An advantage of NZX listing

November 19th, 2013 at 12:00 pm by David Farrar

The Herald reports:

Newly-listed Meridian Energy said the average price it received for its power generation in the September quarter was 22 per cent lower than the same quarter last year, mostly reflecting higher-than-average lake levels, while demand was flat.

Catchment inflows were 139 per cent of the historical average in the quarter and 21 per cent higher than the same quarter last year, Meridian said in a statement to the NZX.

The quarter’s inflows were dominated by very high inflows in early July and mid-September, which resulted in comparatively high storage levels by the end of the quarter.

By the end of September, Meridian’s Waitaki catchment storage was at 1,465 gigawatt hours – 155 per cent of the historical average and 27 per cent higher than the same quarter last year.

With above average inflows and strong wind conditions, Meridian’s New Zealand generation was 143 per cent higher than the same period last year. Meridian’s weekly market share was well above 30 per cent.

This sort of regular transparent data is one of the significant advantages of having former SOEs listed on the NZX.

Most people probably think that an SOE is more transparent than a company with private shareholders because if you are 100% Government owned you must be transparent.

The opposite is true.

NZX requirements require a company to disclose pretty much immediately any important information around how the company is doing and its value.

Solid Energy would never have had its problems come as such a surprise, if it had private shareholders.

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20 Responses to “An advantage of NZX listing”

  1. gazzmaniac (2,319 comments) says:

    Solid Energy would never have had its problems come as such a surprise, if it had private shareholders.

    It didn’t surprise me.
    When I was working at Westport we had someone from head office come over and talk about the company structure etc. At that time (~2006-7) only Rotowaro and Stockton ran at a profit – the entire company was reliant on those two assets to stay afloat.
    After the Stockton Alliance started (about 2010) I heard through the grape vine that Stockton was making a loss. So the fact the company was in trouble came as no surprise to me.

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  2. gazzmaniac (2,319 comments) says:

    * I have to point out that a graphic was put up about the profitibility of all the operations, the point that only two mines were profitable was not highlighted, but I did question it.
    I also point out that this information was available in the annual reports which are public. The company had no requirement to disclose to the NZX but it did have similar reporting to the shareholder, and has similar public reports that anyone can see.

    Just because journalists and bloggers don’t read the reports doesn’t mean that SOEs aren’t transparent.

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  3. dime (9,682 comments) says:

    As a KIWI, i miss my annual pay out from the govt for all of the shares they hold on my behalf.

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  4. gazzmaniac (2,319 comments) says:

    dime – that’s because the shares are really owned by a little old lady in England, not the people of New Zealand.

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  5. Jack5 (4,917 comments) says:

    DPF is right about transparency from a listing.

    But the Government could help right now by making all state-owned enterprises file their annual reports and full-year results with the Companies Office, where they can be readily found by anyone interested. Only some of these do at present.

    Also, did I read the Government was reducing the threshold where overseas owned companies have to file their financial reports with the Companies’ Office. This wouldn’t have anything to do with Communists from China buying our farms, would it?

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  6. gazzmaniac (2,319 comments) says:

    Jack5 – I am pretty sure they all publish their annual reports and company results on their websites.

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  7. MikeG (416 comments) says:

    “NZX requirements require a company to disclose pretty much immediately any important information around how the company is doing and its value.”

    So what was stopping the Government changing the rules so that an SOE would have the same disclosure rules as a listed company? Blind ideology?

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  8. PaulM (2 comments) says:

    Not sure you’re entirely right – SOEs and TVNZ already have a requirement to meet continuous disclosure obligations:

    http://comu.govt.nz/resources/pdfs/disclosures/soe-disc-rules-12.pdf

    And those quarterly releases have been a mainstay for the gentailers for some time.

    Barring the Solid Energy surprise (which was much worse than people thought), the SOEs are generally pretty good with disclosure and reporting (perhaps better than some listed entities in meeting NZX obligations)….

    Where they might come under greater scrutiny is from the institutional investors who are developing better understandings of their business models, and what the practical implications of their releases mean (which, of course, is helpful for retail investors and other geeky market watchers…..)

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  9. Dirty Rat (383 comments) says:

    Jeeesus Christ Farrar

    here….

    http://www.xrb.govt.nz/Site/Accounting_Standards/Current_Standards/Standards_for_For-Profit_Entities/Standards_for_FP_Tier_1_2_Entities_.aspx

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  10. ross69 (3,652 comments) says:

    Solid Energy would never have had its problems come as such a surprise, if it had private shareholders.

    That’s rubbish and you know it. As PaulM has shown, and I have previously, there are strict disclosure rules for SOEs.

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  11. Dirty Rat (383 comments) says:

    Public Benefit Entities are moving towards accounting standards based on International Public Sector Accounting Standards after 1 July 2014.

    Until then they are still required to use interim Standards based on NZ IFRS standards.

    In other words….no different from an Issuer (NZX)

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  12. Jack5 (4,917 comments) says:

    Gazzmaniac filed at 12.32 that he was pretty sure the state-owned enterprises filed their annual reports on their own web sites.

    I presume Gazzmaniac, you also mean “Crown entities” (whatever the difference is) – Television NZ and Radio NZ. A quick search on their web sites found no reference to their annual reports, and they are not on their files at the Companies Office – just the very brief annual returns which have no financial information on them.

    These reports can be found on Parliament’s web site, but both these enterprises are registered as companies at the Companies Office.

    An important convenience of the New Zealand Stock Exchange is that it’s a central point for finding information. If you follow it you get the detailed results of companies and annual reports, or at least links to these, as soon as these are released.

