on a quarterly basis� I want companies to provide comprehensive quarterly reports as before� I think semiannual reports supplemented with simplified quarterly ones in between is sufficient� I think that semiannual reports is enough

8. Regarding companies social responsibility (CSR)� How important is CSR for your investment decision/your assessment of a company? Scale 1-5.� Do you notice any increased pressure to take CSR into account in the assessment of listed

companies?� When a negative CSR incident occurs, such as environmental or ethics, valuation is most affected

by (the incident itself, the management's handling of the incident, don’t know)

9. Regarding listed companies' capital markets days

� How important are capital markets day for your assessment of a company? Scale 1-5

� Compared to three years ago, the information communicated is (better, worse, not better nor worse, no opinion)

10. "Say on pay" is high on the shareholders agenda in e.g. the U.S. and Switzerland, but moreand more countries follow� Do you think that high management compensation in Swedish listed companies is a concern for

investors?� Do you think the debate on high compensation levels affects the willingness to invest in a

company?

Appendix 1

© Box IR 2012

Communication rooted in target groupCommunication rooted in target group

� Mikael Zillén� Since 2005 worked with financial communications and investor relationsboth as self-employed and as senior consultant at Citigate Stockholm.

� Institutional sales at Handelsbanken, Nordea and Danske Bank during more than 15 years. He also has experience from several IPOs.

� Tomas Öqvist� Long experience as top ranked equity analyst at e.g. Carnegie and Alfred Berg. Speaking partner to large Swedish, European and US institutions and also participated in a number of IPOs and M&A deals.

� Since 2007 he has been a consultamt within financial communication and investor relations.

� Anders Bruzelius� With his18 years in the financial markets thorough knowledge of equity valuation and communications. He has worked as an equity analyst at Danske Markets and Carnegie, where he held top rankings in the automotive and engineering sectors. Experience from a number of IPOs and M&A transactions.

� Until recently, Anders worked as head of equity research at Swedbank.

+46 762 13 00 40 | mikael@boxir.se

+46 705 54 34 40 | tomas@boxir.se

+46 703 50 40 88 | anders@boxir.se

© Box IR 2012

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08-21 41 00www.boxir.se