Rebosis Property Fund and its JSE sponsor Nedbank Corporate and Investment Banking on Tuesday both received strong public censures from the JSE for failing to comply with the bourse’s listing requirements in relation to Rebosis’s preliminary results for 2019.
In its first Sens statement on the matter, the JSE said that it found the sponsor to be in breach of paragraphs 2.8(c) and 2.8(h) of the bourse’s “listings requirements”.
The JSE issued a separate Sens statement on the Rebosis censure, noting that the fund was in breach of paragraph 3.22(b) of its listings requirements. This was also posted by Rebosis on the JSE. All three Sens statements were posted around 7:05 am on Tuesday.
The JSE noted in its initial Sens that Nedbank Corporate and Investment Banking had failed “to discharge its responsibilities with due care and skill” in relation to Rebosis’s 2019 preliminary results.
“On 11 November 2019, the company [Rebosis] published preliminary results for the financial year ended 31 August 2019, that were neither reviewed nor audited as required in terms of the JSE listings requirements,” it said.
“On 13 December 2019, the company [Rebosis] published its reviewed results for the year ended 31 August 2019, which contained an adjustment to the property valuations, and included a qualified review opinion by the auditors in respect of the valuations,” the JSE further pointed out.
“As a result of the auditor’s review, the market at large became aware of the significance and impact of the qualification on the 2019 annual financial statements which they were not previously made aware of in the 11 November 2019 preliminary results announcement,” it added.
The JSE stressed that the publication of annual financial statements with the minimum required level of assurance from external auditors, as prescribed by its listing requirements, “contributes to an orderly marketplace and promotes investor confidence”.
“Had the sponsor ensured that the company complied with the listings requirements, the company would have published annual financial results to the market that contained the requisite level of assurance and information pertaining to the qualification through a review report, only when the company was in a position to do so and not on 11 November 2019,” it explained.
“Sponsors play an important role in ensuring that issuers meet all the criteria stipulated in the listings requirements,” the JSE said.
“Sponsors also play a critical role in ensuring that relevant documentation is in compliance with the listings requirements prior to submission to the JSE and ultimately to shareholders. Sponsors have a duty in terms of the listings requirements to ensure that Sens announcements comply with the listings requirements and the JSE therefore places significant reliance on a sponsor fulfilling this role to ensure proper regulation of the market,” it added.
The JSE said that it is “unacceptable that the sponsor permitted the company to proceed with the publication of its 2019 preliminary results that were not at a minimum reviewed”.
It noted that this “failure contributed to the company’s failure to comply with important provisions of the listings requirements”.
In its Sens censure of Rebosis, the JSE said it “finds it unacceptable that the company published annual financial results that were not at a minimum reviewed and subject to a level of assurance”.
The JSE reiterated its concerns around the reporting of the property counter’s preliminary 2019 results that were highlighted in its Sens censure of the sponsor.
In its Rebosis statement, however, the JSE points out: “The subsequent adjustment to the fair valuation in the reviewed financial statements published on 13 December 2019 amounted to approximately R900 million and impacted the company’s 2019 property portfolio, which reduced to R15.6 billion.”
The JSE added that this decreased the company’s 2019 net asset value per “B” share by 15% as at 13 December 2019 (on a net basis, after taking into account debt).
“The publication of annual financial statements, whether preliminary, provisional or final, is a fundamental disclosure requirement upon which investors rely to make informed investment decisions. For this reason, the JSE listings requirements are very clear and deliberate that such information requires a level of assurance from external auditors,” it said.
“In the case of preliminary annual financial statements, they are required, at a minimum, to be reviewed by external auditors. The publication of annual financial statements with the minimum required level of assurance from external auditors contribute to an orderly marketplace and promotes investor confidence,” the JSE noted.
“Had the company complied with the listings requirements, it would have published annual financial results to the market that contained the requisite level of assurance and information pertaining to the qualification through a review report, only when the company was in a position to do so and not on 11 November 2019,” the bourse reiterated.