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.
Property
3 reasons why Australia’s booming housing market won’t last long-term
Despite Australia’s property market growing at a pace not seen for three decades, a leading economist suggests there are warning signs that the property boom could be short-lived. ...Read more
Property
FHB surge as ‘it’s now cheaper to buy than rent’
Record-low interest rates mean that it is now cheaper to buy than rent, with first home buyers taking advantage, doubling their participation in the market, a big four bank CEO has said. ...Read more
Property
New home sales continue to soar in March
A strong level of building activity is expected in 2021 and 2022, given a strong spike in home sales during the year to March. ...Read more
Property
HomeBuilder extension announced
One of the government’s most successful schemes, HomeBuilder, has been extended, bringing the total level of expected government support for the construction sector to $2.5 billion. ...Read more
Property
Policy failures see houses become unattainable for young Australians, minister says
Australia’s booming house prices are the result of the government’s failed policies, with the younger generation now unable to afford what their parents could, a minister has said. ...Read more
Property
House prices to grow by 25% over 3 years
New research is predicting a large gain in property prices of around 25 per cent through to the end of 2023, driven mainly by low interest rates. ...Read more
Property
Strict cap on short-term rentals delayed following criticism
Following widespread criticism from councils and online rental companies, the introduction of NSW’s planned holiday rental code of conduct has been pushed back by three months. ...Read more
Property
Melbourne becomes Australia’s 2nd most affordable rental market
While most capital cities saw house rents soar to new record highs over the first quarter of 2021, Melbourne continued to lag behind – becoming the second most affordable capital city to rent in Aus...Read more
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
Property
3 reasons why Australia’s booming housing market won’t last long-term
Despite Australia’s property market growing at a pace not seen for three decades, a leading economist suggests there are warning signs that the property boom could be short-lived. ...Read more
Property
FHB surge as ‘it’s now cheaper to buy than rent’
Record-low interest rates mean that it is now cheaper to buy than rent, with first home buyers taking advantage, doubling their participation in the market, a big four bank CEO has said. ...Read more
Property
New home sales continue to soar in March
A strong level of building activity is expected in 2021 and 2022, given a strong spike in home sales during the year to March. ...Read more
Property
HomeBuilder extension announced
One of the government’s most successful schemes, HomeBuilder, has been extended, bringing the total level of expected government support for the construction sector to $2.5 billion. ...Read more
Property
Policy failures see houses become unattainable for young Australians, minister says
Australia’s booming house prices are the result of the government’s failed policies, with the younger generation now unable to afford what their parents could, a minister has said. ...Read more
Property
House prices to grow by 25% over 3 years
New research is predicting a large gain in property prices of around 25 per cent through to the end of 2023, driven mainly by low interest rates. ...Read more
Property
Strict cap on short-term rentals delayed following criticism
Following widespread criticism from councils and online rental companies, the introduction of NSW’s planned holiday rental code of conduct has been pushed back by three months. ...Read more
Property
Melbourne becomes Australia’s 2nd most affordable rental market
While most capital cities saw house rents soar to new record highs over the first quarter of 2021, Melbourne continued to lag behind – becoming the second most affordable capital city to rent in Aus...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
