ASX Proposes New Reporting Requirement For Initially Cash-Rich Companies

Australian Stock Exchange ("ASX") today announced that the market will be consulted shortly about the proposed introduction of a new listing rule. This proposed listing rule is intended to apply to those companies that were admitted since 1 July 1999* where the company had assets at least half of which were in the form of cash or in a form readily convertible to cash. The new rule will require these companies to keep shareholders fully informed by providing a quarterly cash flow statement in the first two years following their admission. "The reason for the new rule is that these companies have businesses in the early stages of development, typically based on new technology or other intellectual property investments, so information about their cash flows is highly relevant for investors", said Mr John McMurtrie, ASX's Executive General Manager, Companies. "The companies are already required to provide information about whether they have used cash that they had at the time of admission in a way consistent with business objectives in their annual reports for the first two years following their admission. "Additionally, all ASX listed companies are already required to include a summary cash flow statement in their half yearly and preliminary final reports to ASX. "However, we believe that investors in these particular companies would benefit by getting more detailed cash flow information more frequently. "We think that this will help investors to better understand the extent to which these companies are achieving their stated goals," he added. The exposure draft for the new rule will be available in early January 2000 on ASX's website and interested parties are asked to respond by 14 February 2000. If the listing rule is approved, the first of the quarterly cash flow reports will be available for the March 2000 quarter, by 30 April 2000. The date of 1 July 1999 has been chosen as it means that equities admitted before 1 September 1999 on the basis of a waiver from the requirement for binding contracts will come within the rule.