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Business News of Tuesday, 22 January 2019


GSE delists 5th company in 18 months

Kofi Yamoah, Managing Director of Ghana Stock Exchange (GSE) Kofi Yamoah, Managing Director of Ghana Stock Exchange (GSE)

In a move reminiscent of the Bank of Ghana’s recent revocation of some banking licenses to secure depositors’ funds, the Ghana Stock Exchange (GSE) has moved to compulsorily de-list Pioneer Kitchenware Limited (PKL) from the main equity market of the exchange.

This is to protect equity investors and ensure orderly conduct on the nation’s bourse, bringing the number of companies listed on the GSE down to 41.

Several companies have been delisted since mid-2017 including UT Bank in the wake of the revocation of its operating license by the Bank of Ghana, African Champion Industries Transaction Solutions Ghana and Golden Web. The recent delisting’s bring an era to an end at the GSE during which listing obligations were only loosely adhered to.

This only began to change in the aftermath of the revocation of UT Bank’s license in late 2017; the GSE, having failed to take action against the company for failing to meet its financial reporting obligations and convening of its annual general meeting in both 2016 and 2017 was widely criticized for failing to protect shareholders in the company, who lost the entire value of their holdings.

Subsequently the GSE began to implement its regulations more stringently, revealing various major infractions by many listed companies, including the latest one to be listed whose earlier history on the bourse had been illustrious.

In the GSE’s first decade in particular, Pioneer Kitchenware, during its earlier incarnation as Pioneer Aluminum achieved blue chip status being sought enthusiastically by institutional and retail investors alike for the strong capital gains and dividends that it provided. However in recent years it has fallen into hard times with regards to financial performance.

The company was taken off the official list at the end of the trading day on Monday, January 14, 2019, following the decision which was based on Rule 13 of the GSE Listing Rules.

Under Rule 13(1) of the GSE’s Listing Rules, “the Council may at any time and in circumstances as it thinks fit, suspend or cancel a listing and shall do so to protect investors and to ensure an orderly market”.

Among other reasons for which Council may de-list a company is where the financial situation of the Company is significantly threatened, as provided under Rule 13(4)(g) of GSE’s Listing Rules; or where the Company consistently fails to comply with GSE’s and SEC Rules and directives, as per Rule 13(4)(h) of GSE’s Listing Rules.

PKL manufactures, sells, imports, and exports various aluminum household products for domestic, and industrial or commercial use in Ghana. The company is based in Tema, Ghana.

According to the GSE, PKL had a stated capital of GHc 866,201, and 33.35 million shares issued of the 100 million authorized shares.

In August 2017, GSE suspended trading in the shares of some listed companies for failure to meet their continuing listing obligations in spite of several promptings to do so. These shortcomings include; failure to submit financial reports, non-payment of annual listing fees, and failure to conduct Annual General Meeting, among others.

The companies suspended at the time comprised include: African Champion Industry Limited; Clydestone (Ghana) Limited (CLYD): Golden Web Limited (GWEB); Pioneer Kitchenware Limited (PKL); and Transaction Solutions Limited (TRANSOL). Instructively all of these companies except Clydestone have since been delisted.

PKL Performance

In September 2017, PKL announced unaudited earnings results for the year to March 31, 2017. For the year, the company reported revenue of GHc 350,141, operating loss of GHc 123,169, and total loss before taxation of GHc 512,419, or GHc 0.01401 diluted per share and a net cash flow from operations of GHS 373,689.

At the year end March 31, 2016, the company made revenue of GHS 380,236, operating loss of GHc 94,561, loss before taxation of GHc 408,811.04, loss for the period of GHc 408,811.04 or 0.01118 Cedis diluted per share, net cash flow from operations of GHc 406,936.