Reporting Intellectual Capital to Shareholders

1. Reporting Intellectual Capital to Shareholders

2. www.attainix.com The growing importance of Intellectual Capital • Research has shown that between 50% to 75% of the market value of companies reflect intangible assets such as innovation processes, patents, brands, trademarks, customer databases, etc. • Traditional Balance sheet only reports the value of physical and financial assets • Accounting system is not equipped to deal with Intangible assets • Shareholders have to make their own assumptions on how intangible assets have changed in value during the year • An IC Report helps in eliminating this problem

3. www.attainix.com How does an Intellectual Capital Report help Shareholders • An IC Report is a statement of changes in the company’s Intangible Assets • much like a Balance Sheet is a statement of Changes in the Company’s Physical and Financial Assets • Unlike physical and financial assets, intangibles cannot be valued directly. • Intangibles are represented by proxies called indicators. • The change in values of these indicators during the reporting period indicates the growth or decline in intangibles during the period

4. www.attainix.com How should shareholders interpret an Intellectual Capital Report • A well written IC Report has values of the intangible indicators along with a desired target • The indicators are grouped by core competencies of the company • Shareholders can use an IC report to understand whether the core competencies are generating new products and services • Sustainable core competencies drive future growth • If valuation information is published in the IC report, shareholders can also it to understand the intrinsic worth of the Company