How to read NZX and ASX company announcements

Company announcements are the most important primary source for any share investor. Prices move on them, often within seconds. Knowing which announcements matter, and how to read them quickly, puts you closer to the information professional investors use.

Continuous disclosure: why announcements exist

Both the NZX and ASX have continuous disclosure rules (Listing Rule 3.1 on both exchanges). A listed company must immediately tell the market about information a reasonable person would expect to have a material effect on its share price, unless a narrow exception applies. That means:

• Results, guidance changes, major contracts and acquisitions are released to the exchange first.
• Companies can't brief selected investors before everyone else.
• Big news often arrives before the market opens or after it closes, so it's priced in the opening or closing auction.

Price-sensitive flags

The ASX marks announcements it considers price sensitive (shown as "market sensitive" on its site). The NZX also categorises announcements. Tasman Desk flags price-sensitive announcements so you can skip routine notices. As a rule of thumb:

Often price-sensitive:

• Annual and half-year results
• Earnings guidance updates and trading updates
• Capital raisings, placements and share purchase plans
• Takeover offers, mergers and major acquisitions or sales
• Major contracts, regulatory decisions and legal outcomes
• Trading halts and suspensions

Usually routine:

• Notices of annual meetings and voting results
• Director appointments (unless the CEO or chair leaves suddenly)
• Daily share buyback notices
• Change of registered address and other administrative notices

Reading a results announcement

Results packs can run to dozens of pages. Read in this order:

1. The headline release (one or two pages). Note revenue, underlying or normalised profit, statutory profit and the dividend.
2. Guidance. This often moves the price more than the result itself. Look for phrases like "reaffirms", "upgrades", "expects to be at the lower end of" or "withdraws guidance".
3. Compared with expectations. A profit increase can still send shares down if analysts expected more.
4. Cash flow. Profit can be flattered by accounting choices; operating cash flow is harder to dress up.
5. Debt and funding. Look at net debt, banking covenants and upcoming refinancing.
6. The investor presentation. Slides often contain the clearest explanation of what drove the result.

Statutory vs underlying profit

Companies often report an "underlying", "normalised" or "operating" profit that excludes one-off items. These can be useful, but read the reconciliation. If the same "one-off" items appear every year, they aren't really one-offs.

Trading halts

A trading halt stops trading in a company's shares, usually for up to two trading days, while it prepares an announcement. Common reasons:

• A capital raising (by far the most common)
• A takeover or major transaction
• Responding to a media report or unusual price movement

When a halt is for a capital raising, the new shares are usually offered at a discount to the last price, so the share price often falls when trading resumes.

Capital raisings

When a company issues new shares, check:

• The discount to the last price and to the recent average.
• The purpose. Funding growth is different from repairing a stretched balance sheet.
• Who can take part. A placement goes to institutions; a share purchase plan (SPP) or entitlement offer lets existing retail shareholders take part, sometimes at the same price.
• Dilution. How much the share count increases.

Red flags

• Guidance downgrades soon after reaffirming guidance.
• Auditor changes, delayed accounts or qualified audit opinions.
• Sudden CFO or CEO departures, especially "effective immediately".
• Repeated capital raisings to fund operating losses.
• Responses to an exchange "aware letter" or price query, where the exchange asks a company whether it knows of any information explaining an unusual price move.

Other announcements worth reading

• Substantial holder notices show when a large investor crosses 5% or changes its holding. See substantial holder notices and director trades.
• Director dealings show insiders buying or selling.
• Dividend notices set out the amount, imputation or franking and key dates. See ex-dividend dates explained.

Making announcements manageable

Following dozens of companies means hundreds of announcements a week. Useful habits:

• Filter to price-sensitive announcements for most companies, and read everything for those you own.
• Read guidance and outlook statements first.
• Compare the announcement with the share price reaction. A strong result with a falling price usually means expectations were higher.

Tasman Desk collects NZX and ASX announcements for the companies you follow, puts your holdings first and flags price-sensitive releases, all next to the live price.

Frequently asked questions

What is a price-sensitive announcement?

It's an announcement the exchange or company considers likely to have a material effect on the share price, such as results, guidance changes, capital raisings or takeover news. The ASX marks these as market sensitive.

Why do companies go into a trading halt?

Usually to prepare a material announcement, most often a capital raising or major transaction. Trading pauses so everyone receives the information at the same time.

What does it mean when a company reaffirms guidance?

The company is confirming its earlier forecast for earnings or another measure. An upgrade raises the forecast; a downgrade lowers it. Guidance changes often move the share price more than the reported result.

When are NZX and ASX announcements released?

Announcements can be released throughout the day, but many market-sensitive ones come out before the market opens or after it closes, so the opening and closing auctions price them in.