Global Communications GAAP Summit 2013 Sheraton Golf, Rome June

Transcription

1 Global Communications GAAP Summit 2013 Sheraton Golf, Rome June

2 Fi Dolan Welcome and introduction

3 Welcome and introduction Slide 3

4 The 10 th Year Location Number of delegates 2004 London London London London Berlin Milan Madrid Amsterdam Dublin Rome 180 4

5 Telling your story Accounting for Telcos in 2014 If I Had More Time I Would Write a Shorter Letter Blaise Pascal 5

6 Telling your story Accounting for Telcos in 2014 Loss of trust Technology and information overload Telling your story Increased regulation / complexity Competition for capital Slide 6

7 This is your summit... Slide 7

8 Today Agenda Monday 17 June Time Session Registration Introduction and welcome Integrated Reporting telling your story Buses depart for dinner Slide 8

9 Tomorrow Agenda Tuesday 18 June Time Session Introduction What s new in accounting? Telecom Italia: Market update Coffee break Workshop 1: The new revenue standard Deutsche Telekom: Implementation project, revenue recognition Spending wisely - does the market understand the Telco growth story? Lunch Workshop 2: To buy or to lease? Coffee break Closing remarks Slide 9

10 Administration Slide 10

11 Integrated Reporting telling your story Peter Hogarth

12 Are you getting your message across? Slide 12

13 Are there gaps in the annual report? Source: Ocean Tomo 2010, Intangible Asset Market Value Study Slide 13

14 There are many other sources of information Today the data we have available to make predictions has grown almost unimaginably large: it represents 2.5 quintillion bytes of data each day, enough zeros and ones to fill a billion books of 10 million pages each Nate Silver, author of The Signal & the Noise Slide 14

15 And yet length and complexity is a problem Slide 15

16 Growth in regulation 1993: 370 pages 2013: 3,382 pages Slide 16

17 How is as important as what : joining the dots Pieces of information without connectivity Close-up pictures (partial connectivity) without big picture Big Picture Number of pieces=40 Number of pieces=40 Number of pieces=40 Slide 17

18 Integrated reporting A process that results in communication by an organisation about value creation over time. An integrated report is a concise communication about how an organization s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term. (IIRC Consultation Paper, April 2013) Slide 18

19 Key differences to current reporting Broader scope Financial and non-financial capitals, including stakeholder relationships, as drivers of long term value Integrated thinking bringing together different parts of the business Integrated information Business model, market drivers, strategy, risk, remuneration, governance, performance. Aligning internal and external Alignment between internal and external measurement and reporting processes Slide 19

20 Investor perspectives Slide 20

21 What do investors look for in annual reports? Apply the following principles: - Reflect economic reality substance over form - Transparent and comprehensive disclosure - Clear, understandable, consistent and relevant And help them to understand: - How profitable is the business? - How much cash is it generating? - What assets are being employed? - What risks are being taken? Source: Corporate Reporting Users Forum Slide 21

22 Why bother? The Coloplast experiment Slide 22

23 Where do investors think reporting could improve? Some quick wins - Segmental disclosure Investors analyse businesses from the bottom up Alignment with management reporting is helpful, but aggregation has to make sense Going beyond the minimum required disclosure (eg operating cash flow by segment) makes a real difference Slide 23

24 Investor views Slide 24

25 Winning the competition for capital: Cash and debt disclosure Clearer explanations and reconciliations in the cash flow statement More detail on capital expenditure Net debt reconciliations are highly valued Debt maturity tables could be improved beyond the IFRS requirements (although sector as a whole does well here) Covenant restrictions and terms would be helpful Slide 25

26 Investor views Slide 26

27 Investor views Source: Slide 27

28 Cutting the clutter: a practical approach Jenny Harrison BT Group Gigliola Bonino Telecom Italia Slide 28

29 BT s Annual Report Our Journey Jenny Harrison Head of External Reporting

30 Our purpose British Telecommunications plc

31 Our annual reports through the years

32 Number of pages A real challenge the length of the report Our annual report length has increased from 176 to 196 pages over the last 7 years. Our challenges - How is it best to cut the length? And how do we ensure readers see what is important within this? Financial statements: Between 94 and 107 pages over period Business review: Increase from 72 to 97 pages over this period Year British Telecommunications plc

33 Attacking the dense text 2009 Annual Report Financial instruments note 2013 Annual Report Financial instruments note British Telecommunications plc

34 Extra information when is more worthwhile? We have also added detail to helps users interpret information held in the financial statements. The net debt maturity profile was well received. British Telecommunications plc

35 Helping our readers A picture can tell a thousand words. British Telecommunications plc

36 More graphics following emerging practice 2009 Annual Report 2013 Annual Report Remuneration report Remuneration report British Telecommunications plc

37 Linking performance measures to strategy British Telecommunications plc

38 Bringing the story to life use of case studies British Telecommunications plc

39 A range of media British Telecommunications plc

40 Reduction in printed, hard copy distribution Numbers distributed to shareholders in hardcopy Full ARA SFS ,300 1,055, , ,100 Fallen by 20% 83% while the online version of our 2012 annual report has had over three million hits British Telecommunications plc

41 British Telecommunications plc

42 Gigliola Bonino Head of Financial Reporting Rome, 17

43 Alternative performance measures Arjan Brouwer Slide 43

44 Alternative profit measures.. Slide 44

45 .and many more other performance measures Slide 45

46 To mislead or to inform? Alternative performance measures are generally very relevant and useful when used in combination with defined measures Inconsistent use of measures affects credibility and weight given by investors Credibility and transparency of disclosures to be enhanced by: - Compliance with qualitative characteristics - Clear definitions and headings that reflect content of the measure - Presentation together with defined measures and provision of reconciliations - Consistency and comparatives Industry consensus on alternative measures used will enhance credibility and usefulness for investors Slide 46

47 Where are we now? Slide 47

48 IIRC pilot programme Headline findings Discuss future market trends Link market discussion to strategic choices 83% 40% Slide 48

49 IIRC pilot programme Headline findings Include strategic priorities 94% Base reporting on strategic themes 21% Embed sustainability in strategy 25% Slide 49

50 IIRC pilot programme Headline findings Make reference to their business model Integrate business model into other areas of reporting 67% 40% Slide 50

51 IIRC pilot programme Headline findings Identify one or more material capitals Report priorities for non-financial capitals 84% 17% Slide 51

52 IIRC pilot programme Headline findings Report principal risks Integrate risks into other areas of reporting 96% 23% Slide 52

53 IIRC pilot programme Headline findings Explicitly identify KPIs 71% Identify targets for KPIs 47% Some alignment of KPIs with strategy 17% Slide 53

54 How does our industry measure up? European benchmarking 2012 Slide 54

55 Experience in South Africa Integrated reporting has played an important role for Vodacom in formulating a new strategy; one that integrates key social, economic, environmental and stakeholder initiatives into our long-term objectives. We are pleased with the feedback we received from stakeholders, many saying that they actually enjoyed reading [our integrated report] Belinda Williams, Group Executive for Investor Relations and Integrated Reporting, Vodacom Slide 55

56 Tonight: Palazzo Colonna Meet at the hotel entrance at 18:30 for a prompt departure Slide 56

57 Thank you This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers LLP. All rights reserved. In this document, refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.