Capital Markets Update




Chris Davis Orica CFO




On Friday 14 December 2018 the Capital Markets Issues Working Group (“the Group”) met with representatives from both AIRA and the G100.

This being the third meeting the key priorities that were focussed on in the session included:-

  1. Consensus management – proposed changes to GN8;
  2. Proposed Best practice for lodging conference presentation to ASX – Draft 5;


1. Consensus management – Proposed changes to GN8

The AIRA Secretariat conducted a survey on the management of Consensus estimates on behalf of the AIRA/G100 Capital Markets Issues Working Group. The survey was conducted to canvass companies’ views on Consensus Estimates and how they are managed in the company.

In total, 71% of respondents believe ASX’s Guidance Note 8 should be updated to reflect structural changes in the sell-side industry and impact on consensus management. Ian Matheson met with ASIC and ASX to discuss the survey results. The Group agreed to drive Best Practice Guidelines on consensus.

Quentin Digby at Herbert Smith Freehills was approached to review the Guidance Note 8. Quentin Digby attended the meeting to address the issues around ascertaining/publishing consensus.

The Group agreed that the proposed changes the to the Guidance Note 8 should focus on the following principles:-

  • Broad approach to the consensus to enable companies to use own consensus methodology if required;
  • Simpler and easier rules to follow;
  • Improvement of market disclosures and market integrity measures;
  • Clearer guidance on publishing the consensus.

The Group agreed that the proposed changes to the Guidance Note 8 should include the following points:-

  • Outliers and out of date analyst forecasts (stale forecasts – older than 3 months) can be removed when can be removed when calculation company consensus estimates if they are not reflective of current market condition;
  • While an entity can exclude an analyst if it can provide a reasonable explanation as to why, the explanation itself must not amount to de facto earnings guidance. For example, an entity should not exclude an analyst’s forecast from the information it publishes just because it considers the forecast to be out of line with their own internal forecasts and other analyst forecasts (i.e. an “outlier”), as this substantially increases the risk that the published information could be regarded as de facto earnings guidance. For the avoidance of doubt, this does not prevent an entity from excluding forecasts because they are materially out of date or contain manifest errors.


In conclusion, it was agreed to update the Guidance Note to include the proposed changes. ASX released for consultations Simplifying, clarifying and enhancing the integrity and efficiency of the ASX listing rules seeking feedback on a major package of proposed listing rule amendments. To prepare a submission, the Group agreed for AIRA to seek member’s feedback.


2. Proposed best practice for lodging conference presentations to ASX – Draft 5

It is recommended best practice to lodge Power-Point presentations given at material events, including such events as company investor days and broker conferences, to ASX. At the May 2018 Macquarie Australian Equities Conference, it was noted that 114 companies that presented, 78% lodged a copy of their Power-Point presentations with ASX. Some of those included material updates, which were not appropriately flagged as such and some presentations were lodged after the presentation was delivered.

The Group reviewed the Draft 5 and agreed to remove the following sentence (page 18, paragraph 3) – if these facilities are not provided, consideration should be given to not attending the conference.


In conclusion, the Group agreed that the Best practice for lodging conference presentation to ASX – Draft 5 should be reviewed and approved by the AIRA Board.


3. Other business

It was noted that UBS was stepping back from Active Equities in Australia and outsourcing it to Yarra Capital. The Group agreed to contact UBS to obtain further information.


4. Next meeting

The next meeting of the Group is unscheduled at this stage with details to follow.