Af­gri gets it wrong

Farm­ing busi­ness makes a meal of dis­clo­sures

Finweek English Edition - - Companies & markets - LLEWELLYN JONES

THE JSE’S RULES con­cern­ing the dis­clo­sure of direc­tors’ deal­ings have been in place for six years, with just a few on­go­ing tweaks to the reg­u­la­tions. So there’s re­ally very lit­tle ex­cuse for get­ting it wrong. And that brings us to agribusi­ness Af­gri, which has made a hor­ri­ble meal of its dis­clo­sures, prob­a­bly get­ting it­self into a pickle with the JSE.

Last week the com­pany an­nounced on the Stock Ex­change News Ser­vice (Sens) that MD Jeff Wright had sold shares “as a con­se­quence of the ac­crual and im­ple­men­ta­tion of the de­ferred right to sell shares (op­tions al­lo­cated and ex­er­cised on 1 Novem­ber 2003 at R5,01 and 1 June 2005 at R4,73; mar­ket value on those dates) in terms of the com­pany’s share in­cen­tive scheme.”

The com­pany didn’t dis­close the num­ber of shares ex­er­cised at each price, mak­ing it im­pos­si­ble to cal­cu­late what Wright’s profit was on the trans­ac­tion.

So we went through the Sens ar­chive look­ing for the two op­tions trans­ac­tions quoted by Af­gri. We couldn’t find them. More­over, we couldn’t find any trans­ac­tion by Af­gri that specif­i­cally noted the na­ture of the trans­ac­tion as an ex­er­cise of op­tions.

So we called the com­pany to find out what was go­ing on. Af­ter much back­ward­ing and for­ward­ing while the com­pany checked its records, Af­gri was able to show that it had dis­closed the trans­ac­tions – but on com­pletely dif­fer­ent dates to those de­clared in the latest Sens an­nounce­ment.

Apart from the er­ro­neous dates, Af­gri was also us­ing ir­reg­u­lar and ar­bi­trary ter­mi­nol­ogy to de­scribe deal­ings by its direc­tors. In par­tic­u­lar, the com­pany took the phrase “grant and ac­cep­tance of op­tions” to mean that the di­rec­tor had ex­er­cised op­tions.

No, it doesn’t. Of course, the real won­der is that those er­ro­neous dis­clo­sures got past Af­gri’s spon­sors, RMB. The en­tire role of cor­po­rate ad­vis­ers and spon­sor­ing bro­kers is to make sure that the com­pa­nies they ad­vise get it right.

With that at­ti­tude, Af­gri and its ad­vis­ers must be pre­pared to take what­ever flak comes their way.


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