Fakoyejo OlalekanThe inability of African Alliance Insurance (AAI) management to meet the Nigerian Exchange Limited (NGX) listing rule continues to keep investors in dark over the company’s financial performance, and threatens their investment.
African Alliance told investors and the capital market authority, NGX, that the company will not submit its Unaudited Financial Statements for the period ended June 30, 2022, before deadline.
Listing rule of the Nigerian Exchange Limited (NGX) mandates companies to submit their quarterly financial statements 30 days after each quarter, while that of the annual report is fixed for 90 days after 12 months.
African Alliance said the company is unable to file its Q2 2022 financial statements as its industry regulator, National Insurance Commission (NAICOM), is yet to give approval of previous periods.
Recall that African Alliance is yet to submit its Audited Financial Statements (AFS) for the Year ended December 31, 2021, as well as the 2022 Q1 Unaudited Financial Statements (UFS).
Failure to submit these financial statements prevent African Alliance from submitting succeeding earning periods, and could attract a fine, keeping in mind that Japaul Gold & Ventures was fined N2.8 million for failing to file its 2021 audited financials, while Honeywell Flour Mills was charged N1.2 million for not submiting its Q3 2021 financials before deadline.
How failure to submit financials negatively affects African Alliance shareholders
African Alliance is unsure of when NAICOM will approve its FY 2021 and Q1 2022 financials, leaving investors without three earnings reports (including Q2 2022) to help them make investment decisions relating to the company.
Note that a company’s profitability is important to investors, as it helps them forecast their investment growth in the near future, and the only way they can know the profitability status of African Alliance is through the financial statements.
They are also able to judge the ability of the company in meeting its short-term and long-term financial obligations, and how the revenue growth and debt load weigh on profit, as it could prevent African Alliance from paying dividends overtime.
With investors unable to determine the company’s financial status for six months, it could trigger a sell-off among investors that will crash African Alliance share, and cause investment loss for shareholders.
A look at African Alliance capital market activity display lack of investors’ confidence in the firm, considering there have been little or no growth in shareholders investment since 2020, with the firm’s share stuck at N0.20kobo.
Prime Business Africa understands that the firm’s continued challenge will make it hard for African Alliance shareholders to have exit opportunities, if the stock continues to trade at a significant discount to the intrinsic value.
Recall that African Alliance management’s failure to release the company’s financials have also led to the Nigerian Exchange Regulation Limited (NGX RegCo) suspending trades on the insurance firm’s share until further notice.
Meanwhile, the release of African Alliance earning reports and reopening of trade on the share might not excite investors or positively impact shareholders investment value to a large extent, and may rather encourage a sell-off if there are exit opportunities, considering the financial report challenge is on the heels of a N2.26 billion loss after tax in Q4 2021.
What African Alliance management is saying?
- “African Alliance Insurance Plc (AAI or the Company) regrets to notify its esteemed shareholders and other stakeholders that the Company will not be able to file its Unaudited Financial Statements for the period ended 30th June 2022 (2022 Q2 UFS) within the regulatory timeline of 30 July 2022.
- “This delay is occassioned by the fact that the Company’s Audited Financial Statements (AFS) for the Year ended 31st December 2021, and also the 2022 Q1 Unaudited Financial Statements (UFS) for the period ended 31st March 2022 have not been filed, a condition precedent for filing of the 2022 Q2 UFS.
- “We wish to assure you that the Company is working assiduously towards submitting its 2021 Audited Financial Statements for the Year ended 31st December 2021, 2022 Q1 and 2022 Q2 Unaudited Financial Statements upon receipt of approval of its 2021 Audited Financial Statements from the National Insurance Commission (NAICOM).
- “The Company regrets all inconviniences caused by it delay in releasing the finacial statements.” African Alliance management said.
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