PracticeConsultingDon’t hide your strategy, delegates told

Don't hide your strategy, delegates told

Canary Wharf Group FD Peter Anderson yesterday told delegates at the Richmond Events Finance Directors' Forum that it was vital for them to communicate well with City analysts and shareholders.

‘There are plenty of companies where the [FT’s] Lex column articulates the strategy better than the company itself,’ he said, ‘and that’s dangerous.’

But it’s not just about talk, it’s about results: ‘Deliver what you say you’re going to deliver, deliver early – and let people know you’re early. Then reset the goals,’ he advised.

Canary Wharf is totally focussed on cash generation and return on capital – not on accounting earnings.

‘I never look at the financial statements except when I have to sign them off. People ask us “What are your earnings going to be this year?” I haven’t a clue. We focus on cash and IRR [internal rate of return].’

Anderson also argued against diversification, claiming that ‘companies can only do one thing well’.

Sharing the platform with Anderson was Simon Johnson, head of mid and small cap consumer research at investment bank UBS Warburg. He drew the distinction between companies which are doing well – such as Canary Wharf – and others which may have a more difficult story to tell investors.

‘Don’t lie,’ he said. ‘You will be found out. You may be able to hide it for a while but the City will give credit for being honest and resetting goals.’

The lesson is that FDs have to show that they are creating value, not earnings.

‘Any fool can increase earnings,’ he insisted.

Anderson added that he once complained to an investment bank when an analyst issued a ‘sell’ circular on Canary Wharf shares.

‘We didn’t complain because he said “sell”, we complained because he was stupid,’ Anderson insisted. ‘He didn’t understand our business.’

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Canary Wharf stands tall

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