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JSE
GEN
General -Proposed amendment for profit forecasts
PROPOSED AMENDMENT FOR PROFIT FORECASTS; SECTION 8 JSE LISTINGS
REQUIREMENTS
Section 8
Financial Information
Scope of section
This section sets out financial information that will be required to
be included in a prospectus/pre-listing statement/circular. It also
sets out continuing obligations relating to matters of a financial
nature. When a new applicant or existing issuer issues a prospectus
the presumption is made that, apart from compliance with the Act, such
prospectus will also comply with and contain all necessary disclosures
as if it were a pre-listing statement subject to compliance with the
Listings Requirements.
The main headings of this section are:
8.1 Report of historical financial information 8-3
8.15 Pro forma financial information 8-7
8.35 Profit forecasts and estimates 8-11
8.45 Accountant"s report 8-13
8.57 Minimum contents of interim reports, provisional annual financial
statements ("provisional reports") and abridged annual financial
statements ("abridged annual reports")
8-16
8.62 Minimum contents of annual financial statements 8-18
8.65 GAAP Monitoring Panel 8-24
Where an applicant is producing a prospectus, additional financial
information is required as set out in Section 6.
Additional and alternative requirements are set out in Section 12
(Mineral Companies), Section 13 (Property Companies), Section 14
(Pyramid Companies), Section 15 (Investment Entities), Section 18
(Dual Listings and Listings by External Companies) and Section 19
(Specialist Securities)
Report of historical financial information
8.1 The report of historical financial information is the responsibility
of the directors of the new applicant/issuer, and this fact is to be
stated in the report.
Circumstances when a report of historical financial information is required
8.2 A report of historical financial information is required:
(a) on a new applicant (including an issuer making application in
terms of a reverse take-over) making an application for listing
and issuing a prospectus/pre-listing statement;
(b) on the subject of any substantial acquisition or disposal
(measured against the anticipated market capitalisation of the
new applicant at the date of listing) that has been effected by a
new applicant in the current or preceding financial year;
(c) on the subject of any substantial acquisition or disposal
(measured against the anticipated market capitalisation of the
new applicant at the date of listing) that is planned to be
effected by a new applicant and is known at the date of issue of
the prospectus/pre-listing statement;
(d) on an existing listed issuer that is issuing a prospectus/pre-
listing statement;
(e) on the subject of a Category 1 or 2 transaction("Category 1 or 2
subject");
(f) on the subject of any substantial acquisition or disposal
(measured against the value of the Category 1 or 2 subject) that
has been effected by a Category 1 or 2 subject in the current or
preceding financial year;
Financial information to be presented
8.3 The report of historical financial information is to include the
following historical financial information, prepared in accordance
with Statements of Generally Accepted Accounting Practice or IFRS* and
the AC 500 standards as issued by the Accounting Practices Board or
its successor:
(a) income statements;
(b) balance sheets;
(c) statements of changes in equity;
(d) cash flow statements;
(e) accounting policies;
(f) notes thereto;
(g) segmental information; and
(h) the information set out in paragraphs 8.11 and 8.12.
8.4 The historical financial information required under paragraph 8.3, is
to be presented in consolidated form in respect of a period of at
least three years up to and including the financial year immediately
preceding the issue of the prospectus/pre-listing statement/circular.
Where the historical financial information is not available for the
prior three year period the JSE must be consulted for a ruling
regarding disclosure and approval of the transaction. The same
historical financial information is also to be presented for the
holding company where this provides significant additional information
to that presented in consolidated form.
8.5 When a report of historical financial information is required in terms
of paragraphs 8.2(b), 8.2(c), 8.2(e) or 8.2(f) it must be prepared in
accordance with and by applying the accounting policies of the new
applicant/issuer.
8.6 In addition, where the new applicant/issuer has made a substantial
acquisition/disposal, has entered into any other substantial
transaction or has entered into an agreement to make such a
substantial acquisition/disposal or other substantial transaction
subsequent to the last audited annual financial statements which has
not been reported upon in any circular or other document, disclosure
is to be made of all the material terms and conditions of the
agreement, including any conditions precedent.
8.7 In addition to the historical financial information required to be
presented in accordance with paragraph 8.2, if at the date of the
prospectus/pre-listing statement/circular more than nine months have
elapsed since the end of the last financial year, reviewed interim
financial information is to be prepared in accordance with the
Statement of Generally Accepted Accounting Practice or IFRS on Interim
Financial Reporting, and is to be presented for the first six months
ended subsequent to the relevant subject matter"s latest financial
year ended.
8.8 With respect to 8.2 (a) to (c), if more than 12 months have passed, or
with respect to 8.2 (e) to (f), if more than 15 months have passed,
since the period for which audited annual financial statements were
prepared and issued, then audited annual financial statements shall be
prepared for the latest financial year ended.
8.9 Where other historical financial information has been made available
to the issuer"s holders of securities subsequent to the issuer"s
latest financial year-end, such other historical financial information
is also to be presented.
Non-compliance with Statements of Generally Accepted Accounting
Practice or IFRS* and the Companies Act
8.10 In the case of a company domiciled outside the Republic of South
Africa, where the historical financial information required by
paragraphs 8.2 to 8.9 has not been prepared in compliance with
Statements of Generally Accepted Accounting Practice or IFRS* and the
Act, there is to be disclosure of the following:
(a) the reasons for such non compliance;
(b) the accounting standards and legislation under which the
historical financial information has been prepared; and
(c) a comprehensive reconciliation to GAAP or IFRS of the effect of
such non-compliance on the information required to be presented
in accordance with paragraph 8.3.
