media release (12-228MR)

ASIC proposes guidance for operating and financial reviews


ASIC is proposing guidance to assist directors in ensuring that a key part of listed entity annual reports provides information and analysis useful to investors.

Consultation Paper 187 Effective disclosure in an operating and financial review (CP 187) proposes guidance on the operating and financial review (OFR).

The OFR forms part of a listed entity’s annual report and is required to contain information investors would reasonably require to make an informed assessment of the entity’s operations, financial position, and business strategies and future prospects.

‘There are opportunities for listed companies to make their operating and financial reviews more useful to investors and the market,’ ASIC Commissioner John Price said.

‘While other documents like investor presentations and analyst briefings also provide important information for investors, these are generally presented as slide shows without supporting narrative and are not a substitute for providing information that is all in one place and accessible with the annual report.'

‘ASIC’s proposed guidance is not intended to add unnecessary length to annual reports, but rather is intended to promote more meaningful information and analysis for investors.’

‘Encouraging good, clear, insightful information and analysis furthers ASIC’s aims of promoting confident and informed investors and financial consumers and fair and efficient markets,’ Mr Price said.

CP 187 also includes proposed guidance on the use of an exemption from disclosing information on business strategies and prospects that is likely to cause unreasonable prejudice to the listed entity.

Submissions close 23 November 2012 with final guidance expected in time to assist directors for the 30 June 2013 reporting season.


The OFR provides analysis and narrative in one place that supplements and complements the information contained within an entity’s financial report. Australia’s regulatory regime often allows listed entities to access capital from investors without requiring the entity to issue a full prospectus. Effective periodic disclosure is part of the framework upon which this capital raising regime is built. The OFR requirements play an important part in that effective periodic disclosure.

It is proposed that the OFR be tailored to the circumstances of each entity, but each OFR should provide insightful information and analysis. This includes explaining drivers of the total income and income for major operating segments and also the underlying drivers of an entity’s performance more generally.

ASIC has reviewed similar information required internationally in developing its guidance.

ASIC does not expect companies to start using the guidance during the consultation process.

Download Consultation Paper 187

Media enquiries: Contact ASIC Media Unit