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It’s still a mission to get financial data on small, unlisted companies
HOLDING A POSITION in unlisted shares issued by small, start-up companies can be a testing affair, with investors not always privy to a surfeit of key financial information. All the established unlisted companies put out interim and final results timeously (Grand Parade Investments, KWV Ltd, Pioneer, Clover) and keep shareholders abreast – usually via a website – of key corporate developments. toring, with press releases suggesting major windfalls from contracts and new product developments. Spin is one thing, but turning the hype into millions on the income statements is quite another.
Finweek decided to see how easy (or difficult) it was to obtain key financial information from the four companies. The results of our endeavours were most interesting. We couldn’t obtain interim results from APMI. StratCorp CEO and APMI director David Harington pointed out that because the company wasn’t a listed entity on the JSE, it wasn’t required to publish interim reports.
APMI CEO Gustav Lotz reckons that the 2006 audited financial statements for APMI are nearly finalised. “We undertake to forward you a copy of the annual report at the same time as we send it to the company’s shareholders.”
While appreciating Lotz’s gesture, we can’t help wondering why extra effort isn’t made to furnish shareholders with interim reports – which, after all, are essential updates on a company’s progress (especially at start-up stage).
It does seem regrettable that the fact that APMI (which has hinted hard at listing) uses the excuse that it’s currently unlisted not to publish interim results – an exercise undertaken by most major unlisted companies.
The latest financial statements for “local tequila” producer Agave Distillers were also not readily available – which is very disappointing after all its hoo-ha concerning securing major export contracts last year.
What has transpired (see Openers for more detail) is that there’s been a change of control at Agave, which has apparently delayed the audit process. Figures should be released within weeks and an AGM is scheduled for next month.
What’s apparent is that ordinary share-
The same – generally speaking – isn’t true for the smaller, unlisted ventures (start-up ventures, if you will) that sometimes seem to go out of their way to ensure there’s a paucity of financial detail in circulation. Obviously, when forecasts aren’t met and projects fail to come on stream as predicted, companies don’t exactly want to trumpet the news.
Last year, Finweek and sister medium www.fin24.co.za identified four small, unlisted projects – APMI Holdings (Poolcop), Lazeron, Vinguard and Agave Distillers – as the shares that would carry the reputation of an industry that has for the best part of a decade been scant in terms of returns to investors.
None of them provide any relevant financial information on their respective websites, which are crammed with mainly technical or product information.
Yet all of them have done some spin-doc- holders were not privy to the change of control, a development that would rank as major news for a listed corporate. That again questions whether small, unlisted companies are communicating effectively with their shareholders.
However, we were successful in tracking down financial statements for periods ending June 2006 for Vinguard and Lazeron.
To be perfectly frank, the figures presented in both annual reports don’t make easy reading (both companies generate small turnovers and have their bottom lines sitting in the red). But at least shareholders (and prospective investors) can scan the pages to gauge whether the fledgling businesses could hold potential over the longer term.
Perhaps the fact that both Lazeron and Vinguard have JSE-listed John Daniel Holdings (JDH) as a major shareholder helps ensure shareholders are provided with relevant financial information.
JDH CEO Harry Minnie says: “JDH has always prided itself on presenting financials on time to shareholders – even when we were an unlisted company. The same goes for Lazeron and Vinguard…”
The issue of consistently presenting shareholders with fresh financial information is one of the biggest blemishes in the unlisted share industry.
With companies such as Garek and Ubambo reluctant to adhere to media requests to release financial statements, and others simply not bothering to provide shareholders timeously with annual reports, there’s bound to be a veil of scepticism cast over smaller, unlisted shares.
Most small unlisted contenders moot a future JSE listing in their motivations for raising funds from the public. Such companies should then be acutely aware of JSE requirements to report interim and final results timeously to shareholders.
Any departure from that should rightly be viewed with some disdain by shareholders, though the companies will no doubt cry foul concerning the effort and cost of publishing financials twice a year.
“Not required to publish interim results.” David Harington