The information policy followed by KNP BT over its profit development for 1996 did not breach the Listing Rules.

This conclusion emerged from the investigation mounted by AEX. KNP BT's conduct attracted a good deal of attention because the secondary placement of the interest of MacMillan Bloedel took place soon after KNP BT's publication of 25 April 1996.

The central issue in the investigation was whether KNP BT had breached section 28h of the Listing Rules. This section requires an issuer to make an immediate public announcement concerning any fact or occurrence involving it where such fact or occurrence might be expected to have a substantial effect on the price of its shares.

The judgement whether the information is price-sensitive in the sense of section 28h of the Listing Rules is primarily a matter for the issuer itself. If the issuer is aware of certain facts which are relevant to its profit development, it must exercise a degree of caution in the interpretation of the significance of those facts on future developments must be sufficiently certain before any interim announcement is issued. It is also important that in judging the price-sensitivity of a piece of information, the issuer takes into account expectations about future developments and perhaps also any announcements made in the past. Because of the nature of this judgement, the issuer is entitled to a certain amount of leeway in deciding on its policy.

In its investigation into KNP BT's conduct, AEX was unable to establish that KNP BT should have seen the combination of the developments in the first months of 1996 and the expectations for the future as facts or circumstances in the sense of section 28h of the Listing Rules that could be expected to have a substantial effect on the price of the shares. The fact that it subsequently turned out that the unfavourable developments of the early months of 1996 would become even worse, so taking on a demonstrably structural character, could not, in AEX's opinion, be the decisive factor in judging KNP BT's conduct in the period in question. When developments occur like those in the present case, the time when it has become sufficiently clear that this is not just an incidental phenomenon but signals the start of a trend, is to some extent arbitrary. Since therefore KNP BT could reasonably decide that the unfavourable profit developments of the early months did not necessarily and demonstrably indicate a trend, Amsterdam Exchanges believes that the results of the investigation can not lead to the conclusion that section 28h of the Listing Rules was breached.

In the course of the investigation some time was spent on the question whether the secondary placement of the MacMillan Bloedel holding should have served as an indication to KNP BT to come out with an interim announcement on profit development. Section 28h of the Listing Rules does not require an issuer to inform investors about profit development is such as to have a significant influence on the price of the issuers shares. AEX clearly recognises that when there is a secondary placement of a significant holding it is preferable, in the interests of investors, that the undertaking should issue an interim announcement of its profit development. If this is not convenient for the issuer, and certainly when the issuer takes no part in the secondary placement, the undertaking should preferably inform investors that no announcement about profit development can be made at the time. This may mean that the issuer only comes out with an interim announcement concerning profit development when it judges it is in a position to give a reliable impression. As previously indicated, the Listing Rules currently impose no such requirement. This last is a reason for AEX to put the subject on the agenda for the regular consultations with issuers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Paul Arlman, Amsterdam Exchanges AEX Amsterdam: 00 31 20 550 4004 or Paddy Manning, St James Corporate Communications London: 44 171 436 4101.