The O'Brien Column: Corporate worthies voice their opinions as financial year ends

Friday 30th June 2000

The financial year ends today for many companies and it coincides with annual, half-yearly or quarterly balance dates for the numerous managed funds.

It will be interesting as usual to see what happened to the investment market and whether there was any window-dressing to improve the appearance of portfolios.

Apart from dressing up portfolios, there are also situations where an institution might switch holding from one fund to another for technical reasons.

The latter procedure differs from window dressing, which can happen on quite small share turnover.

There could be no special market action today, in which case things will meander on their longstanding way with business emphasis on getting on with the job, irrespective of movements in share prices.

We have moved into the period of annual meetings for companies that balanced in March, when chairmen and chief executives have an opportunity to express themselves on matters considered of some moment, in addition to assessment of trading prospects for the current year.

The current meetings are close to the release of the Budget, so it will be interesting to see what the corporate worthies think of the government's economic performance and the relationship between the administration and the business community.

A press report of technology specialist Advantage Group's special meeting last week indicated the company did not think much of a suggestion the government might give a grant to an overseas group to open a research operation in New Zealand.

Advantage was also in the news with another of its long list of recent acquisitions.

The company said it had bought the country's second-largest retailer of Eftpos terminals as it prepared for the introduction of internet-enabled point-of-sale into the local market.

Advantage would buy the business and assets of Netco, which was said to have about 45% of new terminal connections.

Announcements from Advantage are notable for the amount of information they contain, including legitimate plugs for the company's overall operations and industry status. The statement of the latest acquisition, for example, said Advantage had "an immense depth of knowledge in electronic payments."

It had developed and supplied the majority of New Zealand's networked electronic payments infrastructure, including more than 60% of today's entire Eftpos installed base.

Later the same day another statement on a related matter said Advantage had "a huge depth of knowledge about electronic payments" as "it developed and supplied the majority of New Zealand's networked electronic point of sale infrastructure, including over 60% of today's entire installed base."

Advantage has a right to broadcast about itself, because the company has done well since being listed and does not seem to be diminishing its growth rate.

It has acquired four businesses so far this year and entered another joint venture.

Advantage's report for the six months ended December, issued in March, said the company expected to complete several acquisitions over the rest of the financial year (which ends today), strengthening its ability to develop and implement "end-to-end e-commerce solutions."

Last week's meeting was called to approve the issue of up to 12 million new shares to help fund more acquisitions and to issue employee options.

Utility company TransAlta's annual meeting heard chairman Ian Woodward say "judging from past experience it seems that no address to TransAlta shareholders would be complete without some commentary on government's current interest in the industry."

Mr Woodward referred to the inquiry into the electricity industry under the chairmanship of former cabinet minister David Caygill.

He said the inquiry report largely supported TransAlta's submissions and recognised the need for whole-of-industry reforms.

TransAlta "looked forward to working with the government and with the other players in the industry and discussing the details of the report in order to implement the key recommendations to benefit consumers and promote investment in service, innovation and infrastructure."

The comment showed the care with which many companies approached current, or likely, relationships with governments, particularly when dealing with sensitive issues. Electricity pricing and associated matters are sensitive issues.

Any sideswipes at a government that had a formal industry report in front of it could backfire, although it seemed TransAlta was fairly comfortable with the report's recommendations.

There have been past instances of company chairmen letting fly at governments of various hues.

Some of those exercises could have been counter-productive, because governments usually have the last say, unless a policy under consideration is likely to have serious electoral repercussions and should therefore be dropped off the agenda.

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