Additional information
8.11 The following additional information is to be provided when presenting
the historical financial information required by paragraph 8.3 for the
latest financial year, and, where paragraph 8.7 is applicable, for the
interim period:
(a) any major change in the nature of property, plant and equipment
and any change in policy regarding the use thereof;
(b) details of any material loan receivable ("loan"), including:
(i) the inception date of the loan;
(ii) to whom the loan was made;
(iii)interest and repayment terms of the loan;
(iv) if interest payments are in arrears, the last date on which
interest was paid and the extent of the arrears;
(v) the period of the loan;
(vi) the nature and value of any security held in respect of the
loan;
vii) if the loan is unsecured, the reasons therefore;
(viii) any changes in 8.11 (b) (ii) to (vii) above during the
period; and
(ix) how each loan arose, particularly whether it arose from the
sale of assets by the issuer or any of its subsidiaries;
(c) details, as required in 8.11 (b) above, of loans made or security
furnished by the issuer or by any of its subsidiaries for the
benefit of any director or manager, or any associate of any
director or manager;
(d) details of any material borrowings ("borrowings"), including
debentures and similar securities/instruments, stating:
(i) the names of the lenders;
(ii) the nature and value of security provided, if any, in
respect of the borrowings;
(iii)interest and repayment terms of the borrowings;
(iv) if borrowings are repayable within 12 months, how the
payments are to be financed; and
(v) how the borrowings arose, stating whether or not they arose
from the purchase of assets;
(e) the aggregate amounts and particulars of any shares and
convertible securities issued, setting out the circumstances and
purposes of the issues;
(f) details of any schemes involving the staff of the issuer or its
subsidiaries;
(g) in respect of each:
- subsidiary, and any entity that was a subsidiary during the
period covered by the report of historical financial
information but has ceased to be one;
- joint venture;
- partnership;
- associate; and/or
- other long-term investment;
- if material to the financial position, changes in equity,
results or cash flows of the issuer, disclose the following:
(i) the amount of all classes of issued share capital, the
percentage held by the issuer, its subsidiaries or
nominees, the voting percentage held, if different from
the ownership percentage, and any changes therein
during the current and /or last financial period;
(ii) any rights held by any person enabling such person to
vary the voting rights held in any subsidiary; and
(iii) the amount of the issuer"s interest,
distinguishing between shares and indebtedness, and any
changes therein during the period;
(h) the issuer"s share of net profits and /or losses for the period
of subsidiaries, joint ventures, partnerships and associates,
disclosed separately for each such entity;
(i) particulars of directors emoluments paid or accrued by the
company in compliance with paragraph 7.B.7;
(j) the net asset value and tangible net asset value per share
expressed in cents. Mineral Companies, as defined in Section 12,
may treat mineral rights and any other mining assets as tangible
assets;
(k) earnings, diluted earnings, headline earnings and dividends per
share in respect of each class of share expressed in cents;
(l) any material change in the nature of the business of the issuer
and its subsidiaries;
(m) any material fact or circumstance that has occurred between the
end of the latest financial year of the issuer and the date of
the prospectus/pre-listing statement/circular, in so far as not
already dealt with in the interim financial information included
in the report of historical financial information, or, where not
applicable, an appropriate negative statement.
Commentary
8.12 The report of historical financial information is to include
commentary on the historical financial information incorporating a
general review of the business and operations of the issuer during the
period and the results thereof and is to deal with every fact or
circumstance material to an appreciation of the state of affairs,
financial position, changes in equity, results of operations and cash
flows of the issuer.
Periods
8.13 Where the financial year-end of the issuer changed at any time during
the reporting periods, the historical financial information for the
full periods in question is to be provided. Annualised historical
financial information is not to be presented in the report of
historical financial information.
Adjustments
8.14 A statement of adjustments is to be provided, detailing the amounts
and reasons therefore, in respect of any adjustments made to
previously reported historical financial information used in preparing
the report of historical financial information. This is to be provided
in the form of a reconciliation between the previously reported
historical financial information and the adjusted historical financial
information presented in the report of historical financial
information. If no adjustments are made, there is to be disclosure of
that fact. Adjustments are only to be made to give effect to:
(a) retrospective application of changes in accounting policies; and
(b) retrospective correction of fundamental errors.
Pro forma financial information
General
8.15 If the issuer publishes pro forma financial information, including but
not limited to financial effects, in any document requiring submission
to the JSE, that information must comply with paragraphs 8.16 to 8.33
and a report in terms of paragraph 8.48(b) must be included in the
relevant document. This report is not required to be prepared for an
announcement. In all instances, the pro forma financial information
must be compiled, and if applicable reported on, in terms of The Guide
on Pro forma Financial Information, issued by SAICA.
8.16 Pro forma financial information is the responsibility of the directors
of the issuer, and this fact is to be stated with the pro forma
financial information.
Nature of information
8.17 ro forma financial information is to provide investors with
information about the impact of the corporate action, the subject of the
prospectus/pre-listing statement/circular, by illustrating how that
corporate action might affect the reported financial information, had the
corporate action been undertaken at the commencement of the period being
reported on, or in the case of a pro forma balance sheet, at the date
reported on. The pro forma financial information presented is not to be
misleading, is to assist investors in analysing future prospects of the
issuer and is to include all appropriate adjustments permitted by paragraph
8.30, of which the issuer is aware, and which are considered necessary to
give effect to the corporate action as if the corporate action had been
undertaken at the commencement of the period being reported on or, in the
case of the pro forma balance sheet, at the date reported on. In certain
limited circumstances, permission will be granted to calculate an income
statement effect at a date other than at the beginning of the financial
period. These exceptions are detailed in The Guide on Pro forma Financial
Information, issued by SAICA.
