Ah, the reporting season. The time to be excited and eagerly anticipate those reports to come out and track company performance. It is fascinating to see how different companies choose to unveil their financial performance. Some we keep a close eye on delight us with their quarterly reports on top of their regular half-yearly and full-year updates. It’s like getting an extra treat for data-hungry investors.
But alas, not all companies follow the same pattern. Some keep us eagerly waiting, and no matter how much we’ve been dying to take a look at their performance this quarter, they stick to their own rhythm. It’s like a tantalizing mystery waiting to be unraveled!
Curious about why some ASX-listed companies issue quarterly reports while others don’t? Instead of making you scour through the ASX compliance and guidance list, keep reading for our summary of reporting frequency regulations of ASX-listed companies.
To begin with…
Companies listed on the ASX report their earnings at least twice a year, typically within two months of their balance sheet date. The main reporting season occurs in August, with many companies releasing their full-year results, while half-year results are usually disclosed in February. This provides an opportunity for analysts, traders, and investors to review earnings reports and assess short-term and long-term performance expectations.
However, some companies need to go through a few other hoops before transitioning to reporting their earnings and performance on a half-yearly basis.
Reporting frequency
ASX-listed companies must provide quarterly activity and cash flow reports for a minimum of eight quarters (under Listing Rules 4.7B and 4.7C) and must satisfy cash flow conditions before being exempted from reporting their quarterlies. They essentially need to be profitable.
As a general rule, the ASX usually likes to see at least four consecutive quarters of positive net operating cash flows before lifting the requirement for quarterly reports. The reporting requirements are based on the trend of net operating cash flows:
Exception for mining and exploration companies
To ensure consistent reporting standards, mining exploration companies were required to provide quarterly cash flow reports until they became mining producing companies. This requirement has been in place for a long time, and three monthly numbers have become the norm in the industry due to the nature of their operations, which can involve significant fluctuations in production, exploration activities, and commodity prices.
The obligation for commitment test companies to produce quarterly reports in Listing Rule 4.7B was introduced in March 2000, following an exposure draft in January 2000, influenced by the similarities between mining exploration companies and companies admitted under the commitments test. Mining exploration companies are usually admitted under the commitments test and thus required to provide quarterly activity and quarterly cash flow reports to assist the market to understand whether they are meeting their exploration objectives.
For commitments test companies, there was no specific milestone to end quarterly cash flow reporting.
ASX discretion to extend or waive quarterly reporting period
The ASX has the flexibility to extend or waive the quarterly reporting regime as needed. The ASX evaluates each case individually to decide whether a company should continue providing quarterly activity and cash flow reports.
The ASX rarely grants waivers from the quarterly reporting rules unless there is a compelling reason to do so. A waiver may be considered for companies at the time of admission or readmission if they have binding contracts or firm arrangements expected to reduce their cash or cash-equivalent assets to less than half of their total tangible assets after raising funds.
Reporting periods
The majority of companies choose to align their financial year with the Australian financial year, which runs from 1 July to 30 June. As a result, these companies typically report their annual financial results ending on 30 June in August and their half-year results ending on 31 December in February.
The 30 June year-end is generally favored by ASX-listed companies as it aligns with the Australian taxation and regulatory requirements. It allows for a smooth transition from one financial year to the next and facilitates better comparability of financial data between companies within the Australian market.
According to the Australian financial year, quarters and half years are defined as follows:
Quarter 1: July to September (September quarter)
Quarter 2: October to December (December quarter)
Quarter 3: January to March (March quarter)
Quarter 4: April to June (June quarter)
Half-Year 1: July to December (December half)
Half-Year 2: January to June (June half)
In many countries, the end of the calendar year is a busy period for retailers due to the festive season, resulting in higher levels of inventory, receivables, and payables. This can make accounting more complex and time-consuming to accurately measure.
Festivals like Diwali and Christmas, celebrated in December, lead to significant sales for retailers and value buying for shoppers, adding to the accounting challenges. Therefore, December is often avoided as the preferred month for the financial year-end to ensure sufficient time, attention, and resources are available for accounting tasks.
However, In Australia, companies have the flexibility to choose their reporting period therefore not all companies provide full year reports at the end of June. Some companies may have different year-ends depending on their specific business needs and strategies, such as:
- Calendar Year/31 December Year-End: Some companies have a financial year-end on 31 December, reporting their annual results in February/March and their half-year results in August/September.
- 30 September Year-End: Companies with a financial year-end on 30 September often report their annual results in November and their half-year results in May.
- 30 March Year-End: Companies with a financial-year end on 30 March usually report their annual results in May/June, with their half-year results around September or October.
Clara is a Business Reporter for The Sentiment.
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