Companies play down continuous disclosure's part in forecasts

By NZPA

Friday 6th December 2002

The Stock Exchange's new continuous disclosure was suspected of having an influence on a raft of company forecasts today.

Companies were loathe to attribute the timing of the announcements to the new regime, lest it appear that they would have not been as open beforehand.

Macquarie Equities investment director Arthur Lim was in no doubt, however, that the first week of continuous disclosure was responsible for much of the news.

"Unquestionably," he said. "One of the major positives is that the market has become more of an even playing ground for all investors."

Shares bounced up and down on today's announcements.

Media group Independent Newspapers Ltd (INL) referred to the exchange's "desire to have wide dissemination of market information" when it forecast an improvement in after tax profit for the half year to December 31.

"If conditions continue... we expect to be announcing a net profit after tax of more than 25 percent above the same period last year," said INL chairman Ken Cowley.

He attributed the bounce to good advertising growth and satisfactory trading.

That was music to the ears of INL shareholders, who have seen the stock trek to a low of $2.80 this week. Today, shares rose 5c to $2.95, having peaked at $3.02 during the day.

Another positive outlook came from casino operator Sky City, which saw its share price rise 5c to 752 after healthy trading at its Auckland and Adelaide casinos.

The company revealed revenues at its Auckland casino were up 15 percent over the five months to November on the same period a year ago, and confirmed it was comfortable with current market expectations for a net surplus in the range of $95 million to $105 million for the June year.

Sky City was responding to speculation in the Australian Financial Review on its recent trading and possible allure as a takeover target.

That's a requirement of the disclosure rules but Quentin Bright, a Sky City spokesman, declined to specify whether it was a distinct response to the new regime.

"We'll respond as fits the situation and continue to meet our obligations."

Investors punished rural servicing company Wrightson after it warned that difficult spring conditions and one-off expenses were expected to impact on its six month result.

The company said net revenue for the five months to November was slightly below the same time last year, but expenses were considerably higher, due to the cost of various long-term, cost-saving initiatives.

"Even allowing for some catch-up during December, we expect the Group's profit for the six months to December 31 to be around half the same period last year, which was $6.3 million."

Wrightson noted that it earned roughly two-thirds of its net profit in the second half of the fiscal year, but shares fell 13c to 116.

Analyst Rob Mercer said the new rules were a challenge for companies, which now had less discretion over when and how information was released.

That wasn't an altogether bad thing, but Mr Mercer, head of research at Forsyth Barr Frater Williams, said it would probably mean some share price volatility.

"They're going to be over-conservative and I think that is going to lead to more announcements."

One of the dangers of the regime was that investors took a statement in isolation.

"Ultimately the announcement by itself has still got to be interpreted and the role of the financial community is still (one of) ... anticipating where profits are heading."

But Mr Lim said the advantage of the new regime was that some institutions could not be favoured with information before others.

He said analysts would "really have to earn their keep", and said he was not worried about share price volatility because it simply meant the inevitable was speeded up.

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