JSE fines and censures Delta

Delta Property Fund has been fined R7.5 million and censured by the JSE for misstating its financials between 2018 and 2020. However, the JSE suspended R5 million of the fine which is linked to certain conditions being met.

The JSE and Delta issued Sens statements on the fine and censure on Friday, which comes as another financial hit to the embattled SA Real Estate Investment Trust (Reit).

“Delta’s previously published financial information for the 2018 to 2020 financial periods did not comply with IFRS and were incorrect, false, and misleading in material aspects,” the JSE said.

“This incorrect information was disseminated to shareholders, the JSE and the investing public. In these circumstances the JSE found that Delta failed to comply with … provisions of the JSE’s Listings Requirements,” it added.

The bourse noted that Delta did not comply with the following provisions:

• Paragraph 8.62(b) in respect of the previously published annual financial statements (AFS) for the financial years ended 28 February 2018, 28 February 2019 and the 2020 AFS which were not prepared in accordance with IFRS and were restated due to the numerous errors contained therein with regards to measurement and presentation; and
• Paragraph 8.57(a) in respect of the previously published 2020 interims which did not comply with the requirements of IFRS and were restated due to the numerous errors contained therein.

“The JSE has considered all the relevant facts and information at its disposal in deciding on an appropriate censure and financial penalty as a result of Delta’s transgressions of the listings requirements which include, Delta’s forensic investigations that uncovered irregular accounting and other practices, its full cooperation and assistance in the JSE’s investigation, the current economic climate, the remedial actions undertaken by the current executive management and the interests of shareholders, the JSE and the investing public,” it noted.

“In these circumstances, the JSE has decided to suspend R5 000 000 [five million rand] of the fine for a period of five years.

This is “on condition that Delta is not found to be in breach of the provisions of the Listings Requirements pertaining to the accuracy of its financial information, financial reporting and related disclosures during the period of suspension,” it added.

Read: JSE suspends Delta Property Fund listing

The JSE suspended Delta’s listing back in December 2020, effectively halting trade in its shares. However, the suspension was lifted in July 2021 after the group’s new management restated the Reit’s results and gave an update into forensic investigations into former executives.

The December 2020 listing suspension came in the wake of the group being rocked by an accounting scandal implicating former executives, which saw the Reit withdrawing its financial statements for its 2020 financial year.

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Delta withdrawing its 2020 financials followed an independent forensic investigation by Mazars implicating senior former executives in “unsubstantiated payments, procurement irregularities and other unethical business dealings” totalling some R46 million.

Read:
Delta’s former execs ‘categorically deny’ any wrongdoings
Delta forensic investigation reveals R46m fraud
Delta rocked by forensic probe into former executives

Noteworthily, the bourse is still investigating former executives that were in charge at the time, but it did not specifically mention the executives by name.

“This concludes the JSE’s process in respect of the company as a juristic person. The investigation into the conduct of individuals that presided at the company during the periods in question and who are bound by the Listings Requirements is ongoing,” it said.