    The Government could similarly use the excellent Companies Office for its SOEs and crown entities, but doubtless some bureaucrats will be beavering away planning a national super site that will house such data on these enterprises and Creative NZ and such. This will cost hundreds of millions, the software will be a stuff-up and have to be redone. Meanwhile all could be done for a pittance, or even nothing, by making these entities lodge with the Companies Office their annual reports (and promptly – when they are tabled in Parliament).

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  13. Dirty Rat (383 comments) says:

    About the model financial statements

    Model financial statements: Crown Service Enterprise 2011-12

    Objective
    The main objective of this model is to guide Crown entities in preparing financial statements that comply with NZ IFRS.

    The model financial statements have been prepared using a fictitious non-company Crown entity, Crown Service Enterprise (the CSE).

    http://www.auditnz.govt.nz/publications-resources/public-sector-auditing/model-financial-statements/crown-entities/about-the-model-financial-statements

    The CSE is a “public benefit entity” for financial reporting purposes. The model is not intended to provide guidance for those Crown entities that are assessed as “profit-oriented entities” for financial reporting purposes.

    The model is not intended to provide specific guidance on the statutory reporting requirements for certain types of Crown entities. The model financial statements do not cover the specific statutory reporting requirements of Tertiary Education Institutions and Crown Research Institutes under their applicable legislation.

    The model is not intended to provide specific guidance on the statutory reporting requirements of those entities listed in Schedule 4 of the Public Finance Act 1989 (PFA). Sections 45M to 45O of the PFA detail those sections of the Crown Entities Act 2004 (CEA) that apply to Schedule 4 entities.

    The only difference between these statements and Issuers Reporting Requirements is the following (for blindingly obvious reasons):

    Standards not covered by the model
    The model does not include the recognition, measurement, presentation, or disclosure requirements of the following standards:

    NZ IFRS 1 First-time Adoption of New Zealand Equivalents International Financial Reporting Standards;
    NZ IFRS 2 Share-based Payment;
    NZ IFRS 3 Business Combinations;
    NZ IFRS 6 Exploration for and Evaluation of Mineral Resources;
    NZ IFRS 8 Operating Segments;
    NZ IAS 11 Construction Contracts;
    NZ IAS 12 Income Taxes;
    NZ IAS 26 Accounting and Reporting by Retirement Benefit Plans;
    NZ IAS 27 Consolidated and Separate Financial Statements;
    NZ IAS 28 Investments in Associates;
    NZ IAS 29 Financial Reporting in Hyperinflationary Economies;
    NZ IAS 31 Interests in Joint Ventures;
    NZ IAS 33 Earnings per Share;
    NZ IAS 34 Interim Financial Reporting;
    NZ IAS 40 Investment Property; and
    NZ IAS 41 Agriculture.

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  14. Dirty Rat (383 comments) says:

    oh…and one more rant in what has been a completely incorrect, misleading and stupid post

    “Most people probably think that an SOE is more transparent than a company with private shareholders because if you are 100% Government owned you must be transparent.”

    You’ll be lucky to find any private company accounts anywhere..so your premise is 100% incorrect

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  15. Jack5 (4,917 comments) says:

    Dirty Rat – re your 1.43 post comment that you would be luck to find private company accounts anywhere.

    DPF said “a company with private shareholders” and that would apply to all NZX listed companies.

    They are more transparent than SOEs and Crown entitites at the moment. They have to report immediately through the NZX any changes likely to affect share value, and the exchange puts these on its site promptly.

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  16. Dirty Rat (383 comments) says:

    Jack5

    That would apply to ALL Companies, whether listed or otherwise, hence the distinction between Public and Private Companies.

    That still makes “Most people probably think that an SOE is more transparent than a company with private shareholders because if you are 100% Government owned you must be transparent.” a misleading, incorrect and stupid comment.

    Now…why would you think a Crown Enterprise does not need to explain to the NZX why its share price has dramatically changed ?

    Take your time on that one

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  17. Jack5 (4,917 comments) says:

    Dirty Rat asked at 3.06:

    ..why would you think a Crown Enterprise does not need to explain to the NZX why its share price has dramatically changed ?

    I’ve never thought that, Dirty Rat, and I don’t what hat you pulled that rabbit out of.

    I’m surprised that any Crown Enterprise could have shares listed on the NZX. Surely Air NZ, for example, though majority owned by the Crown isn’t a Crown Enterprise.

    How do you define a Crown Enterprise as opposed to an SOE or a Crown Entity?

    If you look at the reporting requirements of the NZX, and compare them with, say Television NZ, Radio NZ, and Creative NZ, for example, you surely cannot say Government owned enterprises are as transparent as listed companies?

    I think DPF goes too far in saying the Solid Energy fiasco wouldn’t have happened if it was a listed company, however. The stock exchange records will be littered with the names of failed and collapsed companies. Pike River Coal is one notable recent one.

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  18. Johnboy (15,602 comments) says:

    Much as I admire the logic I would like to know why the MRP shares I recently paid $2.50 for are now at $2.15?

    If it’s all down to the fuckin Greenie/Leftie coalition then I am happy to remain a supporter of the National-led government! :)

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  19. Viking2 (11,284 comments) says:

    Johnboy. Competitive price of energy is on a downward track.
    Oil is going down, natural gas is going down LNG is going down coal is at its lowest in years so electricity will go down or be replaced by other energy source.

    Its a tough world.

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  20. Dirty Rat (383 comments) says:

    Its the XRB that sets the Reporting requirements (in conjunction withe the Financial reporting Act) , not the NZX..the NZX deals with listing Rules

    Above I posted a link to the XRB. you will find your answer there

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