07 08 04 Forming the EBRC 1 SMHVerBIEC

							Forming the EBR Consortium
   Presented By: Susan M. Hinds, CPA, MBA
President, Strategic Management Harmony, LLC




Better markets through better information
    What is Enhanced Business
       Reporting (EBR)?

   EBR is comprised of voluntary, internationally
    recognized guidelines for providing more
    transparent disclosure of business information,
    allowing companies to better communicate
    current and expected performance while giving
    the investment community and other
    stakeholders the information they need to make
    better decisions

                                                      2
           EBR Leading Indicators…

   Standardized key performance indicators based
    on industry-specific definitions & guidelines
   Structured disclosures of company-specific
    strategies, plans, opportunities and risks
   Focusing key stakeholders on long term value
    creation and away from strictly earnings


                                                    3
      Why is Enhanced Business
         Reporting needed?
   The current financial reporting model has value,
    but fails to meet needs of global investors
   Little progress has been made in moving toward
    a more comprehensive reporting model that
    includes both financial and nonfinancial
    information



                                                       4
        Is anything else driving this
                 initiative?
   Regulatory agencies are focusing on key
    performance indicators and business risks and
    opportunities
     US SEC MD&A release, December 2003
     UK Operating & Financial Review (OFR) legislation

     Sarbanes-Oxley 2002, Public Comments Fall 2004

     The US SEC has informally expressed interest in a
      market-led effort in this area


                                                          5
    What is the Enhanced Business
       Reporting Consortium?
   The Consortium is an independent, market-
    driven, international collaboration of investors,
    creditors, analysts, management, boards of
    directors, regulatory agencies, standards setters,
    members of academia, and all other stakeholders
   Consortium members are charged with
    developing and maintaining EBR guidelines and
    definitions

                                                         6
The EBR Consortium will provide an
   opportunity for the users and
  providers of market capital to…
    Demonstrate a commitment to hold themselves
     responsible and accountable for the quality of
     the information provided to the capital markets
    Develop and present constructive proposals as a
     viable alternative to further regulation



                                                       7
       What are the Consortium's
              objectives?
   Improve the quality and transparency of
    information used for decision-making
   Develop, maintain and improve an EBR
    framework and agreed-upon guidelines and
    definitions
   Develop a plan for market-driven
    implementation of EBR


                                               8
          What are the envisioned
               deliverables?
Consensus on an internationally recognized framework of
  voluntary guidelines for enhanced business reporting
      Generally accepted definitions, measurements, and voluntary
       disclosure guidelines for industry-specific, process-oriented
       value drivers and key performance indicators
      Generally accepted, voluntary disclosure guidelines for
       information about opportunities, risks, strategies and plans,
       and about the quality, sustainability and variability of cash
       flows and earnings



                                                                       9
         Are there any short-term
               deliverables?
   Industry working groups would
     Identify information that is of marginal use to the
      investment community and redundancies in
      reporting requirements
     Point the way to eliminate costly overlap and
      duplication
     Streamline the current business reporting process




                                                            10
 Jump-starting the EBR
Consortium – a strawman


   10-12 Strategic partners
   20-30 Charter members
         Luminaries
         Observers


                              11
 Strategic partners would be asked to make
introductions to a specific number of key members
    Producers (users of capital)
        Business Roundtable, Confederation of British Industry,
         Financial Executives International, National Association of
         Corporate Directors, US & International Chambers of
         Commerce
    Consumers (providers of capital)
        Council of Institutional Investors, Investment Company
         Institute
    Enablers (facilitators of capital formation)
        AICPA, CFA Institute (formerly AIMR), London Stock
         Exchange, NASDAQ, New York Stock Exchange, Securities
         Industry Association                                          12
Charter members – Building the foundation
   6-8 big names to achieve critical mass in the US
     2-3 corporations
     2-3 institutional investors

     2-3 enablers (sell-side analysts, rating agencies, etc.)

   After the foundation is in place
     Complete US representation
     Accelerate international outreach




                                                                 13
     Charter members will be diverse…
   Geography
       US, UK, India, Australia and Netherlands
   Stakeholder community
     Producers – 50%
     Consumers – 25%

     Enablers – 25%




                                                   14
     Charter members will be asked to…
   Make a financial contribution
   Provide resources to drive the initiative forward
   Exercise significant influence over…
       Consortium governance
       Development of the EBR framework
       Prioritization of industry sectors for development of
        guidelines
       Identification and selection of consortium members
       Fee structure for members


                                                                15
     Luminaries will be individuals who can
    contribute intellectual capital and speak and
                 write as advocates

   Nominated by charter members
      Academics
      Think tank fellows

      Thought leaders and authors

      Public policy and opinion leaders

      Others…




                                                    16
Observers will have a working role & fully
engaged in the Consortium development effort

   Securities regulators
   Standards setters
   Government agencies
   Industry sector regulators




                                             17
        Project Plan

   Final business plan – July 31
   Strategic partners in place – July 31
   US charter members identified – July 31
   Meet with potential charter members – Aug-Oct
   Consortium launch- November MIT CFO Forum
   1st meeting of EBR Consortium – Jan 2005


                                                18
For more information…

       www.ebrconsortium.org




Better markets through better information
                                            19