Partners for Financial Stability (PFS) Program Investor Relations Online: Best Practice and Trends...

Partners for Financial Stability (PFS) Programwww.pfsprogram.org

Investor Relations Online:Best Practice and Trends inSouth East Europe as well asCentral and Eastern Europe

Presentation of Second Editions of Macedonian Survey

Skopje, MacedoniaMay 19, 2009

AgendaInvestor Relations in SEE

PFS Program SurveysInvestor Relations Online: 2001 - 2009

PFS Program SurveysSurvey of Reporting on CSR: 2003 - 2009

Upcoming Events

About the PFS Program

Investor Relations in SEEOngoing, incremental improvements in financial disclosure, in response to national legislation and efforts to harmonize with European Union (EU) legal requirements related to accounting, audit, corporate governance and financial disclosure

Largely domestic investors in most SEE markets; therefore, there is generally a (perceived) lack of demand for disclosure in English

(Perceived) lack of urgency for benchmarking with best practice and international standards in financial and extra-financial disclosure

(Perceived) lack of appreciation of the benefits (internal and external) of an effective investor relations program.

(Perceived) lack of appreciation of the company website as a low-cost platform to market the company, its products/services and its bonds/shares

Nevertheless, evidence from PFS Program regional surveys, country surveys co-financed by the PFS Program and other data show incremental and recognizable improvement in investor relations practices over the medium-term (<5 years) and long-term (5 years>).




Upcoming Events


Background

PFS Program Regional Surveys – Investor Relations Online

Timetable and Universe

August 2001, February 2002, August 2002,

February 2003, August 2003 and February 2004

Eight CEE Candidate Countries for European Union (EU) Membership

August 2004 and February 2005

Eight New Member States of the EU, Bulgaria, Croatia and Romania

August 2005


Greece and Turkey

February 2006


Portugal and Spain

August 2006, February 2007, August 2007, February 2008, August 2008 and February 2009


Brazil, Russia, India and China (BRIC) as well as Ukraine

Background

Country Surveys – Investor Relations Online

2003

Czech Republic, Hungary and Poland

2005, 2006, 2007 and 2009

Croatia

2007

Bulgaria

2008 and 2009

Macedonia

Investor Relations Online: Comparison of Disclosure in Macedonian language

by the Ten Largest Listed Companies in Macedonia (June 2008 and April/May 2009)

with Disclosure in English by Peers in

Bulgaria, Croatia and Romania (2004 - 2009)

Comparison – Macedonia with BG, HR and RO


Local Language Website

100%100%

97%97%

100%100%100%

97%90%

93%

February-2009

February-2008

February-2007

February-2006

February-2005

MK

March 2009 --------------70%

June 2008 --------------70%

BG, HR and RO


MK

March 2009 -------------------90%

June 2008 ----------------80%

BG, HR and RO

English Language Website

80%83%83%

77%83%

77%83%

77%67%

73%

February-2009

February-2008

February-2007

February-2006

February-2005


MK

March 2009 ---------50%

June 2008 -------------70%

BG, HR and RO

List of Management Available Online

77%80%80%

70%77%

73%67%

63%57%

60%

February-2009

February-2008

February-2007

February-2006

February-2005


MK

March 2009 -------40%

June 2008 -------40%

BG, HR and RO

Additional Information on Management Available Online

43%50%

40%27%

43%27%

23%17%

20%23%

February-2009

February-2008

February-2007

February-2006

February-2005


MK

March 2009 ---------50%

June 2008 -----------60%

BG, HR and RO

List of Board Members Available Online

70%73%

77%67%

73%70%

60%53%53%

56%

February-2009

February-2008

February-2007

February-2006

February-2005


MK

March 2009 -----30%

June 2008 ------40%

BG, HR and RO

Additional Information on Board Members Available Online

33%37%

20%17%

23%20%20%

7%13%13%

February-2009

February-2008

February-2007

February-2006

February-2005

August 2003

Investor Relations Online:Survey of Websites

of the 10 Largest Listed Companies in Eleven Central and Eastern European

(CEE) Countries

February 2009


Bulgaria Croatia Czech Rep. Estonia Hungary Latvia Lithuania Poland Romania Slovakia Slovenia

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Investor Relations Online: Survey of Websites of the Ten Largest Listed Companies in 11 CEE Countries

February 2009

Executive SummaryIn the PFS Program’s 16th semi-annual Survey of the Websites of the Ten Largest Listed Companies (by market capitalization) in 11 Central and Eastern European (CEE) countries disclosure of detailed governance information decreased slightly in all categories surveyed.

