GEORGE( left ) : Investors and the public need not be alarmed that the fourth quarter results are slightly delayed. HYLTON( right ): The timely release of our financials was something that I committed to from the start of the year.
IT'S A topic knowledgeable shareholders complain about repeatedly at annual general meetings - the need for public companies to publish their results in a timely manner, which is critical for the efficient functioning of the market.
In the past the Jamaica Stock Exchange (JSE) has suspended and delisted companies for failing to report their financial results. Outside of the suspension of companies from the exchange when the results are long overdue, there are no sanctions if, for example, a company is habitually late with its reports.
According to the JSE, seven companies have been late with their financial reports at some point during the current calendar year. The exchange has just over forty listed companies.
Ciboney Group Limited, CMP Industries, Lascelles deMercado and Salada Foods have been late with either their fourth quarter reports or their annual results. Montego Freeport, Palace Amusement Company and Jamaica Broilers have also been late this year.
A senior executive at a large brokerage house told Wednesday Business "It is the responsibility of companies on the exchange to observe the filing requirements deadlines as it speaks to good corporate governance." The executive pointed out that "the late filing of financial reports is detrimental to investors, because if there is anything negative in the company's results the investor should know from early on."
That's the view shared by leading emerging markets and corporate governance expert, Vindel Kerr. "If you have anything detrimental to the company you can't keep it in-house for long, since insiders might take advantage of it at the expense of investors."
Kerr argues that "financial statements are of utmost importance where the investing public is concerned, plus a host of other stakeholders who are claimants on the company, directly and indirectly." He gives, as an example, "financial analysts who study macro-economic trends and have to advise their clients."
Wednesday Business spoke with two of the companies whose results are late - Lascelles and Salada. Neither Ciboney nor CMP Industries responded to queries made.
Company secretary of Lascelles, Jane George, explained that her company is late with its results because of changes in JSE's requirements as it pertains to the reporting of the fourth quarter results. She noted that the JSE no longer required companies to file their fourth quarter results once the audited year-end results are filed within ninety days.
She said Lascelles "had been working towards its usual reporting timelines based on the [JSE's custom] and is awaiting certain final valuations from third parties [such as] actuarial valuations necessitated by the IFRS Regulations" before the results are made available.
Noting that "investors and the public need not be alarmed that the fourth quarter results are slightly delayed," the executive, emphasised that "As a long-standing member of the JSE, Lascelles deMercado is striving to meet and uphold principles of good corporate governance, which are the hallmark of a well-regulated modern stock exchange."
Managing director of Salada, John Rosen, explained that the coffee exporter was late because of "the extra activity taking place within the finance department," as a result of the end of Salada's financial year (September 30).
The country's two largest banks - NCB and Scotiabank - recently released their results a month after the end of their financial year.
Commenting on NCB's early submission of its results, managing director, Patrick Hylton, said "The timely release of our financials was something that I committed to from the start of the year, given historical feedback on this issue. ...This is to my mind, an important indicator of the performance of financial institutions, particularly those that are publicly listed. NCB, as an organisation, is committed to maintaining a high standard in this regard, as it reflects good corporate governance and transparency."
Kerr agrees. "Timely, reliable and accurate information are elements of proper day to day management and decision making. Investors hinge their investments on reports. The longer you take to publish the results the more unattractive your company appears to prospective investors."
