Invest
Investors warned on misleading company results
One national accounting and advisory firm has warned that this annual reporting season may see investors making “costly” mistakes through misleading and common marketing tactics.
Investors warned on misleading company results
One national accounting and advisory firm has warned that this annual reporting season may see investors making “costly” mistakes through misleading and common marketing tactics.
The firm, William Buck, warned that many companies may highlight underlying profit results in communications to shareholders and the public, making their performance appear better than the actual reported results.
However, underlying profit measures are generally higher than real statutory profits calculated and audited in accordance with Australian Accounting Standards, said audit director at William Buck Jeffrey Luckins.
“Investors buying equities on the ASX for their personal portfolio or their SMSF may be misled into thinking underlying profit equals real profit,” he said.
“The underlying profit measure is not the legal definition of profit in Australia and generally is disclosed because it represents a more favourable higher result than the real statutory profit measure.
“When companies are focusing your attention on underlying profit, they are actually saying they want you to accept they have incurred exceptional items which may be one-off large or unusual transactions that have adversely affected the real statutory profit for the year.
“That could be entirely reasonable, but shareholders should maintain a sceptical approach to understanding annual financial reports and drill into the detailed note and other disclosures which explain the reasons for the differences between the two profit measures.”
Mr Jeffrey said there may be genuine reasons for the real statutory profit not reflecting the anticipated results for the year and these may include impairment of assets, movement in the fair value of assets, significant foreign exchange movements, share-based payments, climate change events, litigation matters and industrial action.
He suggested checking the auditor’s report to see whether any qualifications or modifications have been reported which may also affect an investor or professional’s understanding of the real statutory profit for the year.
“Our advice to investors is to accept the audited real statutory profit disclosures in the Statement of Comprehensive Income and then critically consider the nature and reasons for any exceptional items identified which result in a higher underlying profit result,” Mr Jeffrey said.
RELATED ARTICLES
Property
From signals to settlements: A case study in turning property insight into investable action
Investor confidence is rebuilding, first-home buyers are edging back, and governments are pushing supply — yet most property players still struggle to convert signals into decisive movesRead more
Property
Australia’s rental choke point: why record-low vacancies are now a boardroom issue
A tightening rental market is no longer just a housing story—it’s a macro risk, a labour challenge and a strategic opening for capital. With vacancies near historic lows and rents still rising, ...Read more
Property
Rents are rewriting the inflation playbook: what record‑low vacancies mean for Australian business
Australia’s rental market is so tight that housing costs are now a primary transmission channel for inflation and interest rates. This isn’t just a property story; it’s a business risk story—affecting ...Read more
Property
Off-market real estate is going mainstream — and changing the rules of dealmaking
With public listings tight and sales still climbing, Australia’s investors are shifting to off-market channels that reward speed, networks and data advantage. The playbook is closer to private equity ...Read more
Property
Australia’s rental squeeze is now a business problem: inflation, capacity and the new growth calculus
Record-low rental vacancies are no longer just a social headline – they’re reshaping cost structures, wage dynamics and capital allocation across corporate Australia. With economists warning of a ...Read more
Property
Rents Are Repricing Australia Inc: What record‑low vacancies mean for inflation, talent and strategy
Australia’s rental market has slipped into a vacancy desert, and it’s not just tenants feeling the heat. Persistently tight supply is pushing up rents, embedding services inflation and complicating ...Read more
Property
Young buyers poised for a comeback as 5% First Home Guarantee takes effect
In a move set to reshape the Australian property landscape, the government’s revamped First Home Guarantee is poised to open the doors of homeownership to a new generation of young AustraliansRead more
Property
AFG Securities waives settlement fees for first-home buyers, signalling strategic shift
In a strategic move aimed at easing the financial burden on first-home buyers, AFG Securities has announced the elimination of settlement fees on select loans, potentially saving customers up to $699Read more
Property
From signals to settlements: A case study in turning property insight into investable action
Investor confidence is rebuilding, first-home buyers are edging back, and governments are pushing supply — yet most property players still struggle to convert signals into decisive movesRead more
Property
Australia’s rental choke point: why record-low vacancies are now a boardroom issue
A tightening rental market is no longer just a housing story—it’s a macro risk, a labour challenge and a strategic opening for capital. With vacancies near historic lows and rents still rising, ...Read more
Property
Rents are rewriting the inflation playbook: what record‑low vacancies mean for Australian business
Australia’s rental market is so tight that housing costs are now a primary transmission channel for inflation and interest rates. This isn’t just a property story; it’s a business risk story—affecting ...Read more
Property
Off-market real estate is going mainstream — and changing the rules of dealmaking
With public listings tight and sales still climbing, Australia’s investors are shifting to off-market channels that reward speed, networks and data advantage. The playbook is closer to private equity ...Read more
Property
Australia’s rental squeeze is now a business problem: inflation, capacity and the new growth calculus
Record-low rental vacancies are no longer just a social headline – they’re reshaping cost structures, wage dynamics and capital allocation across corporate Australia. With economists warning of a ...Read more
Property
Rents Are Repricing Australia Inc: What record‑low vacancies mean for inflation, talent and strategy
Australia’s rental market has slipped into a vacancy desert, and it’s not just tenants feeling the heat. Persistently tight supply is pushing up rents, embedding services inflation and complicating ...Read more
Property
Young buyers poised for a comeback as 5% First Home Guarantee takes effect
In a move set to reshape the Australian property landscape, the government’s revamped First Home Guarantee is poised to open the doors of homeownership to a new generation of young AustraliansRead more
Property
AFG Securities waives settlement fees for first-home buyers, signalling strategic shift
In a strategic move aimed at easing the financial burden on first-home buyers, AFG Securities has announced the elimination of settlement fees on select loans, potentially saving customers up to $699Read more
