Companies Update 01/09



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Chapter 3 - Listing Rules (PDF 163 KB)

Chapter 4 - Listing Rules (PDF 191 KB)

Chapter 19 - Listing Rules (PDF 148 KB)

Guidance Note 8 - Listing Rules (PDF 221 KB)

Appendix 4D - Listing Rules

Appendix 4E - Listing Rules






Companies Update
22 January 2009
Update no 01/09

Important information for ASX Listed Entities

In the period leading up to the deadline for lodging periodic reports for half-year or annual reporting periods ended 31 December 2008, ASX would like to remind listed entities of their obligations under listing rule 3.1 (PDF 163 KB) in relation to any expected material variations in their financial results for that period. Entities are required to make an appropriate announcement immediately they become aware that there is expected to be a material difference in the financial results for that period from the results that were recorded in the previous corresponding period, or from forecasts for that period that have been provided to the market by the entity, or (in some cases) from analysts' consensus forecasts. As with all disclosures to be made under listing rule 3.1 (PDF 163 KB), the disclosure must be made immediately the entity becomes "aware" of the relevant information within the definition of "aware" in chapter 19 (PDF 148 KB) of the Listing Rules. It is not acceptable for the release of such information to be delayed until the release of the periodic financial report (the Appendix 4D, Appendix 4E, or statutory financial report), or until the release of the information has been considered by the board. 

Listing rule 3.1 (PDF 163 KB) states:

"Once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities, the entity must tell ASX that information."

"Aware" is defined in listing rule 19.12 (PDF 148 KB) as follows:

an entity becomes aware of information if a director or executive officer (in the case of a trust, a director or executive officer of the responsible entity) has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as a director or executive officer of that entity.

Guidance Note 8 (PDF 221 KB) to the Listing Rules is on the subject of Continuous Disclosure and has been issued to assist listed entities to comply with their disclosure obligations. The Guidance Note outlines ASX's expectations in relation to best disclosure practice. 

Paragraph 18 of Guidance Note 8 (PDF 221 KB) states:

Once a director or executive officer becomes aware of information, he or she must immediately consider whether that information should be given to ASX. An entity cannot delay giving information to ASX pending formal sign-off or adoption by the board, for example.

Paragraphs 93 to 95 of Guidance Note 8 (PDF 221 KB) are particularly relevant to continuous disclosure obligations in the context of periodic financial reporting. These paragraphs are reproduced below.

  1. Listing rule 3.1 provides examples of information that, if material, would require disclosure. One of those examples is a change in the entity's previously released financial forecast or expectation. As a general policy, a variation in excess of 10% to 15% may be considered material, and should be announced by the entity as soon as the entity becomes aware of the variation. If the entity has not made a forecast, a similar variation from the previous corresponding period will need to be disclosed. In certain circumstances a smaller variation will be disclosable.

  2. In making such disclosure, the entity must provide some details, however qualified, of the extent of the variation. For example a statement by an entity may indicate that, based on internal management accounts, its expected net profit or EBIT will be an approximate amount (e.g. approximately $6m) or alternatively within a stated range (e.g. between $5m and $7m). Alternatively, the entity may indicate an approximate percentage movement (e.g. "up [or down] by 25 %"). ASX accepts that this information may not be precise and may be changed or amended on completion of the final accounts. ASX discourages entities from using terms such as "single digit" and "double digit" when disclosing financial forecasts or profit variations as they are considered to be insufficiently precise and potentially misleading to investors in assessing the impact of information and making investment decisions.

  3. In some cases, it may be appropriate for a listed entity to disclose material variations from analysts' consensus forecasts and expectations. This may occur where previous results do not provide the most relevant reference point or the market is moving in such a way as to indicate that there is a false market in an entity's securities. Officers of listed entities should refrain from publicly commenting they are "happy" or "comfortable" with analysts' consensus forecasts or a range of analysts' forecasts. If an entity makes comments of this nature, ASX will be likely to ask the entity to immediately release to the Company Announcements Office an expected profit of an approximate amount or an amount within a stated range.

An example relevant to paragraphs 93 to 95 is set out at Example B on page 23 of Guidance Note 8 (PDF 221 KB). 

Listed entities are asked to take note that where an entity reports results that have varied by greater than 10% to 15%, ASX will undertake a review of previous announcements made by that entity during and after the financial reporting period to determine if continuous disclosure obligations have been met. This approach will be adopted in respect of entities whose periodic financial report discloses variations of approximately that size from the results in the previous corresponding reporting period or from forecasts or earnings guidance previously released by the entity itself, and (in appropriate cases) from analysts' consensus forecasts. Where it does not appear from that review that an announcement indicating the likelihood of a material variation in the results had been released prior to the release of the periodic financial report, ASX may write to an entity asking it to state when it first became aware that there would be such a variation. If ASX decides to write to an entity in order to confirm that the entity has met its continuous disclosure obligations, copies of correspondence between ASX and the entity may be released to the market. 

ASX would also like to take this opportunity to draw listed entities' attention to listing rules 4.2C.3 and 4.3C.2 (191 KB), which state that in relation to information or documents given to ASX under listing rules 4.2A and 4.3A (191 KB):

The information identified as "Results for announcement to the market" must be set out at the beginning of the document

The "Results for announcement to the market" section of the announcement forms the basis for the voiceline broadcast which is made for all profit results by the Company Announcements Office (CAO). Profit results also trigger a brief halt in trading while the announcement is prepared by CAO for release and voiceline to the market. 

If the relevant section is not prominently displayed at the front of the document, delays will occur in processing and release, particularly during CAO's busy periods. The full name of the reporting entity, and the record date for a dividend or distribution, should also be included on this front page for inclusion in the voiceline broadcast.

Please note that if you are preparing supplementary documentation to be lodged separately but at the same time as the periodic financial reports (such as media releases and/or presentations), these should be sent to ASX after the Appendix 4D or 4E. The 'sensitive' document which triggers the halt in trading is the relevant Appendix containing the voiceline details described above, and it should therefore always be sent to ASX and released ahead of any supplementary documentation.

ASX would also request that a correct user name and a telephone number for contact purposes are attached to each e-lodgement so that any issues may be promptly resolved by CAO. 

It would be appreciated if you could take note of these important steps in preparing your half-yearly and preliminary final reports in order to avoid unnecessary confusion and delay.

To help keep our Listed Entities informed of information and events ASX will be sending emails to the Company Secretary's Office from time to time. You are receiving this email because you have been identified as a key contact within the Company Secretary's Office at your organisation. If you would like to update your email address please do so via the Directors/Senior Management page on ASX Online for Companies. Feel free to forward this email to any relevant parties within your organisation.