Some companies that are listed on the Jamaica Stock Exchange are routinely late in submitting their quarterly and annual financial statements to the exchange, a violation which analysts say robs the market of an essential ingredient for efficient operation: timely information.

But over the past few weeks, even companies that have had an established corporate culture of early reporting, have ran afoul of this important disclosure rule.

Indeed, within the last week alone, over a dozen companies were singled out as being late in submitting either their 2005 audited financial statements or fourth quarter statement. This represents nearly a third of the 40 companies that trade on the JSE.

Those that have been late:

. Salada Foods,
. First Caribbean International Bank
. Caribbean Cement Company
. Dyoll Limited
. First Jamaica Investments
. Gleaner Company Limited
. Pan Jamaican Investments Limited
. Seprod Limited
. CMP
. Trinidad Cement Limited
. Jamaica Public Service Limited
. Jamaica Livestock Association.

Those with outstanding fourth quarter report:

. CMP Industries
. First Caribbean International Bank (Jamaica)
. Salada Foods Limited
. Jamaica Livestock Association

Listed firms are given 90 days after their yearend to submit their audited financial statement, after which they are considered late. If they are late for 100 days, trading in their stocks can be suspended by the JSE.

Marlene Street-Forrest, general manager of the JSE, told the Business Observer that companies were required to inform the exchange of any pending lateness in their report as soon as they were aware of it.

"The probability, the circumstance and the extent, those are the conditions that we ask," said Street-Forrest. "The company must simultaneously advise the market by putting an ad in the print media advising shareholders of the delay, the probable extent of the delay and where it can be stated, why there is a delay."

Street-Forrest added that, as part of its drive for transparency, the JSE "also continuously reports the company as late with their submissions until the submission is produced".

Companies are usually late for a wide variety of reasons. Take the case of Life of Jamaica, a firm that usually reports its financial statements within the required time. LOJ released its numbers on April 5 - after being late for a few days.

Its CEO, Richard Byles, told the Business Observer that the delay was due to a combination of factors: the company's extensive acquisitions in 2005 and the accounting policies that were associated with it; and new insurance company requirements of the International Financial Reporting Standards (IFRS).

LOJ's acquisitions were:

. 51 per cent of Pan Caribbean Financial Services,

. 51 per cent of Cayman General Insurance Company (CGI),

. the insurance and pension management business of First Life.

"These three transactions on their own made the accounts more complicated than they were in 2004, 2003 and so forth," Byles told the Business Observer. "In particular, there is International Accounting Standard number 38 which speaks about intangible assets which arrive on the merger or combination of businesses.it is a standard that in Jamaica, you don't have instances of applying it."

Byles said that LOJ may be the first of Jamaica's publicly traded firms to which the new accounting standard was applied in the way it did, and that there was another requirement - "number 4" - for insurance companies to separate revenue from insurance business from that of investment business.

"Previously this didn't exist.this is the first year, so we had to dive back into our accounting numbers and separate out all of our insurance contracts," said Byles. "Indeed I will venture to say that for all the publicly listed companies, LOJ may be the first one that had to be tested on that standard. I don't know of another public company that did an acquisition in that manner."

Carib Cement faced a different form of challenge. The company, whose results became late after the end of March, has promised to have them ready by May 31.

The cement manufacturer told the JSE that an IT problem had caused the lateness of the publication, with the legal and corporate affairs manager Cordia Constable, arguing that the lateness was unusual.

"We have published all our results on time (before this)," Constable told the Business Observer. "When you are doing an audit for the entire year, there are several steps you have to take and several things you have to take into consideration."

It is not clear, what, if any impact, the well-publicized problems associated with the production and marketing of sub-standard cement, had on the delay in the publication of this company's results.

Carib Cement also faces potentially damaging financial consequences, including the temporary suspension of its monopoly market with the significant reduction in the duty on imported cement. There have also been threats of lawsuits from companies that have suffered losses due to the use of the defective cement.

Salada Foods, one of the firms that is late in submitting its report said there was no specific reasons, and that the financial statements were being worked on.

"There is no real reason, the audited accounts have been handed in and the annual report is being put together as we speak," said John Rosen, general manager. "It should be out very shortly, within the next week or two."

Officials of listed companies say that they work hard each year to ensure that they meet the deadline established by the JSE. In most cases, they succeed.

The Bank of Nova Scotia (BNS) for example, often publishes its audited statements just a few weeks after its yearend - and long before the 90-day period.

In fact, Scotiabank and GraceKennedy, were last year recognized by the JSE at its Best Practices Award, in the category of 'best corporate disclosure.' The annual award is intended by the exchange to foster transparency and sound corporate governance among listed institutions.

"We treat corporate governance and compliance very seriously at Scotia," said corporate secretary David Noel. "In relation to the audited account, our finance department works closely with auditors to ensure that all reporting deadlines are met."

Dennis Cohen, deputy group managing director at the National Commercial Bank (NCB), another institution that has had a history of early publications, told the Business Observer that good financial management was the reason.

"NCB recognizes the importance of ensuring that our stakeholders have access to up-to-date information on the financial standing of the company, as this facilitates better transparency and reflects corporate governance," said Cohen. "We have therefore, more and more, increased our emphasis on publishing reports in a timely manner and will certainly strive to continue doing so."

The rash of late reporting by listed companies coincides with a period in which stock values on the JSE have been particularly depressed.

At the close of trading on Friday, April 07, only four of the 40 listed firms reported appreciation in the value of their stocks since the beginning of the year.

Though no one is drawing a parallel between issues of disclosure and the performance of stocks, some analysts insist, that more information issued on a timely basis, was always good for the market.

"The only thing we (investors) can depend on is published information from the company," charged Vindel Kerr, international corporate governance trainer, researcher and consultant. "That is why it is important for public companies to make their financial results available."

Added the JSE's Street-Forrest: "Decisions are made by shareholders based on market information, so the JSE encourages - to ensure that we have an orderly market - that accurate information is submitted to the market on time. We can say that an audited financial statement gives the market an amount of confidence."

Kerr noted that the consequence of chronic lateness - ultimately suspension - was damaging to investors.

"Late disclosure or perpetual non-disclosure will cause the company to be de-listed," he said. "What this means is that the company does not buy or sell stocks and the investment is literally frozen. If it was de-listed at a price of $2, when it is to be re-listed, it is going to start at $2, even if it is off the market for 20 years."

Kerr said that consistent lateness could be a sign of a deeper problem at a company.

"When a company is consistently late with financial reports, it is an early sign that there are problems looming which the public will soon be made aware of," he said. "It is a clear sign of trouble. When you are doing well, when you are organized, when your management is prudent, something like your books is the first thing you give priority to."

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