The need of a corporate calendar

As we look ahead to the new year, the financial markets will soon be dominated by the annual financial reporting period for companies who also have their financial year ending in December, as well as other quarterly reports by companies with a different year-end to their financial statements.

If one looks at the corporate websites of various international listed companies, a common feature is an annual corporate calendar that provides investors with all the upcoming events and anticipated corporate actions for the year. At this time of year, companies typically disclose all the anticipated reporting for the next twelve months giving the exact dates of when the financial statements will be published, together with dates of other key financial highlights that will be disclosed throughout the year. Companies that pay regular dividends also provide the payment dates and ex-dividend dates in advance. The date of the upcoming Annual General Meeting is also specified.

In contrast, within the local market, equity investors have very limited visibility to the financial reporting and corporate actions of the companies in which they hold shares. It is a common annual occurrence that some companies would not state when they will publish their annual results even one month before the regulatory reporting deadline.

Better visibility of financial reporting would have several benefits for all the stakeholders of equity issuers and ultimately enhances investor relations. In essence, knowing in advance when the information will become available allows for better planning. For example, analysts could plan their research accordingly by scheduling their work in relation to the availability of the financial statements. Likewise, investment committees of institutional investors would be able to prepare their meeting agendas in advance. Furthermore, indicative dividend payment dates allow investors and portfolio managers to plan ahead for the reinvestment of expected cash inflows.

Investors would also be able to schedule their attendance for Annual General Meetings. Whereas abroad, attendance to an AGM typically requires long-distance travelling and may also include overseas accommodation that comes at a substantial cost, which would typically make it unfeasible to retail investors, accessibility to AGMs in Malta is much simpler and most meetings are very well attended. However, due to lack of coordination between companies and no visibility as to when meetings are going to be held, some end up being held concurrently. The publication of the AGM date in the corporate calendar at the start of the year could help to ensure that companies find a date which differs from that of other local issuers.

One important corporate event that is widely organised by international listed companies but absent in Malta is a Capital Markets Day or Investor Day, where companies provide a detailed overview of their business model and investment plans, similar to what most companies typically do at the time of their Initial Public Offering. This is different from an AGM where the information provided is typically historical and thus less important to investors.

A Capital Markets Day is the ideal platform for the Board of Directors and senior management to explain their latest decisions and where they want to position the company in the coming years. Effectively, investors need to be provided with key financial information such as expected revenue growth, return on invested capital, and how the company plans to distribute back profits to shareholders. Without such information, it is very difficult to justify becoming a shareholder in a company.

During a Capital Markets Day, management could also inform investors with respect to any new funding requirements and whether the company is planning to raise funds from the capital market in the near term. This allows investors to position their portfolios better and prepare any liquidity needed to participate in the capital raise. Naturally, all information delivered at a Capital Markets Day would have to be made available to the public through a company announcement and published on the company’s website as one typically finds on corporate websites of international listed companies.

It is evident that some local equity issuers are committed to improve their investor relations. Over the past weeks, a number of companies provided the market with updates to their financial performance that are over-and-above the minimum requirement of semi-annual reporting. Unfortunately, many others still do not provide any additional interim information to the market and investors will need to wait another three or four months to get to know the companies’ financial performance during the second half of 2024.

The announcement of a corporate calendar by listed companies is only a minor necessity when compared to much more urgent reforms needed in the local capital market to revive the investor sentiment and trading liquidity. However, given that it is also much simpler to execute, it can be another small step to improve the local market.

Read more of Mr Falzon’s insights at Rizzo Farrugia (Stockbrokers).

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