It is ASX quarterlies season! Here’s what investors need to know

It is ASX quarterlies season in the dying days of January, April, July and October, and we are just upon that season again. Here’s a guide to investors as to what they are and what they should be looking for.

What are ASX quarterlies?

ASX quarterlies refer to the quarterly financial reports that companies listed on the Australian Securities Exchange (ASX) are required to submit no later than one month after the end of each quarter. The due date is the last business day of January, April, July and October. Only companies that are cash flow negative need to submit them. Some companies may be directed by the ASX to submit them by the month, in extreme circumstances.

What is the big deal about them?

These reports provide investors and the market with critical financial data and insights regarding a company’s performance over the previous three months. You won’t see a full set of financial statements, just a cash flow statement with one bonus addition you normally don’t see in the full years’ reports – how many quarters cash is left at current burn rates. You’ll commonly find management commentary and analysis, although it should be taken with a grain of salt when the accounts tell a different story to what they are suggesting.

ASX quarterlies are a valuable tool for analysts and financial institutions, providing them with valuable data for forecasting and analysis. They use this information to make projections about future earnings and performance of listed companies, which can influence investment decisions. But how to use them?

Our tip for investors

It is common to read any document from start to finish. But we suggest investors first skip to the end and see how many quarters of cash is left. Only then, look at everything else. Because forget about a company’s dreams if they have no capital to fund them.

What the ASX can do to a company after a quarterly

If a company has less than 2 quarters cash flow left, it is required to answer questions to the ASX about whether or not it expects negative cash flows to continue and if so, whether or not it expects to raise capital. It goes without saying a company that cannot expect to cease having negative cash flows and not raise capital will survive long. One of the ASX’s listing rules provides that an entity’s financial condition must be sufficient to warrant listing. But of course, no company will admit that, so they’ll talk about plans to raise capital.

If a company fails to lodge its quarterly on time, it will be suspended from trading until it does. This can be a source of embarrassment for companies and runs the risk of investors cashing out en-masse when they have the opportunity to. It is important to note, however, that a company is only required to lodge the report by that date – it may not be published until the first day of the following month. So don’t fret if you can’t see that your company has lodged its report on the date it was due.

We once again stress that companies with positive cash flow do not have to lodge these reports at all. Yes, you may see companies like BHP lodge quarterly updates, but this is not necessarily an ASX requirement – even if it may be on other exchanges. Some may provide more regular updates to investors than twice a year because not updating investors regularly runs the risk of them becoming bored and seeking other companies to invest in.

Conclusion

In conclusion, ASX quarterlies are an essential aspect of the Australian stock market, providing investors, analysts, and the market with crucial financial data and insights. They serve as a key tool for making informed investment decisions and promoting transparency and accountability in the market. Companies must ensure timely submission of these reports to maintain trust and confidence in the market. So, investors should pay close attention to ASX quarterlies when evaluating potential investments.

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