Super Thursday helps neither directors nor investors
Who have the watchdogs helped by telling public companies to report their profits sooner? Not the boards of directors who have to curtail their summer breaks to rush out June figures before the August bank holiday, and not their shareholders either.
Companies with accounting periods ending in June used to report figures in September. Now the Financial Reporting Council expects them to produce results within two months.
That has not only ruined the summer holidays of thousands of directors and accountants, it also produces considerable bunching of announcements.
On the final Thursday of August alone, more than 70 companies announce their figures to the London stock exchange.
Announcements just before bank holidays used to be used by companies trying to sneak out bad news when no one was watching.
Now the watchdogs demand that companies publish results during this quiet period.
Companies such as Savills or drinks group Diageo that traditionally announced results in September have had to bring them forward to August.
The industrials group IMI announced figures on 10 September in 2001; by 2010 it published on 26 August.
Efficiency and the wish for quicker disclosure means many companies have brought forward results by one day each year for the past decade.
Now that means publishing before the bank holiday rather than after, however – and it creates that “Super Thursday” in what is already a busy week with well over 150 companies reporting.
Once British’s industry closed its factories for August while the workers went on their wakes weeks holidays and the directors departed to the grouse moors.
Employees can now spread their holidays better but it has still been traditional for companies with monthly board meetings to leave August free.
But while previously, only the internal auditors had to slog through the summer to have the figures ready for the directors in September, now the board has to return home from holidays prematurely to approve the results and respond to media and investor inquiries.
Yet the days before a bank holiday are still quiet times for the rest of the market. The results may appear sooner, but investors are still on holiday, newspapers are thin and City analysts are not at their desks.
Press coverage of results is limited because so many are competing for space and writers’ time. And because stockmarket trading is thin during these dog days of summer, a results announcement can produce volatile price movements.
It is a noble objective that news is announced to the market as soon as possible, but making those announcements in a holiday period is not ideal.
Most companies still have December year-ends and thus present interim figures in August, just as the June year-end companies are revealing preliminary results too. Maybe they should follow the retailers and change their year-end to January to avoid ruining their summers.
