media release (21-355MR)

ASIC urges greater focus on material business risk disclosure in financial reports


ASIC has reminded company directors about the importance of a high-quality operating and financial review (OFR), after ASIC’s recent review of financial reports for the year ending 30 June 2021 identified some listed entities that did not disclose material business risks.

The OFR, which accompanies the financial report, helps inform the decision-making of investors by disclosing material risks that may affect the achievement of a listed entity’s strategies and prospects.

Directors are reminded the OFR provides an important complement to the financial report by telling the story about the drivers of the company’s results, its strategies and prospects. This includes the material non-generic risks to those achieving the financial prospects described.

Entities that have made recent announcements about material business risks after ASIC made inquiries are:

  • Betmakers Technology Group Limited (as part of its investor presentation on 22 November);
  • Ashley Services Group Limited (on 2 December); and
  • IQ3Corp Limited (on 15 December).

ASIC will continue to closely review financial reports to ensure that entities are correctly disclosing their material business risks.


The financial report of a listed entity must contain information that shareholders would reasonably require to make an informed assessment of the entity’s operations, financial position and business strategies, and prospects for future financial years.

The part of the directors’ report containing this information is referred to as an ‘operating and financial review’.

ASIC Regulatory Guide 247 Effective disclosure in an operating and financial review (RG 247) provides guidance for directors of listed entities on providing useful and meaningful information to investors in an OFR.

In particular, paragraph 62 of RG 247 notes:

“It is important that a discussion about future prospects is balanced. It is likely to be misleading to discuss prospects for future financial years without referring to the material business risks that could adversely affect the achievement of the financial prospects described for those years.”

Paragraph 63 of RG 247 says:

An OFR should:

  • only include a discussion of the risks that could affect the entity’s achievement of the financial prospects disclosed, taking into account the nature and business of the entity and its business strategy; and
  • not contain an exhaustive list of generic risks that might potentially affect a large number of entities.”
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