Presentation of information
8.18 The pro forma financial information is to state clearly:
(a) the purpose for which it has been prepared;
(b) that it is prepared for illustrative purposes only; and
(c) that because of its nature, it may not fairly present the
issuer"s financial position, changes in equity, results of
operations or cash flows.
8.19 The pro forma financial information is to be presented in columnar
form showing separately the unadjusted financial information, the pro
forma adjustments and the pro forma financial information. The pro
forma financial information is to identify:
(a) the basis upon which it is prepared; and
(b) the source of each item of information and adjustment.
8.20 Pro forma figures must be given no greater prominence in the document
than unadjusted financial figures.
Accounting policies
8.21 Pro forma financial information is to be presented in a manner
consistent with both the format and accounting policies adopted by the
issuer in its report of historical financial information.
8.22 In quantifying pro forma adjustments, the issuer is to apply
accounting policies on the same basis as the issuer would normally
adopt in preparing its annual financial statements.
8.23 The requirement to apply the issuer"s accounting policies in preparing
pro forma financial information applies to adjustments made in respect
of a material acquisition.
8.24 Pro forma financial information is to be prepared in accordance with
the policies adopted in presenting the unadjusted financial
information of the issuer at the relevant date or for the relevant
period, even where new accounting standards will apply subsequently.
Selection of periods
8.25 Pro forma financial information may be published only in respect of:
(a) the most recent completed financial period;
(b) the most recent interim period for which unadjusted information
has been published or is being published in the report of
historical financial information;
(c) both 8.25 (a) and 8.25(b);
(d) in the case of a pro forma balance sheet, as at the date on which
such periods end or ended; and
(e) a profit forecast (provided the forecast has been published and
reported on in terms of Section 8 or Section 13 ) for income
statement purposes and paragraphs 8.25(a) to (d) for balance
sheet purposes.
Subsequent events
8.26 No adjustments may be made to pro forma financial information in
respect of post balance sheet events except:
(a) as provided for in the Statement of Generally Accepted Accounting
Practice or IFRS* on Events After the Balance Sheet Date; or
(b) in respect of the particular corporate action for which the pro
forma financial information is being presented; or
(c) in respect of any previously published financial effects; or
(d) in respect of any post balance sheet corporate action of the
issuer or the target, where it would be misleading not to make an
adjustment, and in such instance, in addition to providing full
details of the adjustment, details must be provided as to why the
issuer believes it would be misleading not to make an adjustment.
Accounting periods
8.27 Where a pro forma income statement or cash flow statement is presented
for two or more entities or business undertakings, such as may be the
case in a material acquisition, the unadjusted information about the
issuer and the adjustments in respect of the other entity or entities
are to cover similar periods of the same length.
Unadjusted information
8.28 The unadjusted information of the issuer is to be derived from the
most recent:
(a) published audited annual financial statements, published interim
report, preliminary reports or provisional reports;
(b) previously published report of historical financial information;
(c) previously published pro forma financial information reported on
in accordance with paragraph 8.48(b);
(d) profit forecast which has been published and reported on in terms
of Section 8 or Section 13 for income statement purposes and
paragraphs 8.28(a) to (c) for balance sheet purposes.
8.29 The unadjusted information of the subject matter of the acquisition or
disposal is to be derived from the:
(a) most recent published audited annual financial statements,
published interim report, preliminary report or provisional
report;
(b) profit forecast which has been issued and reported on in terms of
Section 8 or Section 13 for income statement purposes and
paragraphs 8.29(a) or (c) for balance sheet purposes;
(c) unpublished management accounts provided that:
(i) the issuer is satisfied with the quality of those management
accounts;
(ii) shareholders are warned about the source of the information;
and
(iii) if the category 1 or 2 transaction or related party
circular to shareholders includes those management accounts
and an accountant"s review or audit opinion (whichever is
applicable) on those accounts.
Adjustments
8.30 Any adjustments that are made to the information referred to in
paragraphs 8.28 and 8.29 above in relation to any pro forma statement
are to be:
(a) clearly shown and explained;
(b) directly attributable to the transaction concerned and not
relating to future events or decisions;
(c) factually supportable; and
(d) in respect of a pro forma income statement or cash flow
statement, clearly identified as those adjustments that are
expected to have a continuing effect on the issuer and those that
are not.
8.31 In order to comply fully with paragraph 8.30, issuers must include
notes to the pro forma financial information providing the
explanations required in terms of paragraph 8.30 as well as:
(a) any assumptions on which the adjustments are based;
(b) the range of possible outcomes where there is significant
uncertainty;
(c) the sources of the amounts concerned; and
(d) where relevant, how adjustments have been aggregated or allocated
to financial statement captions.
Continuing effects
8.32 In respect of pro forma income or cash flow statements, issuers are to
identify clearly those adjustments that are expected to have a
continuing effect on the issuer and those that are not. An issuer is
not permitted either:
(a) to omit adjustments that are directly attributable to a corporate
action and are factually supportable, on the grounds that they do
not have a continuing effect; or
(b) to make adjustments to eliminate items solely on the grounds that
they are considered not to have a continuing effect.
8.33 Issuers are to interpret paragraphs 8.28 and 8.29 in line with the
requirements of the Statements of GAAP or IFRS* and the AC 500
standards as issued by the Accounting Practices Board or its
successor.
Earnings and headline earnings per share
8.34 Where pro forma earnings and headline earnings per share information
is given for a transaction it must be provided in compliance with GAAP
statement AC104 and Circular 7/2002, Headline Earnings issued by
SAICA, except that where the transaction includes the issue of
securities, the calculation is to be based on the weighted average
number of issued securities adjusted if that issue had taken place at
the beginning of the period.
