"The (accounting) standard doesn't make a lot of sense for us," AFIC managing director Ross Barker said. "We have $1 billion in our revaluation reserve, but we can't offset any of that against the assets that we are holding below-cost."
AFIC, he said, was making its views known to international and domestic bodies that review and create accounting standards.
An exposure draft where mark-to-market gains and losses would all be taken through the profit and loss statement, or the balance sheet, would not help, according to the AFIC chief.
The first option would create volatile earnings streams, while the second would mean the dividends that AFIC earns from its investments would also have to be taken through the balance-sheet as an adjustment to reserves.
Managing director Rob Patterson said the $64.4m loss after tax was not the best measure of the company's performance over the financial year, as it did not reflect the income received from the investment portfolio and was inconsistent with the company's long-term investment philosophy.
A more accurate indicator, he said, was the operating profit of $163.4m, which was down 10.4 per cent from the previous financial year.
The return on the company's investment portfolio over the financial year was a loss of 16.8 per cent, outperforming the benchmark All Ordinaries Index, which declined by 22.1 per cent.
The demise of Babcock & Brown, Allco Finance Group and the unravelling of the complex structures behind the Macquarie satellites are a stark reminder that investors have had a gutful of backing a model that was good for the head stock/external manager and bad for investors.
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A statement from ASIC late last month on "fair values", no doubt speeded up the model's demise. ASIC said "careful consideration should be given to whether assets are traded in active markets. Most ASX-listed securities are actively traded, in which case, quoted prices should be used".
This would have given the Macquarie boys some major heartburn. In its latest results, released in May, profit was down 52 per cent, as chief executive Nicholas Moore made a $2.5 billion writedown on assets such as MIG, MAP, BrisConnections, real estate equity investments, loan impairment provisions and CDO exposures.
CORPORATE Australia is sitting on a $200 billion debt bomb that needs to be refinanced over the next three years, with analysts warning some infrastructure and small companies will collapse under the mountain of debt.
ANALYSTS believe the August full-year profit reporting season will mark the low point of the earnings rout, suggesting now could be the right time to start looking at cyclical stocks again. As companies prepare for what is tipped to be the worst reporting season in 20 years, most equity strategist are forecasting that earnings will hold up in fiscal 2010. For the 1510 listed companies with a June 30 balance date -- 72 per cent of all the companies listed on the Australian Securities Exchange -- reporting season has already begun and will conclude on August 28. Almost all of the companies will post their full-year reports during August.
''We operate with low margins and with our membership fees, we can sustain low margins,'' Australian Managing Director Patrick Noone said in an interview. ''Lower prices are important because people shop with us to get value.''
THE spotlight is about to return to the culpability of credit ratings agencies in the global financial crisis following a decision by the biggest pension fund in the US to sue over "wildly inaccurate" ratings on the $US600 billion ($750bn) of synthetic derivatives sold to investors.
This, coupled with a court case to be heard in NSW Federal Court this week, could open the floodgates for third-party litigation against the credit rating agencies. It should also corral the regulators into finally doing something about the so-called independence and enormous power of agencies such as Moody's Investors Service and Standard & Poor's.
The passenger figures Qantas released to the stock exchange yesterday weren't flash - but the unannounced financial reality was much, much worse.
While Qantas told the ASX its May Qantas International and Jetstar International revenue seat factors were up 4 and 4.8 percentage points respectively, it didn't say that its yield on the combined international business had collapsed by 25 per cent.
