<IR> in Australian Superannuation

Transcription

1 <IR> in Australian Superannuation Better articulation of business value More informed investment decision-making More efficient capital markets Improved business productivity FEAL October 2016

2 Why corporate reporting needs to change Analyst and investor relations Financial reporting Enron / WorldCom, Executive Remuneration Divergent path The future of corporate reporting Convergence GFC IFRS & US GAAP Management commentary Multiple GAAPs Principle 7 RG247 Financial Reporting - detail Financial Manufactured Human 1930s - Great Depression Social Environmental Intellectual Environmental Social CSR ESG Sustainability reporting UNPRI GRI G4 Infrastructure investment gap Sustainable Reporting - detail Integrated Reporting Diversity Oil spills Divergent path Driver of change 1980 Now 2017

3 Integrated Reporting Principles & Benefits The Integrated Reporting Framework is made up of: Fundamental concepts (refer below) Content elements (9 elements, including governance, business model, risks & opportunities, performance & outlook) Guiding principles (7 principles, including strategic focus & future orientation, connectivity, materiality & conciseness) The 3 fundamental concepts Integrated reporting benefits Organisation Focus on non-financial issues driving financial performance Business risk Breaking down of internal silos Common understanding of the business model Providers of financial capital Reports which are easier to interpret and analyse Increase confidence in the longer term viability of the company Helps decision making and capital allocation + + Other stakeholders Improved communication of issues impacting performance Better understanding of the company by employees leading to better engagement and motivation Business model (the value creation process) Value creation The 6 capitals Financial Funds that are available to the organisation. Intellectual Knowledge-based intangibles - intellectual property, software, and organisational know-how Manufactured Tangible assets used in producing goods or delivering services Human People s competencies, capabilities and experience, and their motivations to innovate Natural All renewable and non-renewable environmental resources Social & relationship The relationships within and between groups of stakeholders 2016 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. 3 Document Classification: KPMG Confidential

4 Your value story built around your business model Communicating business value Your <IR> Report Readers needs Business value Business model Organisational overview and external environment Strategy and resource allocation Opportunities and risks Performance Future outlook Value impact Stewardship assessment Game changers Management plans Business as usual Business model Sanford Annual Report 2015 (winner of ARA integrated reporting award 2015/16)

5 <IR> - what it is and is not Not a new report Can form part of an existing report Not another form of sustainability reporting It is the primary report on how the company creates and sustains shareholder value over time for its providers of capital. No forecasts and projections required Should be tailored for individual organisations Investor-friendly Designed with a view to how investors make capital allocation decisions based upon value creation proposition. Materiality Only matters relevant to an investor s assessment of business value are included

6 Can I model this?

7 Momentum for <IR> is building! Integrated Summary Report released in March 2016 Integrated Annual Report released in October 2015 David Crawford s Chairman s Report Lendlease 2016 Annual Report We are pleased to present our inaugural integrated Annual Report. This integrated report provides a simple and clear way for us to share the value creation story of Lendlease. Larry Fink, BlackRock CEO has asked every company they invest in to lay out a strategic framework for long-term value creation Mary Barth from Stanford University has found that integrated reporting is positively associated with both stock liquidity and firm value Integrated Reporting: Companies should provide for the integrated representation of operational, financial, environmental, social, and governance performance in terms of both financial and non-financial results in order to offer investors a better information set for assessing risk.

8 Who will be The Larry Fink & CalPERS of Australia? In the Interests of Better Capital Markets - The Champion of <IR> in Australia Superannuation / pension funds / investors have become global leaders in <IR>: Supply GE, Lendlease, NAB, BlackRock, VicSuper, Cbus better articulation of business value Demand BlackRock, CalPERS, VicSuper, Cbus more informed investment decision-making National Interest more efficient capital markets and improved business productivity But we need a groundswell need an Australian Larry Fink & and Australian CalPERs-style call for <IR> 2016 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in Australia. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. 8

9 What questions do you have?