JSE punishes two stocks with suspensions over late filing of accounts
THE JAMAICA Stock Exchange has suspended trading in two stocks, Equityline Mortgage Investments Corporation Limited’s preference shares and the ordinary shares of online learning company EduFocal Limited.
Both were suspended over the non-filing of their audited financial results for FY2023.
EduFocal is a newly listed junior company that came to market in March 2022 and trades under the ticker symbol LEARN. Its business involves the delivery of online education.
The company, headed by CEO and cofounder Gordon Swaby and chaired by Peter Levy, should have produced its yearend accounts within two months of the terminal accounting period of December 31, but has several times notified of delays of its audited accounts, which were last promised for May 31. Additionally, the filing of the annual report is also delayed, and is now promised for delivery by June 28; as are the March 2024 first-quarter results, which should have been filed by mid-May.
For year 2022, EduFocal reported a large loss of $179 million, the majority of which, $153 million, related to impairments of trade receivables and loss provisions. The loss decimated the company’s capital base, which shrank from $172 million to $7.6 million.
However, as of September 2023, its ninemonth finances had spun from $16 million of losses to positive earnings of more than $75 million, while revenue climbed by $100 million to $257 million. Notably, the three quarters of profit served to roll back some of the company’s accumulated losses and rebooted its capital to $83 million.
EduFocal was trading at 81 cents per share at suspension, giving it a market value of $526 million. The current price is well off its one-year high of $3.02 per share.
Share redemption
Equityline, a Canadian company, had previously advised Jamaican investors that it would be redeeming their ELMIC A shares at around US$2 per unit, which would have put the full payout at US$5.37 million.
The majority of the ELMIC A shares, approximately two-thirds, are held by four Sagicor-related funds.
Typically, shares are delisted at or after their redemption.
Dividends would continue to accrue on the shares up to payout, the company said in a market filing back in March, which also indicated that both dividends and the principal sums would be made available to investors through the Jamaica Central Securities Depository that’s operated by the Jamaica Stock Exchange.
The cost to redeem the shares is considerably more than Equityline’s net cash position of around CDN$3.28 million (US$2.4 million) at last report to September 2023.
The redemption was delayed from end-January to May 31, but there is no word yet of investors receiving payment. Up to midday yesterday, the shares had not been redeemed, Financial Gleaner checks show. Meanwhile, the value of the stock at suspension was US$1.10 per share, or US$2.95 million for the 2.68 million units listed on the JSE USD Market.
The mortgage investment company, which had CDN$38 million of assets under management at last report, is also highly leveraged, with its debts outpacing its total assets. It last reported negative equity of CDN$5.54 million after yet another quarter of losses.
Equityline, which became operational in 2018, is financed in part through the issue of a series of preference shares, one set of which, ELMIC A, was offered to Jamaican investors via the JSE and listed on the market in February 2019.
There are now three companies on suspension at the Jamaica Stock Exchange, the third being digital marketing company iCreate Limited.