For DIRK, the German IR association, it has been a positive year. One of the highlights for CEO Kay Bommer has been the evolution of quarterly reporting practices, where DIRK has played a key role.
The evolution of the issue dates back to the end of November 2015 when German listed companies could be more flexible in their quarterly reporting after the statutory requirement to publish interim reports was scrapped.
The Frankfurt Stock Exchange council (Börsenrat) decided, in view of the legislative change, to amend its regulations and allow companies listed on its Prime Standard segment greater leeway in their publication of quarterly results. Companies listed on the Prime Standard are no longer required to publish a full quarterly report. Instead, they may publish a significantly more concentrated quarterly announcement.
This marks the end of a debate that has been ongoing for some years. Issuers on the Prime Standard have long promoted a relaxation of the requirement, and many investors, both institutional and private, have questioned the added value of a quarterly report that is issued only weeks after the publication of annual or half-yearly financial statements.
‘As an IR association we were in agreement with the stock exchange that there should be at least some minimum standard to justify the Prime Standard and we were very much part of what this minimum standard should look like,’ says Bommer.
Along with the mutual funds association BVI, DIRK has been key in expanding the debate on greater flexibility of quarterly reporting, while also taking into consideration the perspectives of widely differing capital market players.
‘We brought together all stakeholder groups and the board of the stock exchange took our suggestion and made it part of their stock exchange regulations: that there should be a minimum standard of communication,’ notes Bommer.
With a view to ensuring transparency and confidence in the German capital market, DIRK opposed a total abolition of the quarterly reporting requirement for Prime Standard companies. Instead, it advocated retaining the half-yearly report in its current form and making the reporting requirement for the first and third quarters more flexible.
Investors thus continue to be informed on a quarterly basis about an issuer’s course of business, but the information is concentrated, reduced to the essentials and presented in the form of quarterly announcements. ‘As an association we were quite proud that it was our suggestion was agreed by the stock exchange.’
As a result, in 2016 the number of companies in the Prime Standard that shifted from the full quarterly report to a quarterly statement was roughly half. ‘Also, and more importantly,’ notes Bommer, ‘those companies that have stuck to the quarterly report have made them very much shorter. That is a good thing. Less is more sometimes. I think therefore, we are going in a good direction.’
