The Financial Markets Authority released updated guidance yesterday on disclosing non-GAAP (generally accepted accounting principles) financial information.
In the listed property sector, the main issues – for decades – have been the separation of revaluations from operating earnings and whether they have been highlighted consistently.
A third issue is how visible earnings/security are in listed entities’ results – important in assessing performance where capital has been raised.
The guidance note replaces one issued in 2012 and follows a review covering the last 5 years.
The authority’s capital markets director, Garth Stanish, said in yesterday’s release: “Capital markets only work properly if investors receive accurate and timely information. That information must also be understandable and engaging to investors. It should form an accurate, clear and compelling story about how a company is performing.
“Company financial statements are a vital part of the information investors receive. However, in the financial statements of many companies you’ll find phrases like ‘underlying earnings, ‘normalised profit’ or ‘cash earnings’. Information disclosed this way can sometimes confuse more than clarify. The information can be misleading if it is presented inconsistently, is not adequately defined, or used to hide bad news.”
Attribution: Authority release.