Profit forecasts and estimates
8.35 The following requirements apply equally to forecasts or estimates of
profits or losses, cash flows or net asset values ("collectively
defined as "profits or losses") of an applicant issuer or an
undertaking that is to become a material part of an applicant issuer"s
group8.36 Any statement or information relating to the future
prospects of an applicant issuer, or an undertaking that is to become
a material part of an applicant issuer"s group, must be clear and
unambiguous. The applicant issuer must determine in advance with its
sponsor whether such a statement of information will constitute a
profit forecast or an estimate. Any profit forecast or estimate must
be presented in an explicit manner and must be compiled using
accounting policies applied by the applicant issuer.
8.37 (a) A profit forecast is a form of words which expressly states or by
implication indicates a figure or a minimum or maximum figure for the
likely level of profits or losses for the current financial period
and/or financial periods subsequent to that period, or contains data
from which a calculation of such a figure for future profits or losses
may be made, even if no particular figure is mentioned and the word
"profit" is not used.
(b) A profit estimate is a form of words which expressly states or by
implication indicates a figure or a minimum or maximum figure for the
likely level of profits or losses for a financial period ended but for
which no financial information has yet been published, or contains
data from which a calculation of such a figure may be made, even if no
particular figure is mentioned and the word "profit" is not used.
8.38 A profit forecast or estimate of an applicant issuer or an undertaking
that is to become a material part of the applicant issuer"s group
which is included in any communication with shareholders is the sole
responsibility of the directors and must be reported on by the
sponsors in accordance with paragraph 2.11.
8.39 A dividend forecast must be treated as a profit forecast where the
issuer has a known policy of relating dividends to earnings, or has an
insufficient level of retained earnings, or the forecast otherwise
implies a forecast of profit. In the event of uncertainty the JSE must
be consulted.
8.40 In the event of an applicant issuer publishing a profit forecast or
estimate in an announcement it must either:
(a) produce and submit to the JSE a profit forecast or estimate, and
accountants report thereon in accordance with:
(i) ISAE 3400 - The Examination of Prospective Financial
Information and the SAICA Revised Guide on Forecasts, in
respect of profit forecasts; or
(ii) ISAE 3000 (Revised) - Assurance Engagements other than
Audits or Reviews of Historical Financial Information, in
respect of the estimate;
Or;
(b) include a statement (which is not deemed to be a cautionary
statement and which does not give rise to the commencement of a
closed period) in the announcement advising securities holders
that the forecast financial information has not been reviewed and
reported on by the applicant issuer"s auditors in accordance with
8.40 (a).
8.41 The JSE reserves the right to insist on sign-off by the auditors in
accordance with paragraph 8.40 (a) where it believes that it would be
in the interests of the shareholders.
8.42 The period of the forecast or estimate should normally be to the end
of the financial period. If it is not, then the period of the forecast
or estimate must be in respect of a period for which the results will
be published, or the issuer must make a new forecast for such a
period. The forecast or estimate must be disclosed on a per share
basis and must include profit after tax, disclosing separately any
items expected to be of such size, nature or incidence that their
disclosure is relevant to explain the expected performance, as well as
tax charges, earnings and headline earnings (and cash flows or net
asset values if applicable).
8.43 A profit forecast included in a prospectus/pre-listing
statement/circular must be reported in accordance with paragraph 8.40
(a) and must include a statement of the principal assumptions for each
factor that would have a material effect on the achievement of the
forecast. These assumptions must:
(a) be clearly segregated between assumptions about factors that the
directors can influence and assumptions about factors that are
exclusively outside the influence of the directors;
(b) be readily understandable by investors;
(c) be specific about the particular aspect of the estimate/forecast
to which they refer and about the uncertainty attaching to that
aspect; and
(d) not relate to the general accuracy of the estimates (e.g. sales
estimates, expense estimates, etc) underlying the forecasts.
8.44 With regards to a profit estimatethe estimate may only be subject to
assumptions in exceptional circumstances and such exceptional
circumstances should be explained.
Accountant"s report
Circumstances when an accountant"s report is required
8.45 An accountants" report is required when a report of historical
financial information is required in terms of paragraph 8.2 (a), (b),
(c), (e) and (f), and when pro forma financial statements and profit
forecasts/estimates (when prepared in terms of paragraph 21.3(f), 8.41
and 8.43) are prepared.
The accountant
8.46 The accountant must be an accountant and auditor registered in terms
of the Public Accountants" and Auditors" Act of 1991 and must have
sufficient knowledge and experience in the application of Section 8 of
the Listings Requirements.
8.47 The accountant shall conduct the engagement in accordance with the
relevant International Auditing and Assurance Standards Board (IAASB)
Standard (The IAASB Standards include: International Standards on
Auditing (ISAs), International Standards on Review Engagements
(ISREs), International Standards on Assurance Engagements (ISAEs), and
International Standards on Related Services (ISRSs)) and relevant
guidance issued by SAICA.
