In June, the Exchange published FAQ series 23 on disclosure in a new applicant’s listing document of its unaudited net profits since the end of its audited track record period.

The FAQ clarify that a listing applicant will be treated as making a profit forecast/estimate if it discloses unaudited net profit or other figures that enable investors to estimate the applicant’s profits/losses since the latest audited period (e.g., revenue amount and net profit margin percentage). Any such disclosure should therefore be reviewed and reported on by the reporting accountants and the sponsor, and their reports must be set out in the listing document.

Under the Listing Rules, a profit forecast/estimate appearing in a listing document must cover the same period as the applicant’s financial year, or exceptionally its first half (in which case the applicant must undertake that the interim report for that half year will be audited).

Therefore, if an applicant includes a profit forecast/estimate for a different period (e.g., a three-month period), it should either obtain a waiver, or disclose the interim financial statements and notes in the listing document with a management discussion and a review report by an independent auditor.

If the applicant’s unaudited financial information after the track record period has already been published in another jurisdiction, it must also be included in the listing document together with a review report by an independent auditor.

For a copy of the FAQ, please follow this link: http://www.hkex.com.hk/eng/rulesreg/listrules/listrulesfaq/Documents/FAQ_23.pdf