Home » Economy » Lamination of bad developments – 28 of the 30 SLI companies publish alternative key figures News

Lamination of bad developments – 28 of the 30 SLI companies publish alternative key figures News

Sunday, August 27th, 2017 | Economy

28 of the 30 companies listed in the SLI index have reported at least one adjusted ratio over the past four years. In other words, they mainly calculated expenses, but also income from the key figures that they generate according to their accounting standards. In most cases they were able to show higher profits.
19 companies regularly make use of adjusted figures. They have carried out adjustments every four years in succession, according to an analysis by analysts from Z├╝rcher Kantonalbank (ZKB). The study, reported by the "NZZ on Sunday", is the news agency sda. Only the construction company Sika and the watch group Swatch therefore forgo the alternative key figures and publish only the figures of the audited annual financial statements.
Defective development
The use of adjusted figures is not per se bad, it could contain valuable additional information about the past and future profitability of a company, writes ZKB. As a positive example, the analysts call Geberit. The sanitary engineering manufacturer transparently calculated the costs of a takeover.
The analysts warn, however, about risks for investors: such figures could also tempt misunderstandings and spoil profits. Studies showed that, in particular, small investors tended to misinterpret the adjusted performance parameters.
An extreme example of cleaning is the bakery group Aryzta. For the 2016 financial year, the Group calculated an adjusted profit margin of 312 million Swiss francs, while the reported Reingewinn was only 67 million Swiss francs. Investors caught it cold a few months later, when a profit warning cut the market value of the company by a third within one day.
Overall, the aggregate adjusted earnings of the SLI companies in 2016 were roughly one-third above the profit margins according to the applied accounting standard. In 2013 the difference was still 23 percent. Not only did companies come out with the newly adjusted reingewinne, also the adjustments made reached a new level.
Companies are most likely to see costs associated with amortization, depreciation and write-downs, as well as expenses related to restructuring, reorganization and acquisitions. Conversely, income from the sale of companies or assets is also excluded.
New policy
The Swiss stock exchange operator SIX has already called for the growth of alternative key figures. It has drawn up a guideline for the use of such figures for which the listed companies were able to comment by the end of July.
Among other things, the directive requires clear and comprehensible definitions of the alternative key figures. In addition, a reference to comparable parameters must be established according to the accounting standard. In addition, the alternative key figures must not be emphasized more than these.
SIX is thus less far than the European Securities Supervision Authority (ESMA) or the US stock exchange supervisory authority (SEC). These are already calling for a reason for the use of alternative key figures. New regulations: A prohibition of such ratios is not probable and probably not meaningful, writes ZKB. Financial market acters had no other choice but to familiarize themselves with the problem.
(AWP)

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