8.48 The accountant is to provide opinions on the following reports:
(a) a report of historical financial information by way of:
(i) an audit opinion on financial information relating to the
financial year immediately preceding the issue of the
prospectus/pre-listing statement/circular; and/or
(ii) either an audit opinion or a review opinion on financial
information relating to the financial years prior to the
financial year immediately preceding the issue of the
prospectus or circular; and/or
(iii) a review opinion on interim financial information where
such information requires a review opinion;
(b) the pro forma financial information as to:
(i) whether the pro forma financial information has been
properly compiled on the basis stated;
(ii) whether such basis is consistent with the accounting
policies of the issuer; and
(iii) whether the adjustments are appropriate for the
purposes of the pro forma information as disclosed pursuant
to paragraph 8.17 and paragraph 8.30;
(c) a profit forecast as to:
(i) whether the assumptions, barring unforeseen circumstances,
provides a reasonable basis for the preparation of the
forecast;
(ii) whether the forecast has been properly compiled on the basis
s tated; and
(iii) whether the forecast has been properly presented and
all material assumptions are adequately disclosed; and
(iv) whether the profit forecast is presented on a basis
consistent with the accounting policies of the company or
group in question.
(d) a profit estimate as to:
(i) whether the estimate has been properly compiled on the basis
stated;
(ii) whether the estimate has been properly presented and all
material matters are adequately disclosed; and
(iii) whether the estimate is presented on a basis consistent
with the accounting policies of the company or group in
question.
8.49 Where the historical financial information has not been subject to an
audit previously or where the reporting accountant is not the auditor
of the company, the reporting accountant is to audit, at a minimum,
the historical financial information relating to the financial year
preceding the issue of the prospectus/pre listing statement/circular,
and review the historical financial information of prior periods. The
reporting accountant is to follow the International Standard on
Auditing on Initial Engagements - Opening Balances with regard to the
unaudited opening balances.
8.50 Where, in accordance with the requirements of paragraph 8.48, an audit
of the historical financial information is to be performed, and the
reporting accountant is also the auditor of the company, he is to
review the audit working papers relating to the relevant historical
financial statements. However, where the reporting accountant is not
the auditor of the company, he is to follow the statement of
International Standard on Auditing on Using the Work of Another
Auditor.
Contents of an accountant"s report
8.51 An accountant"s report should be addressed to the directors of the
applicant, in the case of an application for listing of new
securities, or the listed company, in the case of an acquisition or
disposal, and must include the following basic elements, ordinarily in
the following layout:
(a) title;
(b) addressee;
(c) Opening or introductory paragraph with:
(i) the purpose for which the report has been prepared;
(ii) a statement of the responsibility of the directors;
(iii) a statement of the responsibility of the accountant;
and
(iv) identification of the components of the financial
information audited or reviewed;
(d) scope paragraphs, describing the nature of the work undertaken,
with:
(i) a reference that the audit has been conducted in accordance
with International Standards on Auditing (ISAs) (in the
case of an audit); and/or
(ii) the relevant International Standard on Review Engagements
(ISREs) (in the case of a review); and/or
(iii) the International Standards on Related Services (ISRS)
4400 -Engagements to Perform Agreed upon Procedures
Regarding Financial Information (in the case of agreed-upon
procedures);and/or
(iv) the International Standard on Assurance Engagements (ISAE)
3000 - Assurance Engagements other than Audits or Reviews
of Historical Financial Information (in the case of
assurance engagement and estimate); and/or
(v) the International Standard on Assurance Engagements (ISAE)
3400 - The Examination of Prospective Financial Information
and the SAICA Revised Guide on Forecasts (in the case of
profit forecasts); and/or
(vi) the guidance issued by SAICA (in the case of a review of pro
forma financial information); and
(vii) a description of the work the accountant has performed;
(e) an opinion paragraph containing an expression of opinion (in the
case of an audit or assurance engagement) or a conclusion
paragraph containing an expression of the accountant"s conclusion
(in the case of other assurance engagements conducted in
accordance with ISAEs);
(f) the accountant"s name, address and signature; and
(g) the date on which the accountant"s report is signed.
Date of reports
8.52 The accountant"s report(s) should be dated on the same day that the
directors authorise the issue of the prospectus/pre-listing
statement/circular/announcement, for formal submission to the JSE.
Review of prospectus/pre-listing statement/circular
8.53 The accountant should review the prospectus/pre-listing
statement/circular to ensure that the contents thereof are not
contradictory with the information contained in the report of
historical financial information. The accountant must inform the JSE,
in writing, of his consent for inclusion and of any such
contradictions.
Consent letters
8.54 The accountant should submit a letter to the directors giving his/her
consent to the inclusion of:
(a) the accountant"s report(s) in the prospectus/pre-listing
statement/ circular; and
(b) references to, or extracts from, the accountant"s report(s)
included in the prospectus/pre-listing statement/circular.
8.55 The consent letter should be dated on the same day that the directors
authorise the issue of the prospectus or circular for formal
submission to the JSE.
8.56 A statement is to be included in the prospectus/pre-listing
statement/circular that the accountant has given and has not withdrawn
his/her/its written consent to the issue of the prospectus/pre-listing
statement/circular, containing the accountant"s report in the form and
context in which it appears.
Minimum contents of interim reports, preliminary reports, provisional
annual financial statements ("provisional reports") and abridged
annual financial statements ("abridged reports")
8.57 Every listed company, in addition to complying with the statutory
requirements concerning interim reports, preliminary reports,
provisional reports and abridged reports must prepare such reports in
accordance with, and containing the information required by the
Statement of Generally Accepted Accounting Practice or IFRS* and the
AC 500 standards as issued by the Accounting Practices Board or its
successor on Interim Financial Reporting.
