Even with the Jamaica Stock Exchange (JSE) ending extensions in March for audited financial statements and annual reports, investors have been left in the dark on the status of a number of listed companies who delayed publishing updates citing the JSE extension.

Over the last two years JSE-listed companies benefited from a 45-day extension in the event of a delay in filing their audited financial statements and annual reports in the stipulated timelines. While this gave companies the opportunity to work with their external auditors and valuation consultants to file these documents, it also created a new headache for investors as they were left in the dark on the company’s status after the year end. There was no requirement that any company which sought the 45-day extension window be required to file an unaudited fourth-quarter report as a pre-condition to receiving the additional time.

A recent example of this situation was VM Investments Limited, who sought an extension beyond the March 1 submission window due to system-related issues noted in its first delayed submission filing. The company typically files its audited financials within the 60-day window as per JSE rule 407, rather than file an unaudited fourth-quarter report in 45 days and submit audited financials in 90 days from the end of financial year.

After four additional delay notices, VMIL’s audited financials were posted on the JSE on May 4. The last available financials that would have been available to investors would have been on November 11, 2022.

A similar situation would have occurred with Dolphin Cove Limited, KLE Group Limited and Jetcon Corporation Limited, whose investors were left in the dark for almost six months.

When Jamaica Observer asked why there was no amendment to the JSE extension policy to require an unaudited fourth quarter submission to receive the extension, JSE Managing Director Marlene Street-Forrest in an e-mail said that, “The JSE adopted a similar approach in respect to the offering of extension relief for the filing of audited financial statements and annual reports in 2021 to 2022 to support listed companies and their audit partners who reported challenges in meeting their obligations. With the discontinuation of extension relief as at March 31, 2023, we will continue to monitor whether companies who elected to forego fourth-quarter filings are also delaying the submission of audited financial statements.”

Some company principals, who spoke with the Business Observer on the condition of anonymity, indicated that they’d prefer to wait on the audited financials to be published than release an unaudited fourth-quarter report that is drastically different from its audited financials.

However, IronRock Insurance Company Limited, which has typically published in the 45-day and 90-day timelines, has always included a note when there’s a difference between the unaudited report and audited report. The company had reported a net profit of $53 million in its unaudited fourth-quarter report for 2022, but the audited financials instead had $28 million for the full year. It explained that this difference was due to actuarial and income tax adjustments.

Even MPC Caribbean Clean Energy Limited, which saw its reported net profit in its unaudited financials spin into a loss in its audited report, explained the difference in the report attached to its audited financials.

This situation has drawn the ire of Ryan Strachan, vice-president of investor relations at GK Capital Management, who tagged the JSE on Twitter on April 1 about the absence of any information being furnished by companies whose audited financials were delayed.

“Many have not even released Q4 numbers either. This in my estimation has investors trading these stocks blindly as we are now at the end of Q1 2023, and we have no idea of how these companies are doing past their announcements or lack thereof. This is untenable in my opinion. It is a serious circumstance that I hope you find it fit to address expeditiously,” Strachan tweeted.

Street-Forrest added, “The 10 listed companies who have not filed took advantage of the final extension relief and in doing so were required to notify the market of the delay and the extent of the delay. They are also required to extend the blackout period for dealings by their insiders.”

While VMIL would have been subject to a fine of $5,000 per day once they exhausted the 45-day extension as a Main Market company, every Junior Market company which had delays beyond the same extension timeline or for any breach would not have been fined.

The JSE managing director had told the Business Observer last June that fines were going to be put in place if they breached any rules. However, the JSE’s 2022 annual report only shows six proposed rule changes under the chairman’s report for the regulatory and oversight committee. One rule change was withdrawn, three were awaiting the Financial Services Commission (FSC) no-objection to enact the amendment, and two were under review.

In the meantime, General Accident Insurance Company Limited and IronRock’s first-quarter financials have been delayed by a month as they work to implement IFRS (International Financial Reporting Standards) 17. Image Plus Consultants Limited’s 2022 audited financials were amended post-publication to disclose transaction costs and dividends paid, while JFP Limited’s had revision notes due to some figures being incorrectly stated, though this didn’t change the financial position for 2022.

In addition to ongoing rule development to support market efficiency, Street-Forrest said that for this year the JSE is in the process of further strengthening its market surveillance functions while enhancing collaborative efforts with the FSC as it relates to market conduct.

“Also, it is critical for the JSE to continue its investor education drive as to steps they can take to protect their investments on the exchange. We have enhanced this process through publications on our website to educate investors, and with the provision of client portals for investors to be notified when there are transactions on their accounts, and to make queries,” Street-Forrest explained.