Investor Relations

IMPLEMENTING BEST PRACTICES IN INVESTOR RELATIONS 105 The breakdown of performance is given for each division andgeographic area, in accordance with applicable accounting standards, andin a manner that is consistent with their overall organization. The business or sector-specific indicator is mentioned in the previoussection.These “extra efforts” will give corporate messages even more impact.Reported performances should also be explained by the internal andexternal factors that helped make them possible: successful price increasesfor the company’s products compensating for inflation in raw materials,restructuring measures positively impacting the cost base, lower interestrates, and decrease in indebtedness reducing financial charges, and so on.Here again, there is an educational role for Investor relations to play.Past performances should wherever possible be correlated with the objectivesthe company has communicated to the markets. This is an opportunityto discuss milestones in achieving its strategy and stress whether if it isahead or behind schedule.What company management in general and Investor Relations in particularshould refrain from talking about is how they are viewed by the financialmarket. It is not for the CEO to voice an opinion on how cheap or undervaluedhe feels the company is.3.5.2.5 Business modelThe presentation of a company’s business model is focused on the financialcriteria and on the key performance indicators that are applied in strategicplanning and in the setting up of realistic targets and credible objectives.Examples include the following:Compound annual growth rates;Revenue breakdowns by division (or product lines) and geographicarea;Market shares;Annual research and development expenditure;Operating income as a percentage of sales;Dividend payout ratio;