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A monitor displays the Cambodian stock market index next to the reception of the CSX earlier this month in Phnom Penh.
A monitor displays the Cambodian stock market index next to the reception of the CSX earlier this month in Phnom Penh. Heng Chivoan

Listed firms lax on fiscal reports

Six weeks since the close of the fiscal first half, none of the four listed companies on Cambodia’s stock exchange have issued their required half-year financial statements, and one firm has not disclosed any financial data since 2014 – casting doubts on the tiny bourse’s commitment to enforcing basic disclosure rules.

State utility Phnom Penh Water Supply Authority (PPWSA) and garment manufacturer Grand Twins International (GTI) have routinely delayed issuance of financial statements by months, while recently listed state port operator Phnom Penh Autonomous Port (PPAP) looks set to follow their lead.

Leonie Lethbridge, the CEO of ANZ Royal Bank, said that within a international and regional context, once a company becomes publicly listed, failure to produce timely financial reports “would result in serious consequences”.

“[The] inability to produce reporting in an expected timeframe can be a reflection and raise questions about the company’s capabilities or internal governance,” she said.

She added that while investors are often more concerned with a company’s overall business strategy, “timely financial reporting is an important vehicle to demonstrate and sell the effectiveness of that strategy”.

According to CSX regulations, companies listed on the exchange are required to submit quarterly or annual reports to the market regulator within 45 days of the end of the reporting period. Annual reports must be submitted within 90 days of the end of the financial year.

Yet Phnom Penh SEZ, which operates an industrial park on the outskirts of the capital, has not disclosed any of its financial statements since going public in May after raising $8.2 million in an initial public offering (IPO). Data in the company’s last published financial report date back more than 18 months to end-2014.

Potential investors raised the issue at the company’s pre-IPO presentation last April, but were assured by a Phnom Penh SEZ representative that auditors were reviewing the firm’s 2015 financial statement and it would be released within weeks.

Fong Nee Wai, chief financial officer of Phnom Penh SEZ, told the Post last week that the long-delayed document would be made available to investors this month.

“As a matter of fact, these [last] two weeks we [have been preparing] the required information for our disclosure needs,” he wrote in an email, adding that once the financials are disclosed “we also plan to have some key information released”.

Phnom Penh SEZ has since announced it will release its 2015 financial statement and hold a presentation on its first-half 2016 financial performance on September 6.

Thomas Hugger, CEO and fund manager of Asia Frontier Capital, said that while there were always companies in developing markets unable to submit their financial statements on time, it was generally not a positive sign.

“Normally a delayed publication of the audited financial statements is not a good sign,” he said. “One can assume that there is a dispute between the auditor and the management of the listed company over the content and valuation of the audited financial statement.”

Such disputes, he said, come down to auditors not willing to sign the accounts or the company’s directors not accepting the statement’s findings. More developed stock markets, like Thailand’s SET, will suspend the trading of shares for listed companies that do not adequately report, he added.

However, Lamun Soleil, director of market operations at the CSX, said Cambodian regulators have agreed to bend regulations to give firms more time to meet their disclosure obligations.

He said the sole responsibility for enforcing disclosure rules on listed companies lies with the Securities and Exchange Commission of Cambodia (SECC).

“[It] is the work of the SECC to get them to provide their financial reports,” he said, adding that an SECC official had told him that Phnom Penh SEZ’s delay in issuing financials was due to the fact that the company listed during the second quarter.

“The company is obligated to announce any news within 45 days of the end of the quarter,” Soleil said. “So they are a bit late, but we are giving them a grace period.”

SECC officials contacted yesterday declined to comment on the cause for delay.

Han Kyung Tae, managing director of Yuanta Securities (Cambodia), said accurate and timely reporting is important for Cambodia’s fledgling stock market when trying to promote long-term investment potential.

“If listed private companies cannot respond to investors concerns, they will lose trust in the CSX,” he said.



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