Public censure imposed on Rebosis for breaching JSE listing requirements

Founder and Executive Deputy Chairman of Rebosis,, Sisa Ngebulana.
Founder and CEO of Rebosis Property Fund, Dr Sisa Ngebulana.

The Johannesburg Stock Exchange (JSE) has imposed a public censure on Rebosis Property Fund Limited due to a breach of its listing requirements.

In a SENS announcement, the JSE listed the following findings in respect of the company:

  1. On the 11th of November 2019, Rebosis published preliminary results for its financial year ending on the 31st of August 2019 title ‘Unaudited Results’. These results were not reviewed at the time due to differences between the company and its auditors in the company’s determination of its investment property valuation for the financial period concerned. In terms of paragraph 3.22(b) of the JSE’s listing requirements, annual financial information published by an issuer in advance of being required to do so, must, at a minimum, be reviewed by the issuer’s auditor.
  2. On the 13th of December 2019, Rebosis published its reviewed results for the year ended on the 31st of August 2019 which contained an adjustment to the property valuations, and it included a qualified review opinion by the auditors. As a result of the auditor’s review, the market at large became aware of the significance and the impact of the qualification on the 2019 annual financial statements which were not previously made aware of with the 11th of November 2019 preliminary results announced.
  3. The subsequent adjustment to the fair valuation in the reviewed financial statements which were published on the 13th of December 2019, amounted to approximately R900 million and this impacted the company’s 2019 property portfolio which reduced to R15.6 billion. Further, it decreased the company’s 2019 net asset value per ‘B’ shares by 15% as of the 13th of December 2019 (on a net basis, after considering debt).
  4. 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 clear and deliberate that such information requires a level of assurance from external auditors. 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. Had Rebosis complied with the listing requirements, the company would have published financial annual 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 able to do so and not on the 11th of November 2019.

The JSE has found Rebosis to be in breach of paragraph 3.22(b) of the listings requirements and finds “it unacceptable that the company published annual financial results that were not at a minimum reviewed and subject to a level of assurance”.

In a second SENS announcement on the same day, Rebosis noted and responded to the JSE’s public censure stating:

  1. The 2019 financial results were ‘clearly titled’ ‘unaudited’ and Rebosis ‘strongly disagrees with the JSE’s conclusion that the company made a conscious decision to publish unreviewed and unaudited results due to differences between the company and its auditors in the determination of Rebosis’ investment property valuation for the 2019 financial results’.
  2. ‘Rebosis’ board of directors depend on several parties to keep it informed of the relevant JSE listing requirements and the 2019 financial results were ‘transparently published as being unreviewed and unaudited’.
  3. On becoming aware of the lapse in complying with the JSE listing requirements, the sponsor, following engagement with the company, post the release of the 2019 financial results, proactively informed the JSE of the matter and the company launched its own investigation into the causes of the oversight. The investigation ultimately resulted in the replacement of the company’s audit and risk committee, its Chief Financial Officer as well as a change in the audit partner’.
  4. Following the board’s subsequent replacement of key incumbents and implementation of additional processes, Rebosis successfully resolved the dispute with its auditors and an unqualified audit opinion was expressed on its most recent financial results for the year ended on the 31st of August 2020’.

Rebosis’ board and management ‘remains committed to good corporate governance as demonstrated by the actions taken and have streamlined internal measures and policies to ensure ongoing compliance with the JSE Listings Requirements’.