With effect from 7 Feb 2020 (Friday), SGX will drop the quarterly reporting (“QR”)
requirement for listed companies. QR was implemented in 2003 and applicable to
companies with market capitalization over S$75Mil. The current need to do QR
for listed company will be dependent on risk assessment basis. In place will be
a risk focused governance regime based on continuous disclosure.
Main reasons cited for
change
I was very disappointed by the announcement as quarterly release of
financial results give retail investors like myself more timely visibility to
the overall health of the business. Apparently, what triggered the downgrade in
reporting requirement was to (i) allow management team of listed companies to
implement longer term strategies rather than devoting time with meeting
quarterly reporting deadlines and (ii) the issue of high compliance cost for
companies.
Ironic arguments by the
regulator
I find the arguments for the change ironic as SGX will still require
“problematic” listed companies to continue to do QR. If the apparent reason is
to allow longer term strategies implementation, then isn’t it even more crucial
for loss making high risk companies doing restructuring to do away with QR so
that they can focus on restructuring planning? Why do such higher risk
companies then need to keep doing QR rather than focusing on long term back to
profitability plan? The cost argument is even more mind perplexing. If a
company which wants to list on SGX to get public funding cannot even afford a
good accounting & compliance team, then how can we trust it to keep true
and fair views of its daily financials? The arguments are thus laden with
inconsistencies from my perspective.
Personal thoughts
Personally, I think that SGX is moving in the wrong direction by
copying other countries which are doing away with QR. The lack of QR will mean
less timely reaction time in particularly for investors monitoring the
financial performance of those smaller sized listed companies. I will not be
surprised that in another 5-10years time, SGX may announce that it will be
reverting to QR again.
It might be the case it matters less. It gives you little reaction time as a speculator but you wonder how much usefulness is the quarterly results.
ReplyDeleteHi Kyith, thanks for sharing your thoughts. The quarterly results and ops data released enables one to do a prior quarter to quarter variance and trending analysis for any downside as well as also enabling one to compare it with the same quarter for prior year. It has helped me for example in Asian Pay TV Trust, Starhub and SPH. Hence even if the management of listed companies keep sugar coating their results with grandiose future growth stories and hope of stabilization of declining business, the actual results will show for itself whether such assertions are true.
Delete95% of what the eyes can see is real and 95% of what the ears can hear is illusion.
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