Supplementary information
8.58 In addition to the requirements of Statements of Generally Accepted
Accounting Practice or IFRS and the AC 500 standards as issued by the
Accounting Practices Board or its successor on Interim Financial
Reporting and Schedule 4 of the Act, the following supplementary
information must, where applicable and material, be included:
(a) any exceptional increase in borrowings during the period under
review, and where possible the effect of such increased
borrowings on the earnings per share and headline earnings per
share. Should it not be possible to disclose this effect on the
earnings per share and headline earnings per share, the reasons
must be stated;
(b) in respect of the period under review and the immediately
preceding comparable period, a headline earnings per share figure
as well as an earnings per share figure must be disclosed, as
well as an itemised reconciliation between headline earnings and
the earnings used in the calculation of earnings per share. The
headline earnings should be calculated in terms of Circular
7/2002, Headline Earnings issued by SAICA;
(c) with respect to Mineral Companies, summary information must be
provided in the interim report disclosing any material changes to
the information disclosed in compliance with 8.63(m) for the
prior year/period ended, or an appropriate negative statement
where there have been no material changes; and
(d) disclosure where there is a material change to the initial
estimates of a contingent consideration payable or receivable in
terms of an acquisition or disposal, as used in the pro forma
financial effects calculations.
Change of financial year
8.59 If a change in the financial year is proposed, the JSE must be
notified in writing and consulted as to the period or periods to be
covered by the interim report.
Audited/reviewed interim, provisional and abridged annual reports
8.60 If an interim, preliminary, provisional or abridged report has been
audited or reviewed by an auditor, this fact and the name of the
auditor shall be stated in such published report. Although the report
of the auditor need not be included in the published report, if such
report is modified, details of the nature of such modification shall
be stated therein. If the report of the auditor is not included in the
published report, it shall state that the report of the auditor is
available for inspection at the company"s registered office. If such
report has not been audited or reviewed by an auditor, an appropriate
negative statement must appear in such published report.
Basis of presentation
8.61 Interim, preliminary, provisional and abridged reports must be
presented on a consolidated basis and prepared in accordance with
paragraphs 8.58 (a) and (b).
Minimum contents of annual financial statements
8.62 The annual financial statements must:
(a) be drawn up in accordance with the national law applicable to a
listed company;
(b) be prepared in accordance with:
(i) South African Statements of Generally Accepted Accounting
Practice; or
(ii) International Financial Reporting Standards* and the AC 500
Standards as issued by the Accounting Practices Board and
its successor (but see Section 18 in respect of dual
listings and listings by overseas companies);
(c) be audited in accordance with:
(i) Statements of South African Auditing Standards or
International Standards on Auditing;# or
(ii) in the case of overseas companies, in accordance with
national auditing standards acceptable to the JSE or
International Standards on Auditing;
(d) be in consolidated form if the listed company has subsidiaries,
unless the JSE otherwise agrees, but the listed company"s own
financial statements must also be published if they contain
significant additional information; and
(e) fairly present the financial position, changes in equity, results
of operations and cash flows of the group.
8.63 In addition to complying with GAAP, Schedule 4 of the Act and
paragraph 3.84 of the Listings Requirements, issuers are required to
disclose the following information in the annual report (in the case
of 8.63(a) and (m)), and in the annual financial statements (in the
case of 8.63 (b)-(l) and (n)):
(a) the King Code:
(i) a narrative statement of how it has applied the principles
set out in the King Code, providing explanation(s) that
enable(s) its shareholders to evaluate how the principles
have been applied; and
(ii) a statement addressing the extent of the company"s
compliance with the King Code and the reasons for non-
compliance with any of the principles in the King Code,
specifying whether or not the company has complied
throughout the accounting period with all the provisions of
the King Code, and indicating for what part of the period
any non-compliance occurred;
(b) borrowings:
(i) full disclosure must be made of all borrowings. Where,
during the period under review, a listed company or any of
its subsidiaries incurs a material increase in its
borrowings, it must disclose the nature of and purpose for
such borrowings; and
(ii) as a note, disclosure must be made of the level of
borrowings in relation to those borrowings authorised by the
articles of association of the listed company and its
subsidiaries;
(c) headline earnings per share:
in respect of each current financial year and the immediately
preceding financial year, a headline earnings per share figure
must be disclosed, as well as an itemised reconciliation between
headline earnings and the earnings used in the calculation of
earnings per share. Headline earnings must be calculated in terms
of Circular 7/2002, Headline Earnings issued by SAICA;
(d) disclosure of directors" interests:
(i) the aggregate of the direct and indirect interests of the
directors in, and the direct and indirect interest of each
director"s holding in the share capital of the listed
company distinguishing between beneficial and non beneficial
interests. The statement should include by way of a note any
change in those interests occurring between the end of the
financial year and a date not more than one month prior to
the date of the notice of the annual general meeting or, if
there has been no such change, disclosure of that fact; and
(ii) comparative figures for the previous year must be presented;
(e) shareholder spread:
(i) the number of public shareholders for every class of listed
securities must be disclosed;
(ii) the percentages of each class of listed security that is
held by public and non-public shareholders must be
disclosed; and
(iii) the disclosure for non-public shareholders must be
analysed in accordance with the categories set out in
paragraph 4.25;
(f) major shareholders:
the interest of any shareholder other than a director who, in so
far as it is known, is directly or indirectly beneficially
interested in 5% or more of any class of the listed company"s
capital, together with the amount of each such shareholder"s
interest, or if there are no such shareholders, an appropriate
negative statement;
(g) share incentive schemes:
the listed company must, in respect of its or its subsidiary
companies" share incentive schemes, summarise the details and
terms of options in issue at the beginning of the financial
period, cancelled or issued during the financial period and in
issue at the end of the financial period, the number of
securities that may be utilised for purposes of the scheme at the
beginning of the financial period, changes in such number during
the financial period and the number of securities available for
utilisation for purposes of the scheme at the end of the
financial period;
(h) profit forecasts:
if the results for the period under review differ by 10% or more
from any published forecast or estimate by the company for that
period, an explanation of the difference must be given;
(i) unlisted securities:
if applicable, a statement in accordance with paragraph 4.23 (b)
must be made;
(j) special resolutions:
full details must be given of all special resolutions passed by
the issuer"s subsidiaries since the date of the previous
directors" report relating to capital structure, borrowing
powers, the object clause contained in the memorandum of
association or any other material matter that affects the
understanding of the company and its subsidiaries;
(k) issues for cash:
details must be given of all issues of securities for cash during
the period under review, distinguishing between general and
specific issues, and including, at least, the number of
securities issued, the price at which and, in the event of a
specific issue to non-public shareholders as defined in paragraph
4.25, to whom they were issued; and
(l) disclosure of individual director"s emoluments:
an analysis in aggregate and by director, of emoluments paid in
respect of each current financial year and the immediately
preceding financial year by the company, or receivable by
directors, in their capacity as director, or in any other
capacity, whether determined by the articles or not,
distinguishing separately between executive and non-executive
directors;
(i) fees for services as a director;
(ii) management, consulting, technical or other fees paid for
such services rendered, directly or indirectly, including
payments to management companies, a part of which is then
paid to a director of the company;
(iii) basic salary;
(iv) bonuses and performance-related payments;
(v) sums paid by way of expense allowance;
(vi) any other material benefits received;
(vii) contributions paid under any pension scheme;
(viii) any commission, gain or profit-sharing arrangements;
and
(ix) in respect of share options or any other right given which
has had the same or a similar effect in respect of providing
a right to subscribe for shares ("share options"):
(1) the opening balance of share options, including the
number of share options at each different strike price;
(2) the number of share options awarded and their strike
prices;
(3) the strike dates of differing lots of options awarded;
(4) the number of share options exercised and at what
prices;
(5) the closing balance of share options, including the
number of share options at each different strike price;
(1) to (5) above may be presented in tabular form;
(x) any shares issued and allotted in terms of a share
purchase/option scheme for employees (or other
scheme/structure effected outside of the issuer which
achieves substantially the same objectives as a share
purchase/option scheme), usually held as a pledge against an
outstanding loan to an employee in a share purchase scheme
trust, which have not been fully paid for, including the
number so issued and allotted, the price of issue and
allotment, the release periods applicable to such shares and
any other relevant information;
(xi) without derogating from the generality of 8.63 (l) (i) to
(x) above, the directors emoluments disclosed in accordance
with 8.63 (l) (i) to (x) above must include disclosure of
all emoluments received or receivable from the following
entities:
(1) the issuer"s holding company;
(2) the issuer"s subsidiaries and fellow subsidiaries;
(3) associates of 8.63 (l) (xi) (1) and (2) above;
(4) joint ventures of the issuer or of 8.63 (l) (xi) (1) to
(3) above; and
(5) entities that provide management or advisory services
to the company or any of 8.63 (l) (xi) (1) to (4)
above.
(m) Mineral Resources and Mineral Reserves
(i) Scope
(1) 8.63(m) applies to Mineral Companies (comprising Exploration Companies
- being companies whose principal activity is that of exploration and
Mining Companies - whose principal activity is that of mining) only.
(2) Mineral Companies (which for purposes of this listings requirement,
includes subsidiaries, joint ventures, associates and investments),
are required to disclose the details contained in 8.63(m) on an
attributable beneficial interest basis (ie beneficial "see through"
basis).
(3) Mineral Companies may report on an aggregated attributable beneficial
interest basis ("total basis") where the required disclosure details
in 8.63(m) have been previously disclosed and published by separately
listed Mineral Companies in compliance with this listing requirement.
If disclosure is made on a total basis, then the attributable
beneficial interest percentage must also be clearly stated.
(4) Mineral Companies" disclosure in accordance with 8.63(m) must be
compliant with the SAMREC Code and where applicable, the relevant
paragraphs in 12.8, 12.9, 12.13 and 12.14(a). The applicable relevant
Section 12 paragraphs are referred to throughout this requirement as
follows - (refer to 12.X(a)). Where the disclosure is not in
accordance with a specific Section 12 paragraph, or incorporates a
number of such paragraphs, it will be referred to as follows - (stand
alone).
(5) Mineral Companies must disclose the full name, address, professional
qualifications and relevant experience (including the name and address
of the body recognised by SAMREC of which the Competent Person is a
member) of the Competent Person authorising publication of the
information disclosed in terms of 8.63(m) (refer to 12.9(a)).
(6) Mineral Companies must include a statement that they have written
confirmation from the Competent Person(s) that the information
disclosed in terms of 8.63(m) is compliant with the SAMREC Code and
the applicable paragraphs in 12.8, 12.9, 12.13 and 12.14(a) and that
it may be published in the form and context in which it was intended
(stand alone).
(ii) Disclosure compliance
(1) Where individual operations, projects or exploration activities are
material to:
(a) Mining Companies, then 8.63(m)(iii) must be complied with in full
(if any sub paragraph(s) is/are not applicable, an appropriate
statement(s) must be made); or
(b) Exploration Companies, then 8.63(m)(iii) and 8.63(m)(iv) must be
complied with in full (if any sub paragraph(s) is/are not
applicable, an appropriate statement(s) must be made).
(2) Where individual operations, projects or exploration activities are
not material to Mineral Companies, then only 8.63(m)(iii)(6) and
8.63(m)(iii)(8) require compliance disclosure.