84% of the companies surveyed provide a list of management online, compared with 88% in August 2008 and 90% in February 2008. 61% of the companies surveyed provide additional information about management online, compared with 64% in August 2008 and 63% in February 2008. 85% of the companies surveyed provide a list of board members online, compared with 91% in August 2008 and 87% in February 2008. 56% of the companies surveyed provide additional information about board members online, compared with 61% in August 2008 and 52% in February 2008.

The survey and this presentation contain the following information:

• Current data on companies in all 11 CEE countries;

• Separate data on companies in eight CEE countries that joined the European Union (EU) on May 1, 2004;

• Separate data on companies in Bulgaria, Croatia and Romania;

• Comparisons of the data from this current survey with data from the previous 15 surveys conducted every August and February since August 2001; and

• Separate data on companies in Brazil, Russia, India and China (BRIC) as well as Ukraine.

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Survey of Websites of the Ten Largest Listed Companies in 11 CEE Countries

Local Language and English-Language Websites: 2001 - 2009

70%

80%

90%

100%

Febr

uary

-20

09

Augu

st-

2008

Febr

uary

-20

08

Augu

st-

2007

Febr

uary

-20

07

Augu

st-

2006

Febr

uary

-20

06

Augu

st-

2005

Febr

uary

-20

05

Augu

st-

2004

Febr

uary

-20

04

Augu

st-

2003

Febr

uary

-20

03

Augu

st-

2002

Febr

uary

-20

02

Augu

st-

2001

CEE - 11 (inc. Bulgaria, Croatia, Romania)CEE - 8 (CZ, EE, HU, LT, LV, PL, SI, SK)

Local LanguageWebsite

EnglishLanguageWebsite

18

The Ideal Website - Recommendations

Best practice in the European Union (EU) and internationally suggests that the ideal website contains the following information:

• a list of members of management / management board;• a list of members of the board of directors / supervisory board;• a brief description of the educational and professional background of each person;• the scope of responsibilities of each person;• a brief description of functions held by each person in other companies/institutions;• a description on the shares in the company held by each person; and,• a photograph of each person.

Some of these information is available on the websites of many companies surveyed, but all of this information is available on the websites of very few companies. However, the trend is

positive; today more companies disclose this information than was the case in previous surveys.

Investor Relations OnlineThe Ideal Website - Recommendations

Investor Relations Online The Ideal Website – Best Practice in CEE

August 2008

19

The Ideal Website – Best Practice in CEEOn February 15, 2009 52 of the 110 companies surveyed in CEE (47%) disclose

information in all of the categories analyzed in the basic PFS Program survey: local-language website; local-language website; list of management; list of board members; additional information on management; list of board members; and

additional information on board members.

This is a slight decrease in comparison with August 15, 2008 when 56 of the 110 companies surveyed in CEE (51%) disclosed this basic information.

Please note:

On February 15, 2008 51 of the 110 companies surveyed in CEE (46%) disclosed this basic information, compared with

47 of the 110 companies surveyed in CEE (43 %) on August 15, 2007.


February 2009

20

The Ideal Website – Best Practice in CEEOn February 15, 2009 52 of the 110 companies surveyed in CEE (47%) disclose

information in all of the categories analyzed in the basic PFS Program survey: local-language website; local-language website; list of management; additional

information on management; list of board members; and additional information on board members.

These 52 companies were analyzed further regarding the above-mentioned ideal website recommendations.

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52 of 110 Companies in CEE – February 2009

BG HR CZ EE HU LV LT PL RO SK SI

0

1

2

3

4

5

6

7

8

9

10

Educational Background

Professional Background

Scope of Responsibilities

Brief description of functions held byeach person in other org/instit

Description of Shares held

Photograph


February 2009

22

The Ideal Website – Best Practice in CEE

On February 15, 2009 16 of the 110 companies surveyed in CEE (15%) provide all of the “ideal” recommended information:

• Four companies provide information directly on their company website; and

• 12 companies provide information indirectly through an annual report available online.

Furthermore 13 companies surveyed provide all of the information except one element:

• One company provides all information except for the photographs online;

• Two companies provide all information except for a educational background;

• Three companies provide all information except for a brief description of functions held by each person in other institutions;

• Three companies provide all information except for a scope of responsibilities; and

• Four companies provide all information except for a description of shares held by board members.

