Transcript What is An Intellectual Capital Report?

REPORTING INTELLECTUAL
CAPITAL TO SHAREHOLDERS
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
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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
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HOW DOES AN INTELLECTUAL CAPITAL
REPORT HELP SHAREHOLDERS
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An IC Report is a statement of changes in the
company’s Intangible Assets
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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
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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
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