Caribbean Cream Limited (Kremi) dodged suspension in the trading of its ordinary shares three times this year as it submitted its financial statements before the end of the Jamaica Stock Exchange’s (JSE’s) grace period.

The ice cream manufacturer has seen the delay of its third quarter, audited financial statements and first quarter reports all within 2024. The delay was blamed on the implementation of a new ERP (enterprise resource planning) system, which was stated to have impacted its ability to prepare its financial statements on time under the JSE’s rules.

Thus, shareholders who were looking for Kremi’s first report on January 14 were welcomed with a delay notice and a new submission date of February 14. However, a notice on February 14 gave a new submission date of February 28. The report was published on February 29 by the JSE at 1:00 pm or after the market closed.

What’s the significance

According to the JSE’s rules, companies are required to submit a quarterly report every 45 days to the JSE which is promulgated to the wider public. If a company misses that deadline, then they have another 45 days to submit that report or be considered for suspension by the JSE.

Although Kremi’s Junior Market tax break expired in May 2023, it can still be liable to repay any tax remissions it received to Tax Administration Jamaica (TAJ) if it is suspended from trading or is delisted before 15 years have elapsed. So, a suspension could trigger a massive tax liability to TAJ.

Kremi was then required to submit its 2024 audited financials by April 29. The company sent a new notice to the JSE that its audited financials and annual report would be delayed to June 13 and July 26, respectively. However, Kremi missed that deadline as it once again blamed its new ERP system. The company set a new submission date for its audited financials for July 1.

“The delay resulted from implementing the ERP software, which is important to improve the efficiency and performance of the operations,” said Kremi in a July 2 notice on the delay of its audited financials, first-quarter report and annual report.

Kremi then set new deadlines of July 28 for its audited financials, August 29 for its first-quarter report and September 30 for its annual report. Kremi’s audited financials were published by the JSE on July 29.

The reason why Kremi stipulated July 28 as its final deadline was because that was the final day of its grace period under JSE rules with any further delays pushing the company into consideration for suspension in the trading of its shares. The JSE rules give an additional 90 day window for companies to submit their audited financials after they miss their initial 60 or day timeline.

Kremi’s first quarter report for the period ending May 30 was published by the JSE on September 4. A key, noteworthy fact is that despite Kremi breaching the JSE rules for all these delays, it will not face any financial penalties for these breaches, as Junior Market companies are not fined for breaching JSE rules. They only face a write-up in the monthly regulatory report by the JSE’s Regulatory and Market Oversight Division (RMOD). JSE Managing Director Marlene Street Forrest promised to push for changes to this absence of fines in 2022, but no new changes have been announced before her retirement at the end of this year.

Productive Business Solutions Limited (PBS), meanwhile, is currently racking up a $5,000 a day fine until it submits its 2023 audited financials which were due on March 30. The company’s ordinary and preference shares were suspended from trading on July 2 with the company now setting October 31 to submit its audited financials. This delay has been blamed on required restatements of material accounting transactions undertaken by its Costa Rican subsidiary. The company’s 9.75 per cent preference share which was set to mature on July 31 has not been delisted from the JSE as yet.

Another company that is currently suspended is Equityline Mortgage Investment Corporation (ELMIC), which was suspended for a second time this year on July 26. This was due to the company’s auditors withdrawing their auditor’s report. Its limited liability partnership Equityline SPV Limited Partnership has been placed in receivership with KSV Restructuring Inc being put in as the receiver. ELMIC’s board has approved a wind-up of the company. The company’s preference shares are expected to be delisted by January 22, 2025, since any firm which is suspended for more than 180 days by the JSE shall be automatically delisted.

Other companies which have been suspended by the JSE so far this year include iCreate Limited, EduFocal Limited, and IronRock Insurance Company Limited. These suspensions come on the heel of several accountants calling for the JSE to revise the auditing timelines amidst continued pressure in the profession which has been gripped with a shortage of talent and increasingly complex accounting standards.

Kremi posts strong

After enduring a relative slowdown in business and a near-$1-billion capital expenditure over the last two years, Kremi was able to grow its revenue by 26 per cent to $763.60 million with net profit increasing 129 per cent to $15.33 million. It should be noted that the company’s $20.44 million in profit before taxation (PBT) represents 42 per cent of the company’s 2024 PBT of $48.21 million.

Kremi’s total assets were down six per cent in the quarter to $2.37 billion with the company’s property, plant and equipment now valued at $1.74 billion. The company’s cash ended the period at $97.26 million. Kremi’s total liabilities were down 10 per cent to $1.49 billion with total debt at $1.14 billion. Shareholders equity was $877.69 million.

“Receivables were affected by collections due to initial issues with the implementation of the new ERP system. The ERP system is an IT software that enables the management of all departments to include a fully integrated computing solution across the business. This new ERP system is now fully implemented, and we are confident that the ongoing standardization of our processes will continue to drive improvement in efficiency and productivity going forward,” said the pre-amble in the Q1 report signed by chairman Dr Matthew Clarke and CEO Christopher Clarke.

Dr Clarke became the new chairman on November 3 when he took over from his brother Christopher. Christopher became the executive chairman in March 2020, taking over from his mom Carol Clarke Webster.

Kremi’s stock price has traded up 13 per cent since the publication of its first-quarter report to $3.45. However, this leaves the stock down 25 per cent year to date with a market capitalisation of $1.31 billion. The company’s May 2013 initial public offering (IPO) price was $1.