23 May 2012

FMA consultation paper issued

7:04 am on 23 May 2012

The Financial Markets Authority says underlying and normalised profit that are used in prospectuses to raise money or takeover documents should not misled investors.

The FMA has issued a consultation paper on disclosing financial information that is not generally accepted accounting practise.

It follows earlier guidance from the authority on the use of measures such as underlying profit, which has become more common in recent years, and has raised fears that the terms may not give an accurate picture of a firm's performance.

The FMA says these measures can be useful, but points out net profit after tax or loss should always be the bottom line and given prominence in any document.