Shareholders Association reviews reporting season

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Australian Broadcasting Corporation

Broadcast: 31/08/2011

Reporter: Ticky Fullerton

Australian Shareholders Association chief Vaz Kolesnikoff discusses the profit reporting season and the issues affecting shareholders.


TICKY FULLERTON, PRESENTER: We're pretty much finished with the profit reporting season, and a good time to look at some of the issues that are affecting shareholders at the moment.

I'm joined now by Vas Kolesnikoff, CEO of the Australian Shareholders Association.

Vas, welcome to the program.


TICKY FULLERTON: I've got to ask you about Centro first. This judgment on the Centro directors: no bans, no fines, the judge saying it would otherwise be unfair and inappropriate.

VAS KOLESNIKOFF: Well, I suppose if you look at it, I think we've all had parking tickets greater than what happened.

But I think at the end of the day from a shareholders' point of view, how do you explain to a shareholder that they relied on directors and they were proven to have done something wrong under the Corp's Act and there was no penalty? It's just hard to explain.

TICKY FULLERTON: I think the feeling was that this public outing that they had was enough accountability.

VAS KOLESNIKOFF: Well, somehow I just can't see that, to be honest. It's ...

TICKY FULLERTON: So you think there should have been significant ban or fines of some sort.

VAS KOLESNIKOFF: Well, we have the Corporations Act, and ASIC unfortunately from Greg Medcraft's point of view, he's there to enforce the Corp's Act, and unfortunately, they won their case and nothing happened.

So what does that show to shareholders? What can they expect? Certainly, you know, OK, they've been - the directors have been seen to have not done their duties appropriately, but there has to be some form of penalty larger than a parking ticket.

TICKY FULLERTON: We've just been through the reporting season, as I've said. A feeling generally that global uncertainty perhaps is now priced into stocks and there are some cheap opportunities, do you think?

VAS KOLESNIKOFF: Well, definitely. I think a lot of people that I speak with, the various research providers - and if you look at the numbers, the PE ratios are pretty low. So there are opportunities there. The issue is now how much longer will this global uncertainty continue?

TICKY FULLERTON: Because manufacturing stocks and retail stocks obviously are suffering on the whole, aren't they?

VAS KOLESNIKOFF: Well that's - these are all consumer sentiment issues from the retail perspective and this will continue for as long as the debt crises continue and as long as the US unemployment stays high, European unemployment rate stays high. These are all confidence issues, and personally, I just don't see them resolving for a while. So I think there's no rush.

TICKY FULLERTON: What about the leadership of these sorts of companies?

VAS KOLESNIKOFF: Look, it's - certainly from an example of BlueScope Steel, it's disappointing. Certainly, they're reporting poor results, you know, losing a billion dollars.

OK, that's a global competitiveness issue; certainly the FX hasn't helped BlueScope; certainly the scale of manufacturing hasn't helped. They're not competitive so, OK, you have to rationalise production.

But then there's no leadership. You need the leaders of the company to actually set the example and say, "OK, look, we're all suffering here; we're not going to pay ourselves bonuses. We don't deserve them."

TICKY FULLERTON: That became a big issue last week. I mean, the other company of course that is in the throes of a major restructuring is Qantas. Now these rumours of a private equity bid just won't go way, will they?

VAS KOLESNIKOFF: No. Well, look, I think Qantas: interesting time. Good time for a private equity participant to go and look at an asset when it's at almost all-time lows.

TICKY FULLERTON: What are you hearing about the bid possibly?

VAS KOLESNIKOFF: Well, look, I'm definitely hearing and if I'm hearing it, I'm sure everybody else is hearing it, that there is a consortium out there running the numbers.

TICKY FULLERTON: Which might have overlapped with the old APA consortium, or these different players, or ... ?

VAS KOLESNIKOFF: APA is definitely coming up. I think APA raised its head at, what?, about 13 years ago. Certainly - and 13 years ago, if we look at the timing of it as well, the Qantas stock price was pretty low at the time as well. If you look at it now, Qantas' business, it's changing, it's - they're looking at these new Asian businesses, firing a few people - perfect time for private equity to come in and wrong time for shareholders really to be selling. It has to be low.

TICKY FULLERTON: One on the Commonwealth Bank results. It's interesting that somebody told me that retail analysts were invited both to a lunch with the chief executive Ralph Norris and to a dinner.

Now, I imagine that you probably weren't invited to lunch or dinner. Is there an issue here with continuous disclosure, that retail investors don't actually get the same sort of presentation that the chiefs give to retail analysts?

VAS KOLESNIKOFF: Look, and that's right and that's the disappointment to me. One thing I've been doing is writing to all the companies to say, "Look, let's start getting serious about engagement."

You've got the analysts, you've got the instos, all the people really being courted by the companies and informing them. The only people in the dark and not engaged, disenfranchised are the 33 per cent of the average company shareholder base which is the retail investor. They don't get a look in.

TICKY FULLERTON: Vas Kolesnikoff, it's been great to talk to you. Thank you so much for joining us.

VAS KOLESNIKOFF: Thanks for having me.

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