What I'm suggesting is that perhaps there should be thresholds,...

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MarsC

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19/01/16

15:09

Post #: 16825436
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Originally posted by bensterz ↑

I understand where you are coming from. I usually read financial reports from back to front and rarely read through the corporate governance disclosures (I largely feel they are box ticking exercises).

The Australian Accounting Standards already mandate reporting defaults with debt facilities in the financial accounts (see accounting standard AASB7 (paragraphs 18-19) including demands from bankers for an accelerated repayment of principal. ASX Listing Rule 3.1 (continuous disclosure) provides a loan covenant breach as an example of an event which would require immediate disclosure. I imagine in DSH's case the financial covenants weren't technically breached until they had the Dec-15 management accounts available (hence the trading halt on 4 January).

I don't think quarterly reporting would add a material increase in administrative costs (especially when such a requirement wouldn't lead to an increase in report auditing), management already has discretion not to entertain short term financial forecasts (which many detractors of quarterly reporting in the US say is a by-product of frequent financial reporting) and should be noted the Australian banks provide similar data to APRA already.

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What I'm suggesting is that perhaps there should be thresholds, in terms selected financial metrics, that hopefully become apparent long before any banking covenants are breached. Once these thresholds are breached, perhaps then mandatory quarterly reporting could kick in.

That way, those that choose to be financially conservative, need not be bothered.

DSH Price at posting: 35.5¢ Sentiment: None Disclosure: Not Held
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What I'm suggesting is that perhaps there should be thresholds,...

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