DELTA PROPERTY FUND LIMITED - Censure imposed by the JSE on Delta Property Fund Limited

Censure imposed by the JSE on Delta Property Fund Limited

GEN – General – Delta Property Fund Limited
Censure imposed by the JSE on Delta Property Fund Limited ("Delta" or "Company")

The JSE hereby informs stakeholders of the following findings in respect of the Company:

1.	On 9 December 2020, Delta informed shareholders that its external auditor had withdrawn its Audit 
	Opinion in respect of the Company's Annual Financial Statements for the year ended February 2020 
	("2020 AFS"). As a result, continued reliance on the 2020 AFS was no longer appropriate, and Delta 
	withdrew its 2020 AFS on 9 December 2020. 

2.	On 22 April 2021, Delta reissued and restated its 2020 AFS which also contained restatements to the 
	annual financial statements for the periods ended 28 February 2018 and 28 February 2019, and 
	interim financial statements for the six months ended 31 August 2019 ("2020 interims") to correct a 
	substantial number of prior period errors in accordance with International Financial Reporting 
	Standards ("IFRS"). 

Background to the restatements
3.	During 2020, the Company initiated independent forensic investigations into practices involving 
	governance failings and suspected wrongdoing ("forensic investigations") that occurred in previous 
	financial reporting periods.  

4.	The forensic investigations uncovered a lack of oversight mechanisms, governance failings and 
	wrongdoing in prior financial periods which arose during the tenure of previous executive 
	management which resulted in irregularities; the payment of commissions by the Company amounting 
	to R43.9 million (for the 2018, 2019 and 2020 financial years) resulting from invalid, lapsed or no 
	broker mandates; fraud resulting from unethical dealings; and non-disclosure of related-party 
	transactions to the Board. As a result, the Company restated its annual financial statements for the 
	financial periods ended 28 February 2018 and 28 February 2019 and the 2020 interims. The Company 
	was transparent by correcting the prior period errors and disclosing the improprieties to the market. 

5.	The financial impact of the restatements of prior period errors in the 2019 annual financial statements 
	were material in that:
	i.	Loans due from subsidiaries decreased by 100%
	ii.	Non-current assets held for sale decreased by 97%
	iii.	Cash and cash equivalents increased by 229%
	iv.	Non-controlling interests increased by 100%
	v.	Retained income decreased by 87%
	vi.	Lease liabilities increased by 100%
	vii.	Admin expenses increased 29%
	viii.	Fair value of investment property decreased by 318% due to the downward valuation thereof
	ix.	Interest income decreased by 10%
	x.	Profit for the period decreased by 219% into a loss for the period
	xi.	Earnings per share of 39.80 cents decreased to a loss per share of 81.59 cents per share 
		(205%)
	xii.	Headline earnings per share decreased by 9%

JSE's findings and decision to censure Delta
6.	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 and 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 the following provisions of the JSE's Listings 
	Requirements: 
	i.	Paragraph 8.62(b) in respect of the previously published annual financial statements 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 
	ii.	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. 

7.	The accuracy and reliability of financial information published by companies play a pivotal role in 
	maintaining a fair, efficient, and transparent market. The provisions of the Listings Requirements, 
	which impose various important obligations on listed companies in respect of the disclosure of 
	financial information, enhance the integrity of the market and promote investor confidence. 
	Consequently, the Company and its directors are obliged to ensure that all financial information and 
	reports that are published are, in all material aspects, accurate and correct. Furthermore, the investing 
	public depends on a company's disclosed financial information to make crucial investment decisions. 

8.	For these reasons and with reference to the JSE's findings of breach, the JSE has decided to impose a 
	public censure and the maximum fine of R7 500 000 (seven million five hundred thousand rand) on 
	Delta as a result of its failure to comply with important provisions of the Listings Requirements.

9.	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. In these circumstances, the JSE has decided to suspend 
	R5 000 000 (five million rand) of the fine for a period of five years 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.

10.	The fine imposed against Delta will be appropriated in accordance with section 11(4) of the Financial 
	Markets Act, 19 of 2012 read with section 1.25 of the Listings Requirements which includes, inter alia, 
	the settlement of any external costs incurred by the JSE which may arise through the enforcement of 
	the provisions of the Listings Requirements and/or in furtherance thereof.

11.	It is important to note the provisions of section 11(5) of the Financial Markets Act, which stipulate that 
	the Listings Requirements are binding on companies and their directors. The JSE is therefore duty 
	bound to properly investigate all potential breaches of the Listings Requirements by companies and 
	their directors and to take the necessary and appropriate action if the Company and/or its directors 
	failed to comply with the provisions of the Listings Requirements.

Other parties regulated by the JSE
12.	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. 

16 February 2024










Date: 16-02-2024 07:05:00
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