James Moore: There's no excuse for 70 companies to report interims at the last minute
Friday 27 August 2010
Outlook Just in case you missed it, yesterday was super Thursday in the City of London, not that there's really anything really super about it. The day acquired that nickname in and around the Square Mile because more than 70 companies all chose to put out their interim results on it.
The reason for the stampede was that yesterday just happened to be the last day before a deadline imposed by the Financial Reporting Council, which wants companies to get their numbers out within two months of the end of the first half of their financial years.
It is, in many ways, a laudable aim. Today's stock markets move at a breakneck pace. The need for companies to provide prompt updates has never been more pressing. And in the modern connected corporate world, with its state-of-the-art IT systems and up-to-the-minute data reporting, there really should not be any excuse for not doing this. And there should not be any need for so many companies to report on the same day, the very last day that they are allowed to under the rules.
Unfortunately for the reputation of British business, that doesn't appear to have registered with the more than 70 companies who left it all until the last minute, including the sort of big names which are perfectly able to employ armies of the best finance staff that money can buy. Among the sorry 70 were five FTSE 100 constituents. In no particular order: Diageo, G4S, Segro, Amec and Kazakhmys.
There are real problems with what happened yesterday (and it is not the first time this has occurred). For a start, many of the investors who are supposed to benefit from the reporting rule are on holiday, as are many stock analysts and dealers. Those at their desks will be spread thin because they will have to grapple with multiple companies reporting in their sectors. Many of the dealing room staff who remain in situ will be juniors, manning the desks while trading volumes are thin. At a time when markets are nervous given the patchy economic recovery, the potential for wild share price movements based on misinterpreted data is clear. Cynically, some of the smaller companies, whose numbers will receive only cursory inspection at best, are also presented with a marvellous opportunity to bury bad news.
Thus it might actually benefit all concerned to put back the deadline for a couple of weeks until after the August Bank Holiday has passed. Of course, you might still end up with a rush of companies who use the extra couple of weeks to slumber and so still push it right down to the wire. Here's a suggestion, then: tell company finance directors that they can have the extra time if they want. But warn them that if yesterday's ridiculous situation occurs again, then new rules will be created to the effect that companies get allocated a particular day on which to report.
Does that sound silly? Inflexible? Up to a point, perhaps it does. But it's hardly less silly than having 70 companies reporting all at once.
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