Timing of Financial Results Announcements

Article #25 by Edward Rizzo - Published Monthly

Most companies in Malta have their financial year ending in December and according to the Listing Rules published by the Listing Authority, issuers of financial instruments must publish their Annual Financial Report by not later than four months after the end of each financial year.

Since the majority of companies had until the end of April to comply with this requirement, a large amount of company announcements were issued during the last few days of April, informing the market that their Annual Reports were published.

The timing of the financial results announcements varied from mid-morning until very late at night.

The Listing Rules also stipulate that companies must publish an announcement to inform the market of the date scheduled for any board meeting at which any financial report is to be approved. The market is therefore aware of the date of the board meeting and investors anxiously await the financial results to gauge the financial performance and learn about the extent of any dividend payments. Although in most instances, companies publish their financial statements on the same day of approval by the board of directors, some announcements were delayed.

This prompted a number of investors to question whether rules should be put into place in Malta to regulate the timing of financial results announcements.

Although there are no such formal rules in place in the UK and the US regulating the exact timing of financial results announcements, it is general practice by all companies to either publish their financial statements prior to the opening of the market or after the close of the trading session. This would be stated well in advance by each of the companies and many financial portals publish a financial calendar every week of the date and time of each of the companies that will be publishing their financial statements.

In the UK, most financial results announcements are published at 7am, an hour before the market opens at 8am. This allows investors and financial analysts some time to review  the main highlights in order to take any investment decisions that may be required by the time the market opens.

In the US, there are companies that prefer to publish prior to the market open while several others opt to publish as soon as the market closes. On certain days several companies publish simultaneously as soon as the market closes with many of the well-known news portals providing live coverage of the main highlights of the larger companies such as Apple Inc, Amazon.com, McDonald’s etc.

Warren Buffett’s investment vehicle Berkshire Hathaway Inc has its own policy of publishing its financials. In fact, Berkshire issues its financial statements either after the market closure on a Friday afternoon or on Saturday mornings. In the words of CEO Warren Buffet, it will allow “maximum time for analysis and give investment professionals the opportunity to deliver informed commentary before markets open on Monday”.

It is generally accepted across international financial markets that market participants require time to digest the information contained within financial statements and therefore companies adhere to their strict timing before the market opens or ‘after hours’. Many commentators argue that this ensures a level playing field for market participants with varying degrees of access to information as opposed to reporting during market hours. Moreover, some financial commentators believe that reporting after trading hours helps companies obtain increased attention of the financial media and analysts, who might otherwise be more concerned with other developments taking place during the trading session.

Since financial statements contain price-sensitive information, the publication of periodic financials create volatility across equity markets and many companies opt to publish after the market closure so as to have their customary conference call with financial analysts later in the day and allow sufficient time ahead of the market open on the following day.

In Malta, only HSBC Bank Malta plc adopts a strategy of timely reporting prior to the opening of the stock exchange trading session. In recent years HSBC Malta published its financial statements at 9am on the stipulated date.

On the other hand, many companies publish their financial results at erratic times after the market closes at 3.30pm (some also well into the night) and other companies also publish their results when the market is open between 9.30am and 3.30pm. This can lead to quick trades by some investors upon receiving the news which may cause a certain degree of volatility and also catch some of the more passive investors unaware that an announcement had been issued.

In view of the different timing strategies in Malta compared to the more organised approach adopted overseas, it could be worth exploring whether companies listed on the Malta Stock Exchange could commit to a more structured manner of the publication of financial results announcements. This could help in providing greater visibility to the investing public and also limit the stress that this may place upon some investors when such important announcements are published during market hours.

It could also be worth exploring whether there should be deadlines in place for the issuance of the announcements related to the date of the board meetings for the discussion and publication of financial statements. The companies listed on the main international stockmarkets issue their financial calendar of all statutory financial results announcements many months in advance and this is also important information for the investing public. In Malta, while some companies issue such statements several weeks in advance, unfortunately many companies only announce the date a few days prior to the actual publication. This may also prove problematic in view of other restrictions in place when it comes to market abuse. In fact, the Listing Rules of the Listing Authority state that “during the period of thirty (30) days immediately preceding any publication of the Issuer’s annual results, or the half-yearly results or the quarterly basis reports, a Restricted Person shall not purchase any Securities of the Issuer nor shall he sell any such Securities”.

In view of the fact that the ‘closed period’ or ‘black-out period’ commences 30 days prior to the publication of the financial statements, it would therefore be best practice for all companies to announce the date of the publication of the periodic financial statements, at least 30 days in advance. This would help both restricted persons and also financial intermediaries to ensure they are aware of the correct dates when ‘closed periods’ or ‘black-out periods’ commence.

Companies in Malta must emulate international best practice standards to further enhance the development of the Maltese capital market.

  Print This Page

The article contains public information only and is published solely for informational purposes. It should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in this article. Rizzo, Farrugia & Co. (Stockbrokers) Ltd (“Rizzo Farrugia”) is under no obligation to update or keep current the information contained herein. Since the buying and selling of securities by any person is dependent on that person’s financial situation and an assessment of the suitability and appropriateness of the proposed transaction, no person should act upon any recommendation in this article without first obtaining investment advice. Rizzo Farrugia, its directors, the author of this article, other employees or clients may have or have had interests in the securities referred to herein and may at any time make purchases and/or sales in them as principal or agent. Furthermore, Rizzo Farrugia may have or have had a relationship with or may provide or has provided other services of a corporate nature to companies herein mentioned. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security mentioned in this article. Neither Rizzo Farrugia, nor any of its directors or employees accepts any liability for any loss or damage arising out of the use of all or any part of this article. Additional information can be made available upon request from Rizzo, Farrugia & Co. (Stockbrokers) Ltd., Airways House, Fourth Floor, High Street, Sliema SLM 1551. Telephone: +356 2258 3000; Email: info@rizzofarrugia.com; Website: www.rizzofarrugia.com © 2021 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved. This article may not be reproduced or redistributed, in whole or in part, without the written permission of Rizzo Farrugia. Moreover, Rizzo Farrugia accepts no liability whatsoever for the actions of third parties in this respect.

This article was produced by Edward Rizzo, Director at Rizzo Farrugia, which is a company licensed to undertake investment services in Malta by the MFSA under the Investment Services Act, Cap. 370 of the Laws of Malta and a member of the Malta Stock Exchange. The company’s registered address is at Airways House, Fourth Floor, High Street, Sliema SLM 1551, Malta.