• PROFIT FORECASTS AND QUANTIFIED FINANCIAL BENEFITS STATEMENTS

    • PARAGRAPH 27 PARAGRAPH 27

      NB The requirements of Paragraph 27 do not apply to a profit forecast or a quantified financial benefits statement published by a cash Bidder.

      • 27.1 REQUIREMENTS FOR PROFIT FORECASTS AND QUANTIFIED FINANCIAL BENEFITS STATEMENTS

        (a) Except with the consent of the Panel, if, during an offer period (or in an announcement which commences an offer period), the Target or a securities exchange Bidder publishes a profit forecast or a quantified financial benefits statement, the document or announcement in which the forecast or statement is first published must include:
        (i) a report from its reporting accountants stating that, in their opinion, the forecast or statement has been properly compiled on the basis stated and (in the case of a profit forecast only) that the basis of accounting used is consistent with the company's accounting policies; and
        (ii) a report from its financial adviser(s) stating that, in its (or their) opinion, the forecast or statement has been prepared with due care and consideration.
        (b) Except with the consent of the Panel, if the Target or a securities exchange Bidder published a profit forecast before the offer period commenced but after it received or made an approach with regard to a possible offer, the offer document or Target board circular (as appropriate), or any earlier document or announcement published during the offer period in which the profit forecast is referred to, must repeat the profit forecast and include the reports from its reporting accountants and financial adviser(s) specified in Paragraph 27.1(a)(i) and (ii).
        (c) Except with the consent of the Panel, if the Target or a securities exchange Bidder published a profit forecast before it received or made an approach with regard to a possible offer, the offer document or Target board circular (as appropriate), or any earlier document or announcement published during the offer period in which the profit forecast is referred to, must:
        (i) repeat the profit forecast and include a statement by the directors that it remains valid and confirmations by the directors that the profit forecast has been properly compiled on the basis of the assumptions stated and that the basis of accounting used is consistent with the company's accounting policies (the "directors' confirmations"); or
        (ii) include a statement by the directors that the profit forecast is no longer valid and an explanation of why that is the case; or
        (iii) include a new profit forecast for the relevant period and the reports from its reporting accountants and financial adviser(s) specified in Paragraph 27.1(a)(i) and (ii).
        (d) See also Paragraph 27.2(b).

      • 27.2 PROFIT FORECASTS FOR FUTURE FINANCIAL PERIODS

        (a) The Panel will normally grant a dispensation from the requirement to include reports from reporting accountants and the financial adviser(s) in the case of a profit forecast for a financial period ending more than 15 months from the date on which it is, or was, first published. Where such a dispensation is granted, the offer document or Target board circular (as appropriate), or any earlier document or announcement published during the offer period in which the profit forecast is referred to or first published, must include the directors' confirmations referred to in Paragraph 27.1(c)(i). Alternatively, in the case of a profit forecast which was published before the offer period commenced, the document or announcement may include a statement by the directors that the profit forecast is no longer valid and an explanation of why that is the case.
        (b) Except with the consent of the Panel, if, during the offer period (or in an announcement which commences an offer period), the Target or a securities exchange Bidder either publishes for the first time or repeats a profit forecast for a future financial year, the document or announcement must include a corresponding profit forecast for the current financial year and for each intervening financial year. The requirements of Paragraph 27.1(a), (b) or (c)(i) (as appropriate) will apply to each such forecast for a financial year ending 15 months or less from the date on which it is, or was, first published and the requirements of Paragraph 27.2(a) will normally apply to each such forecast for a financial year ending more than 15 months from the date on which it is, or was, first published.

      • 27.3 COMPILATION OF PROFIT FORECASTS AND QUANTIFIED FINANCIAL BENEFITS STATEMENTS

        (a) Any profit forecast or quantified financial benefits statement must be properly compiled and must be prepared with due care and consideration. The profit forecast or quantified financial benefits statement, and the assumptions on which it is based, are the responsibility of the relevant party to the offer and its directors.
        (b) A profit forecast (and the assumptions stated) or a quantified financial benefits statement (and the details included in accordance with Paragraph 27.6) must be:
        (i) understandable: it must not be so complex or include such extensive disclosure that it cannot be readily understood;
        (ii) reliable: it must be supported by a thorough analysis of the Target's and/or the Bidder's business and must represent factual and not hypothetical strategies, plans and risk analysis; and
        (iii) comparable (in the case of a profit forecast only): it should be capable of justification by comparison with outcomes in the form of historical financial information.
        (c) A forecast of profit before tax should disclose separately any non recurrent items and tax charges if they are expected to be abnormally high or low.

      • 27.4 ASSUMPTIONS AND BASES OF BELIEF

        (a) When a profit forecast is included in any document or announcement published during an offer period (or in an announcement which commences an offer period), the document or announcement must include the principal assumptions on which the profit forecast is based.
        (b) The assumptions included for a profit forecast or bases of belief included for a quantified financial benefits statement should provide useful information as to its reasonableness and reliability. They must:
        (i) be readily understandable;
        (ii) be specific and precise; and
        (iii) not relate to the general accuracy of the estimates underlying the profit forecast or the quantified financial benefits statement.
        (c) There must be a clear distinction between assumptions or bases of belief about factors which the directors (or other members of the company's management) can influence and those which they cannot influence.

