Practice Note 4.1 Profit Forecasts and Right of First Refusals
Issue date: 14 September 2011
Effective date: 29 September 2011
1.1 This Practice Note provides guidance in connection with profit forecasts and right of first refusal arrangements for real estate investment trusts (REITs) and business trusts (the "Trusts")
2. Profit Estimates, Forecasts and Projections
2.1 Listing Rule 409(3) states that the annual accounts of the investment fund for each of the last 3 financial years, if applicable must be submitted when applying for a listing. In the event the investment fund is unable to provide the annual accounts for each of the last 3 financial years, the investment fund is expected to provide profit estimates, forecasts and/or projections.
2.2 Listing Rule 609(b) further states that the proforma income statement or statement of comprehensive income should be presented for the latest 3 financial years and for the most recent interim period (if applicable) as if the restructured group had been in existence at the beginning of the period reported on. The proforma statement of financial position should be presented as at the date to which the most recent proforma income statement or statement of comprehensive income has been made up. In the event the issuer is unable to present the required proforma financial information, the Exchange may request for the provision of profit estimates, forecasts and projections.
2.3 As a guide, the Exchange will normally expect up to 2 years of full year profit estimates, forecasts or projections to be provided in relation to Rule 409(3) and Rule 609(b).
3. Right of First Refusals ("ROFRs")
3.1 For any disposal of assets owned by the controlling unitholder and/or any of its subsidiaries that would fall within the investment mandate ("the competing assets"), a ROFR granted by the controlling unitholder to the Manager of the Trust will effectively mitigate conflicts of interest when the ROFR:—
(a) gives the Trust the first right to acquire the competing assets from the controlling unitholder and/or any of its subsidiaries; and
(b) is valid for as long as (i) the Manager remains the manager of the Trust; and (ii) the controlling unitholder together with its related corporations, remains a controlling shareholder of the Manager,
where "related corporation" has the meaning ascribed to it under the Companies Act.