PATRICIA TAN AC3103 2023
1
Agenda
Introduction to valuation
Strategy analysis
Nonfinancial disclosures
◦ OFR
◦ Sustainability reporting
Discussion Questions
Presentation/Facilitation: Case study - Sheng Siong
PATRICIA TAN AC3103 2023
2
Business Valuation
◦
◦
◦
◦
Strategy Analysis
Accounting Analysis
Financial Analysis
Prospective Analysis
Intrinsic value
Share price
Buy/sell/hold
Strategy analysis
•
•
•
•
Business model
Industry it is competing in
How it is positioning itself
Many businesses: how it is putting the businesses together
Strategy analysis enables
• Risk factors, key success factors, revenue drivers, etc….for forecasting purposes
• Provide context to interpret financial statements
• Make sense of the financial and non-financial ratios
PATRICIA TAN AC3103 2023
3
Information required for entity valuation
Operating and Financial Review
Information includes
(a) A review of the operating and financial performance of the entity in the last
financial year.
(b) The review must include each of the following:
(i) Any development subsequent to the release of the issuer's preliminary
financial statement, which would materially affect the issuer's operating
and financial performance;
(ii) An analysis of the business outlook;
(iii)Prospectus-type information relating to the background of directors and
key management staff; and
(iv)Prospectus-type information relating to risk management policies and
processes
PATRICIA TAN AC3103 2023
Information required for entity valuation
Sustainability Reporting
Information to assess
 risks and
 opportunities
What about the
impact of the
entity on the world?
PATRICIA TAN AC3103 2023
SINGAPORE: To remain competitive in the long term, businesses will need to incorporate
decarbonisation and climate risks into their strategies or risk being written off as “doing
too little, too late”, said Senior Minister and Coordinating Minister for National Security
Teo Chee Hean on Tuesday (Jun 7).
Speaking at sustainability conference Ecosperity Week, Mr Teo warned that the effects of
climate change will affect businesses, and disrupt their operating models and supply
chains.
Mr Teo called on the private sector to do more to tackle climate change.
“Climate policies, technological advancements and stakeholder preferences will
fundamentally impact what is the sustainable value of a company, and its valuation in the
long term,” he said.
PATRICIA TAN AC3103 2023
6
Information required for entity valuation
PATRICIA TAN AC3103 2023
7
Annual reports
Management Commentary
Source: Snapshot: Management Commentary (ED), IFRS, May 2021
https://www.ifrs.org/projects/work-plan/management-commentary/#supporting-material
PATRICIA TAN AC3103 2023
8
PATRICIA TAN AC3103 2023
9
Sustainability reporting for all listed companies mandatory from
FY2017
Today, June 21 2016
In another move to raise standards on sustainability reporting
here, the Singapore Exchange (SGX) has made it mandatory for all
listed companies to report their environmental, social and
governance practices from the financial year ending Dec 31, 2017
onwards.
The report, done on a “comply or explain” basis, must include a
board statement to describe the company’s sustainability actions,
identify environmental, social and governance factors that affect
business strategies, explain their practices and performances,
and set targets.
PATRICIA TAN AC3103 2023
10
Mr Loh Boon Chye, CEO of SGX, said: “SGX
supports our listed companies’ efforts to meet the
growing interest in sustainability from shareholders
and potential investors worldwide. The annual
reporting of non-financial information will enhance
the visibility of SGX-listed companies among
investors who seek sustainable investment and
want to review a company’s environmental, social
and governance efforts.
PATRICIA TAN AC3103 2023
11
PATRICIA TAN AC3103 2023
12
SGX “Sustainability reporting guide”.
Contents of Sustainability Reporting
4.1 The sustainability report should comprise the
following primary components:
(i) Material ESG factors
(ii) Policies, practices and performance
(iii) Targets
(iv) Sustainability reporting framework
(v) Board statement and associated governance structure for sustainability practices
PATRICIA TAN AC3103 2023
13
Integrated Reporting
Integrated Reporting <IR> is a process founded
on integrated thinking that results in a periodic
integrated report by an organization about value
creation over time and related communications
regarding aspects of value creation.
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
in the short, medium and long term.
PATRICIA TAN AC3103 2023
14
PATRICIA TAN AC3103 2023
15
PATRICIA TAN AC3103 2023
16
Straits Times
PATRICIA TAN AC3103 2023
17
Challenges of Climate Change
Source: How are Companies developing their reporting on climate-related challenges,
PATRICIA TAN AC3103 2023
18
FRC Climate Thematic, FRC, Nov 2020, p. 4
Straits Times August 26 2021
PATRICIA TAN AC3103 2023
19
PATRICIA TAN AC3103 2023
20
Larry Fink’s 2020 Letter to CEOs
The importance of serving stakeholders and embracing purpose
is becoming increasingly central to the way that companies
understand their role in society. As I have written in past letters,
a company cannot achieve long-term profits without embracing
purpose and considering the needs of a broad range of
stakeholders…. By contrast, a strong sense of purpose and a
commitment to stakeholders helps a company connect more
deeply to its customers and adjust to the changing demands of
society.
Over time, companies and countries that do not respond to
stakeholders and address sustainability risks will encounter
growing skepticism from the markets, and in turn, a higher cost
of capital.
PATRICIA TAN AC3103 2023
21
Larry Fink’s 2020 Letter to CEOs
In the absence of robust disclosures, investors, including
BlackRock, will increasingly conclude that companies are not
adequately managing risk.
Disclosure should be a means to achieving a more sustainable and
inclusive capitalism. Companies must be deliberate and
committed to embracing purpose and serving all stakeholders –
your shareholders, customers, employees, and the communities
where you operate. In doing so, your company will enjoy greater
long-term prosperity, as will investors, workers, and society as a
whole.
PATRICIA TAN AC3103 2023
22
FT Aug 17 2023
PATRICIA TAN AC3103 2023
23
PATRICIA TAN AC3103 2023
24
Presentation and Discussion
Case study - Sheng Siong
PATRICIA TAN AC3103 2023
25