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Smart technologies and electronics firm Jasco Electronics Holdings [JSE:JSC] has been publicly reprimanded by the JSE for publishing financial statements that were not audited in 2018.
After retraction, the company plunged into a loss, despite promising shareholders that there would be no material changes to profits.
The Midrand-based company, which delivers smart technologies across multiple disciplines such as telecommunications, IT, energy and industry, published provisional summarised results for the financial year ended 30 June 2018 in September that year. At the time, the company said the results were audited.
"At the time of release, the audit of Jasco was still underway and no audit report was issued in respect of the provisional results," said the JSE on Monday.
The main bourse said a few days later, the company published an announcement on the Stock Exchange News Service (SENS) informing the market that it "erroneously" referred to the results being audited when they had, in fact, not been.
Jasco then voluntarily suspended its shares until the updated results were republished, but when it did so, the company told shareholders that the updated final annual financial statements would not reflect any changes to the profits and earnings that had been released a few days earlier and referred to as "audited".
'Technical' issue
When the audited results were published over a month later, in November 2018, however, they contained material changes including a revelation that there was incorrect cash flow classification of several items, such as leased assets. The company subsequently adjusted included revenue by R3 million, and goodwill and impairment were adjusted by R3.5 million. Its 2017 basic and diluted earnings per share dived 580%, from 3.6 cents to a loss of 17.3 cents per share.
In response to the reprimand, Jasco said it accepts the censure, but added that it self-corrected and its corrections to the financial statements were disclosed to all shareholders.
Jasco CEO Mark van Vuuren said the restatements were a result of different technical differences in the way the company interpreted IFRIS and how its new auditor, PwC, implemented it. He said the matter, which arose more than 18 months ago, had fully been dealt with, and extensive engagements took place between Jasco, its sponsor, shareholders and the JSE, among many parties, which culminated in the company publishing its 2019 financial results in October without the same hiccups.
"The issue at hand was really of a technical nature, IFRIS 2 versus IFRIS 3. But as we were going through that 18 months ago, the first we did was to voluntarily suspend our share so that there would be no harm to the shareholders. We issued a SENS announcement that detailed exactly what transpired, so we were fully transparent to the market," said Van Vuuren.
CFO Warren Prinsloo said the JSE gave the company a public censure rather than a harsher punishment because it recognised the steps that Jasco took to self-correct. "It was a first-time and one-off event. It was unfortunate for sure, and we certainly took lessons out of it," he said.
