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Guidance For Boards Amidst The Pandemic

Leading law firm Russell McVeagh has today released analysis of announcements made by the constituent members of the NZX 20, in its 'Governance challenges amidst the pandemic' report, to provide insight on current practices relating to providing earnings guidance.

Russell McVeagh Corporate partner David Raudkivi says, "When the pandemic and first lockdown hit us in March, issuers across the board cancelled or suspended earnings guidance. Now we are seeing guidance return with around half of NZX 20 issuers including it with their results or at AGMs. It is certainly a focus for analysts and institutional investors.

"There is, and rightly, some apprehension from boards in providing forward looking information throughout this period of heightened volatility and uncertainty. Legally, guidance can be provided as long as it is based on reasonable grounds and monitored once given for material changes. While this will continue to be business and industry specific – if the board has carefully considered the issuer’s expected performance and is satisfied with the underpinning information and assumptions, we expect that the board could reach a decision to provide guidance through this volatile period," he says.

Russell McVeagh's analysis of the NZX 20 shows:

Guidance in relation to expected FY21 earnings

  • Around half of the constituents provided guidance in relation to FY21 expected earnings, either as a specific expected Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) amount, or as a range.
  • Some others indicated that they would provide guidance at their shareholder meeting.
  • A small number provided guidance on specific financial components such as expected cost implications from COVID-19 or results from investments, but not expected group earnings.

Assumptions and qualifications in forward looking statements

  • Several of those companies providing guidance in relation to expected FY21 earnings, have included assumptions and qualifications on their forward looking statements – including assuming that there are no material adverse changes, significant intervening events, changes to market conditions, meaningful further COVID-19 disruptions or unforeseen circumstances.

Dividend payments

  • All but 3 of the index constituents have announced that they will pay a dividend or signalled a return to paying dividends.

Equity capital raisings

  • Only 3 out of the 20 undertook equity capital raisings in the period since the first lockdown, reflecting the mature nature of their businesses and resilience of their balance sheets.


  • Listed Gentailers have had to factor in the expected implications of the decision to close the Tiwai aluminium smelter.

In its report, Russell McVeagh also considers the 2019 Australian Federal Court decision in TPT Patrol v Myer in the context of providing practical considerations for boards of listed issuers in decisions on providing guidance to the market.

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