Monday, 4 October 2004
Corporate Value Driven To New Heights
SKYCITY Tops PricewaterhouseCoopers Corporate Value Report
The PricewaterhouseCoopers Corporate Value Report released today contains good news for shareholders with 90% of
companies in the survey enjoying positive returns this year, up from 80% in 2003. The median return to shareholders was
almost 20%, an increase from 16% last year.
PricewaterhouseCoopers Corporate Finance partner David Bridgman said these upward trends were driven by the focus on
governance which followed in the wake of the corporate accounting scandals in 2002. “Companies have responded by
buttressing their risk management and compliance systems to protect their corporate value. The pendulum is still
swinging back towards value creation as businesses take calculated risks to boost performance.”
The Corporate Value Report analyses data relating to 70 companies listed on the NZX with a minimum market capitalisation
of $40m. The PricewaterhouseCoopers ValueWeb methodology ranks each company using eleven criteria including total
shareholder return, liquidity and volatility, ownership concentration, intangible value, revenue growth, margins, and
price/earnings ratios.
By not focusing on a single measure, the ValueWeb is much less likely to be distorted by isolated events and is able to
provide a comprehensive view of a company’s overall value.
Prominent Australasian gaming and entertainment company, SKYCITY Entertainment Group Ltd emerged with the best overall
performance in 2004.
There were a number of factors which contributed to SKYCITY delivering the best value for shareholders, according to
Bridgman. “The company has a relatively low financial risk profile and high intangible asset intensity. It showed good
economic profitability in the gaming sector which is a highly regulated and consolidating market.”
Auckland International Airport Ltd and Fisher & Paykel Healthcare Ltd filled second and third positions in the Corporate Value Report’s rankings.
The Corporate Value Report also highlighted the need for companies to consider the impact of the change to International
Financial Reporting Standards (IFRS) on the valuation of their intangible assets. Approximately 20% of the companies
surveyed had a market value lower than the carrying value of their assets, meaning impairment issues could be a real
concern for some companies.
“Ultimately the key is to achieve a balance between risk and value as the single-minded pursuit of one objective tends
to compromise the other. Our ValueWeb takes a much more holistic approach and looks at a range of factors with proven
links to value creation and sustainability.” said Bridgman.
ENDS