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Once again, we have reached that time of the year when companies and IROs almost everywhere are firmly focused on the sizeable task of reporting earnings for the previous year. This not only encompasses the communication of the numbers but also poses the challenge of crafting messaging that will form the basis of a compelling investment story.

In addition, many will be faced with the need to establish the financial performance targets that will guide, but also set the expectations for, the market in the period(s) ahead. As such, striking the appropriate balance between reporting facts and looking ahead is the primary challenge.

Thoughts then naturally centre on developing the right message. But what do we really mean by “messaging”, and how do you arrive at a proposition that allows the market to accurately assess the value that the strategic vision of the company brings?

What can often be forgotten is the first step to setting a message: you have to look at the numbers. It is common to fixate on creating a powerful story, but without first knowing and understanding the past, present and future financial and operational metrics underpinning your company’s performance and, consequently, the way in which the market values and rates your stock relative to the competition, then crafting that story is an odious, if not impossible task.

The future numbers are also part of the equation. Analysts and investors covering your stock will already be factoring in any medium-term guidance previously issued and judging the company’s execution towards these goals. How you expand on these, based also on the visibility you have internally into performance in the current year to date, will also influence the story that you set.


When companies ask us about messaging, we help them by firstly considering five (high-level) questions:

  1. How does the past and present financial and operational performance relate to the equity or debt story that has been previously communicated?
  2. What can we tell about the future direction of the business from the short- and medium-term internal forecasts and budget?
  3. How do these forecasts differ (if at all) from the guidance that has been previously communicated and from the consensus expectations of the analysts in print on your stock, and how does the guidance you issue vary from the guidance your peers issue?
  4. What can we deduce as being the key elements that will shape expected future performance, and what are their likely implications for consensus revisions, and therefore valuation?
  5. Which operational and financial proof points can we deliver to in the short and medium term to support the story?
These questions are aimed at identifying the key elements that will build the narrative of the equity or debt story, supported by the granular detail IROs gain by gathering information internally on the individual segments of the business. Indeed, this systematic approach can be equally applied to each interim reporting period, as a means to assessing the progress in the story and gauging how the investment proposition will resonate with current and prospective investors.

The story may be king, but the spreadsheets are undoubtedly its faithful subjects.


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