      • 27.5 PROFIT ESTIMATES

        Paragraph 27.1 does not apply to a profit estimate included in:

        (a) a preliminary statement of annual results which complies with the relevant provisions of the Listing Regulations;
        (b) a half yearly financial report which complies with the relevant provisions of the rules of ADGM's securities exchange; or
        (c) an interim management statement, or other interim financial information, which is published by virtue of a regulatory requirement and which has been prepared in accordance with the reporting framework set out in International Accounting Standard 34.

      • 27.6 DISCLOSURE REQUIREMENTS FOR QUANTIFIED FINANCIAL BENEFITS STATEMENTS

        When a quantified financial benefits statement is included in any document or announcement published during an offer period (or in an announcement which commences an offer period), the document or announcement must include:

        (a) the bases of belief supporting the statement (identifying the principal assumptions and sources of information);
        (b) an analysis, explanation and quantification of the constituent elements sufficient to enable the context and relative importance of those elements to be understood;
        (c) a base figure where any comparison is made with historical financial performance or with existing cost bases and structures;
        (d) details of any disbenefits expected to arise;
        (e) in the case of a statement falling under paragraph (a) of the definition of a "quantified financial benefits statement", a statement that the expected financial benefits will accrue as a direct result of the success of the offer and could not be achieved independently of the offer;
        (f) an indication of when the financial benefits are expected to be realised;
        (g) an indication of whether the expected financial benefits will be recurring, clearly identifying any non recurring benefit(s); and
        (h) the recurring and non recurring costs of realising the expected financial benefits.

      • 27.7 PUBLICATION OF INVESTMENT ANALYSTS' FORECASTS ON WEBSITES

        (a) Where, during the offer period, the Target or a securities exchange Bidder publishes on its website profit forecasts relating to it that are derived from investment analysts' forecasts, the forecasts on the website must be based on all forecasts provided by investment analysts who have published such forecasts, excluding:
        (i) any forecasts which pre date the publication of the company's latest preliminary statement of annual results or half yearly financial report (as appropriate); and
        (ii) any forecasts by investment analysts whose employer is controlled by, controls or is under the same control as any party to the offer or a connected adviser to any party to the offer.
        (b) In addition to the exclusions in paragraph (a), an investment analyst's forecast may exceptionally be excluded from the forecasts on the company's website if it is wholly anomalous or has been prepared on a wholly different basis from that of the other investment analysts.
        (c) Except with the consent of the Panel, the following requirements must be complied with (failing which, all investment analysts' forecasts must be removed from the website upon the commencement of the offer period):
        (i) for each line in respect of which forecasts are published on the website, the highest and lowest figures forecast by any investment analyst must be stated, together with the arithmetic mean of all investment analysts' forecasts (a "consensus forecast");
        (ii) the name of each organisation whose forecasts have been included in the calculation of the consensus forecast, and the dates of the forecasts, must be stated;
        (iii) if any analyst's forecast has been excluded from the calculation of the consensus forecast, the name of the organisation, the date of the forecast and the reason for its exclusion, must be stated;
        (iv) during the offer period, the relevant section of the website must be kept up to date by including any new forecasts promptly after their publication and promptly excluding any forecasts which pre date the publication of the latest preliminary statement of annual results or half yearly financial report; and
        (v) it must be prominently stated that the investment analysts' forecasts are not endorsed by the company and that they have not been reviewed or reported on in accordance with the requirements of Paragraph 27.1(a).
        (d) Subject to Paragraph 27.8, any reference to or quotation from a consensus or other third party forecast, other than publishing investment analysts' forecasts on a website in accordance with the requirements of this Paragraph 27.7, will be treated as having been endorsed by the Target or Bidder that published that profit forecast.

      • 27.8 REFERENCES TO CONSENSUS FORECASTS RELATING TO ANOTHER PARTY TO THE OFFER

        (a) Except with the consent of the Panel, if, during the offer period (or in an announcement which commences an offer period), a party to the offer ("party A") wishes to refer to investment analysts' forecasts relating to any other party to the offer ("party B"), party A must refer to either:
        (i) a consensus forecast (see Paragraph 27.7(c)) published on party B's website in accordance with the requirements of Paragraph 27.7; or
        (ii) if no such consensus forecast has been published on party B's website, a consensus forecast compiled by party A in accordance with the requirements of Paragraph 27.7.
        (b) Where party A has referred to a consensus forecast relating to party B, any subsequent reference to that consensus forecast by party B will not be subject to Paragraph 27.1(a), provided that party B does not endorse the consensus forecast.
        (c) Any document or announcement which includes a reference by party A to a consensus forecast relating to party B must make clear whether or not the reference is being made with the agreement or approval of party B. Where the consensus forecast is referred to in any document or announcement which is published by party A with the agreement or approval of party B, or at a time when the offer is a recommended offer, the consensus forecast will be treated as having been endorsed and published by party B and Paragraph 27.1(a) will therefore apply.