Listed-company annual meetings are becoming increasingly important for shareholders to attend if they want accurate and up-to-date financial information, Craigs Investment Partners broker Chris Timms says.
Because of the current economic environment, very few companies are providing financial guidance with their results for the year ended June.
Even companies with outstanding profits are not including financial guidance. Instead, the directors are invariably optimistic about the future.
Dunedin's most active director, Stuart McLauchlan, told the Otago Daily Times, if a company provided guidance, it was likely to have to provide updates to the market in the future.
"The issue in the future is that if there is a meltdown, things can change disastrously."
Lately, one or two companies have upgraded their guidance, but a company like Scott Technology, of which Mr McLauchlan is chairman, that was difficult, as it specialised in bespoke jobs which could make or lose money.
It had provided guidance in its reports, but this would have to be constantly changed, he said.
At the Scott annual meeting, he was more likely to comment on the state of trading during the first two months of the new financial year than provide actual numbers.
Mr McLauchlan is also chairman of UDC, Helicopters New Zealand and Pharmac. A recent annual reports lists him as a director on 12 other companies.
Mr Timms said yesterday lack of guidance had become more prevalent in the past few years but had been exacerbated by the current investment climate.
The same was true with Australian-listed companies.
While Fletcher Building gave "reasonable" guidance, most other companies did not do so for the same reasons as New Zealand-listed companies.
"No guidance leaves us in a news vacuum.""What we are seeing is guidance coming from the annual meetings. Those meetings are becoming more important for outlooks."
The problem was the June reports were being released in August, already two months into the trading period, while annual meetings were held in September or October, three or four months into first-half trading, he said.
Asked why companies had adopted that strategy, Mr Timms said directors did not want to end up selling something they might fail to deliver.
There were two sides to the debate for investors. One one hand, it was difficult for investors and shareholders to make investment decisions without some guidance on how the company was performing.
However, on the other, investors could take some comfort from the fact anything that materially affected the company or its share price was immediately disclosed to the markets.
Broking houses kept in close touch with companies and, with a full research team, brokers were able to assist clients with access to information and analysis, he said.
But it was up to the shareholders to attend company annual meetings and be prepared to stand up and ask questions of the directors.
Asked how he would invest in a company, Mr McLauchlan said he would look at the management team. For instance, the Hellaby Group managing director John Williamson "has major skin in the game" and had an incentive to make the company work well, Mr McLauchlan said.
"When I am investing, I am looking at the people, as well as the investment."