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Upcoming Events


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PFS Program Survey – Reporting on CSR

Timetable and Universe

August 2003 and April 2004

Eight CEE Candidate Countries for European Union (EU) Membership

August 2004 and April 2005


September 2005


Greece and Turkey

April 2006


Portugal and Spain

September 2006, April 2007, September 2007, April 2008, September 2008 and April 2009


Brazil, Russia, India and China (BRIC) as well as Ukraine

25


Survey of Reporting on Corporate Social Responsibility (CSR) by the Largest Listed Companies in Eleven Central and Eastern

European (CEE) Countries

Warsaw, PolandApril 2009

Bulgaria Croatia Czech Rep. Estonia Hungary Latvia Lithuania Poland Romania Slovakia Slovenia

26

English-language stand-alone ESG Reports – April 15, 2009

0

1

2

3

4

5

6

7

BG CZ EE HR HU LT LV PL RO SI SK

ESG Report

Companies with a stand aloneEnglish-language ESG report -April 2009

Companies using recognizedstandards (i.e. GRI) for ESG report- April 2009

Companies with an ESG reportwhich includes an assurancestatement - April 2009

27


Croatia – Zagrebacka Banka, Privredna banka Zagreb d.d., HT-hrvatske telekomunikacije, INA, and Pliva farmaceutika

Czech Republic – Cez, Telefónica O2 Czech Republic, Unipetrol and Erste Bank

Estonia – Tallink Grupp, Tallina Vesi, Merko Ehitus, Norma and Eesti Ehitus

Hungary – MOL, OTP, Magyar Telekom, Gedeon Richter, TVK, FHB and Egis

Lithuania – TEO LT and Lifosa

Latvia – DnB NORD Banka, Latvijas Gāze, Latvijas kuģniecība, Ventspils nafta, Liepājas metalurgs and Latvijas Krājbanka

Poland – PKN Orlen, Polskie Gornictwo Naftowe i Gazownictwo, BRE Bank, Bank Zachodni WBK and TVN

Romania – Petrom and CNTEE Transelectrica

Slovakia – Slovnaft and Všeobecná úverová banka

Slovenia – Krka, Petrol and Sava

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This 12th edition of the semi-annual survey documents the existence of stand-alone environmental, social and governance (ESG) reports for the seventh time.

41 of the 110 companies CEE companies surveyed (37%) issue a stand-alone English-language ESG report on the record date of April 15, 2009.

This demonstrates continuation of an ongoing trend:

September 2008 – 28 of the 100 CEE companies surveyed (25%);April 2008 - 29 of the 110 companies surveyed (26%) ;

September 2007 - 22 of the 110 companies surveyed (20%);April 2007 - 19 of the 110 companies surveyed (17%); and

September 2006 - 14 of the 110 companies surveyed (13%) .

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Comparison of Six PFS Program Regional Surveys:ESG Reporting in CEE

ESG Reporting in CEE

0%

10%

20%

30%

40%

September2006

April 2007 September2007


April 2009

Percentage ofsurveyed listedcompanies thatpublish a stand-alone English-language ESGreport

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Comparison of Six PFS Program Regional Surveys:ESG Reporting in CEE

ESG Reporting in CEE

0%

10%

20%

30%

40%

September2006



April 2009

Percentage ofsurveyed listedcompanies thatpublish a stand-alone English-language ESGreportPercentage ofcompanieswhose reportuses recognizedstandards (GRIor other)

Percentage ofcompanieswhose reportincludes anassurancestatement

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Upcoming Events


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Upcoming Events

International Seminar

Supply Chain Management

and its Impact on Socially Responsible Investment

Bucharest Stock Exchange – Corporate Governance Institute and PFS Program

Bucharest

June 25, 2009

Investor Relations Seminar

Macedonian Stock Exchange and PFS Program

Skopje

September 2009 (date to be confirmed)

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Upcoming Events


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About the Partners for Financial Stability (PFS) Program

The United States Agency for International Development (USAID) established the Partners for Financial Stability (PFS) Program in 1999 as a public-private partnership to help complete reforms necessary to create sound, private and well-functioning financial sectors in the eight Central and Eastern European (CEE) countries that have since joined the European Union. In 2005, the geographical focus of the program shifted to South East Europe (SEE).

East-West Management Institute (EWMI), a New York-based not-for-profit organization, is currently the primary implementing partner.

The PFS Program is mandated to fill remaining gaps in the institutional development of the financial sector in CEE and SEE countries through regional integration and cooperation, selective technical assistance programs and the practical application of lessons learned in neighboring countries. The substantive areas covered under the PFS Program are: accounting, auditing, banking, capital markets, insurance and pension reform. For more information, please visit the PFS Program website at http://www.pfsprogram.org.

Partners for Financial Stability (PFS) Program Investor Relations Online: Best Practice and Trends...

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