Few companies use reporting extension

AUCKLAND: Only four out of 22 S&P/NZX50 companies opted to take up a onemonth extension to report their financial results, despite their businesses being turned upsidedown by Covid19 lockdowns and border closures, PwC says.

The extension was among a raft of measures introduced by the NZX to help companies deal wth the effect on their businesses of Covid19 measures.

‘‘It was quite impressive that so few did, because the businesses in this group suffered through level 3 and 4 lockdowns and had some particularly difficult financial reporting matters to deal with,’’ PwC’s chief risk officer, Karen Shires said.

In most cases, companies reported their results within days of when they did last year.

PwC, in an analysis of those June 30 reporting stocks, said all 22 came through with ‘‘clean’’ or ‘‘green light’’ audit reports.

Among its findings, PwC said just under half those stocks recorded impairments of nonfinancial assets.

Many had to move early to make sure that they had enough funding and liquidity.

Auckland Airport, Sky City and Sky TV all raised capital, and Air NZ arranged a standby debt facility.

A number had pushed out debt covenant agreements with their banks to late 2021.

Of the 22, 10 recorded impairments in their statements.

‘‘That’s a large proportion and some of those numbers are big, so clearly there are lot of challenges around looking at those things,’’ she said.

In Air NZ’s case there were writeoffs of valuations of aircraft while Auckland Airport had to write off work in progress.

Sky TV, Fletcher Building, Vector and Sky City all had big writedowns.

‘‘There were a large number of chunky writedowns which would have been difficult for the auditors and the management teams to work through,’’ she said.

Of the 22, 46% of the NZX50 reporting stocks recorded impairment of nonfinancial assets.

Many closed out derivative positions, incurring losses.

In the auditors’ reports the key audit matters, or KAMs, tended to cover funding and liquidity matters and a large number around asset impairment.

‘‘There is no need for panic, but I do think that it’s important for shareholders and investors to ensure that they have read those KAMs because they do highlight where significant effort is required, and there are some new areas this year that have not seen as a group in the past,’’ she said.

‘‘They have definitely come through it well and I think the (June 30 reporters) have really responded to the challenge thrown down by the Financial Markets Authority and others to make it easier to understand the judgements that have been made,’’ she said.

‘‘Generally, entities have done that.’’

Looking ahead, Ms Shires expected impairments to continue to be a big feature of financial reports, particularly if New Zealand went into lockdown again.

Those that were clearly exposed to international tourism had made various predictions about when they might return to business as usual.

If those forecasts didn’t come to pass, then that could be prove to be a further challenge around how long those businesses could afford to operate.

At that point, it would come down to the real fundamentals as to whether the company was a going concern or not.

‘‘That could continue to be a feature, maybe not in the NZXlisted entities, but in the next couple of tiers below that,’’ she said.

In its analysis, PwC said 10 out of the 22 NZXlisted company’s took up the wage subsidy — $177.5 million in total.

Most included ‘‘narrative’’ to explain it, Ms Swires said.

Of the 10, four claimed a loss for the year and six did not.