Time to call a halt to the reporting season pile-up
THE blizzard of blue chip companies reporting major results in the past fortnight has turned into an avalanche. Yesterday marked the last of the overwhelming diary days – at least for a while.
The respite is a relief for the analysts tasked with producing research notes based on the results, not to mention shareholders and asset managers trying to keep track of their investments.
Last Thursday 30 July, nine of Britain’s largest quoted companies all published financial results, including Antofagasta, AstraZeneca, BAE Systems, British American Tobacco, BSkyB, BT, Centrica, Reed Elsevier, Rolls Royce and Royal Dutch Shell.
This week was one of the most important of the entire year for the London Stock Exchange – as major banks such as Lloyds Banking Group, HSBC and Barclays unveiled their results. One City veteran acknowledges that such packed schedules mean it is difficult to cope. “There’s simply too much to digest,” he says.
Many analysts have found the calendar so packed that they are unable to produce timely research for clients. Some have been unable to produce notes on the same day that results are published, making them less relevant to investors.
This surely can’t be the best way of doing things. Why should City professionals be expected to concentrate on more than one set of blue chip accounts on a single day? Shouldn’t company year-ends be adjusted to allow a wider spacing of major results presentations?
On the one hand it is easy to see why this happens. As usual, regulations are to blame for the congestion.
The UK Listing Rules state that interim results must be reported no later than two months after the end of the half-year period, while companies have four months to report their full year figures from the end of the financial year.
Hence the flurry of interims reported at the end of July or early August, about six weeks after the auditors have done their job and statements are ready for publication.
Another question worth asking is do results pile-ups cause undue volatility? This is harder to assess, but using the example of last Thursday 30 July again, the FTSE 100 surged 1.9 per cent as those nine blue chip companies reported. Big gainers included Rolls-Royce, Shell and Antofagasta.
The prospect of a new regulatory regime for financial services is likely to see the banks forced to adopt quarterly reporting, a move that would be welcomed by most in the City for boosting transparency.
Unfortunately it means even more financial information to wade through every three months and more market volatility.
Surely a simple tweak to the Listing Rules to enable company results to be dispersed, even if by a few days, would ease the burden for everyone concerned.