(iii )Mining Companies annual disclosure requirements
Mining Companies must disclose the following information, where
applicable, for the financial year/period under review as part of
their annual reports:
(1) a brief description of any exploration activities, exploration
expenditures, exploration results and feasibility studies undertaken
(stand alone but refer to 12.10(a) for guidance);
(2) a brief description of the geological setting (refer to 12.10(a)(xi)
and 12.10(b)(i)) and geological modelling (refer to 12.10(b)(vi)(2));
(3) a brief description of the type of mining and mining activities,
including a brief history of the workings or operations (refer to
12.10(i) and 12.14(a)(ix));
(4) production figures (refer to 12.14(a)(v)), including a comparison with
the previous financial year/period (stand alone);
(5) a statement that the company has the legal entitlement to the minerals
being reported upon (refer to 12.12(d) and 12.10(e)) together with any
known impediments (stand alone);
(6) the estimated Mineral Resources and Mineral Reserves ("Mineral
Resource and Reserve Statement") (refer to 12.14(a)(ii));
(7) description of the methods and the key assumptions and parameters by
which the Mineral Resources (refer to 12.10(b)(vi)(8)) and Mineral
Reserves (refer to 12.14(a)(xiv) were calculated and classified;
(8) a comparison of the Mineral Reserve and Mineral Resource estimates
with the previous financial year/period"s estimates together with
explanations of material differences (stand alone);
(9) whether or not the Inferred Mineral Resource category has been
included in feasibility studies, and if so the impact of such
inclusion (refer to 12.14(a)(ii));
(10) any material risk factors that could impact on the Mineral Resource
(refer to 12.10(b)(vi)(8)) and Reserve (refer to 12.14(a)(xii))
Statement;
(11) a statement by the directors on any legal proceedings or other
material conditions that may impact on the company"s ability to
continue mining or exploration activities, or an appropriate negative
statement (refer to 12.10(g));
(12) appropriate locality maps and plans (refer to 12.10(d)); and
(13) a summary of environmental management and funding (refer to 12.10(c)
and 12.14(a)(i)).
(iv) Exploration Companies - annual disclosure requirements
In addition to the disclosure requirements in 8.63(m)(iii),
Exploration Companies must disclose the following information as a
part of their annual report, where applicable:
(1) summary information of previous exploration work done by other parties
on the property (refer to 12.10(a)(x));
(2) summary information on the data density and distribution (refer to
12.10(a)(viii));
(3) exploration results not incorporated in the Mineral Resource and
Reserve Statement including the following, where applicable, or a
qualified negative statement:
(a) the relationship between mineralization true widths and intercept
lengths (refer to 12.10(a)(xiii));
(b) data and grade compositing methods and the basis for mineral
equivalent calculations (refer to 12.10(a)(xiii));
(c) for poly-metallic mineralisation or multi-commodity projects,
separate identification of the individual components;
(d) the representivity of reported results (refer to 12.10(a)(xiv);
(e) other substantive exploration data and results (refer to
12.10(a)(xv));
(f) comment on future exploration work (refer to 12.10(a)(xvi));
(g) the basic tonnage/volume, grade/quality and economic parameters
for the exploration target (refer to 12.10(b)(v)); and
(h) sample and assay laboratory quality assurance and quality control
procedures (refer to 12.10(f));
(n) for a property entity the information set out in paragraphs
13.5(b), 13.23 and 13.24.
8.64 The issuer"s auditor shall modify the auditors report as considered
appropriate in cases of non-compliance with any of the disclosure
requirements set out in paragraphs 8.63 (b) to (l).
GAAP Monitoring Panel
8.65 The JSE and SAICA has formed a panel to be known as the GAAP
Monitoring Panel ("GMP") to investigate complaints and advise the JSE
in relation to compliance by issuers with GAAP or IFRS, the JSE"s
required accounting practices (in terms of the Listings Requirements)
and the accounting practices required by the Act. If, after receiving
advice from the GMP, the JSE is satisfied that an issuer has not
complied with any of the above, the JSE will be able, in its sole
discretion:
(a) to censure such issuer in accordance with the provisions
contained in Section 1 of the Listings Requirements; and
(b) instruct such issuer to publish or re-issue any information the
JSE deems appropriate.
8.66 In addition, the JSE will refer any such non compliance to
SAICA, PAAB or any other professional or relevant body.
JSE LIMITED
Amendment to Listings Requirements relating to profit forecasts
The JSE Limited ("JSE") wishes to advise that it is proposing to
remove the requirement for sign-off from auditors under certain
circumstances when listed companies publish profit forecasts.
The main benefits of the proposed amendments are as follows:
- no potential delays in the release of price sensitive information;
- substantial cost savings for listed companies;
- alignment with international best practice;
- this approach will be aligned with that taken with trading statements.
The proposed changes are contained on the JSE"s website, www.jse.co.za
and interested parties are invited to comment by no later than 20
October 2006.
Comments must be in writing and addressed to Andre Visser at
andrev@jse.co.za or faxed to (011) 520-8596.
2 October 2006
_______________________________
*Compliance with IFRS and the AC 500 standards as issued by the Accounting
Practices Board or its successor will be compulsory for financial years
commencing during 2005 and thereafter.
* refer to paragraph 8.3 footnote.
* refer to paragraph 8.3 footnote.
* refer to paragraph 8.3 footnote.
* refer to paragraph 8.3 footnote.
* refer to paragraph 8.3 footnote.
* refer to paragraph 8.3 footnote.
# Compliance with International Auditing and Assurance Standards Board
Standards is compulsory for all financial periods commencing on or after
1 January 2005. See Circular B.1/2004 issued by the Public Accountants"
and Auditors" Board.
Date: 02/10/2006 11:31:28 AM Produced by the JSE SENS Department
