Trustco and the Johannesburg Stock Exchange are still deadlocked in a difference of opinion on the interpretation and application of International Financial Reporting Standards. The JSE claimed Trustco failed to comply with the JSE’s listings requirements and relevant IFRS accounting standards. For this reason, the JSE asked Trustco to restate its financial statements. 

“Trustco disputes the alleged non-compliance with IFRS and the JSE’s listings requirements and, as a result, the parties, together with their respective IFRS expert advisors, remain in disagreement regarding the correct IFRS accounting treatment for the transactions in dispute,” reads a Trustco statement issued on Friday.  

“It is important to emphasise that the JSE made no allegations of fraud, misconduct or wrongdoing by Trustco or its board. Trustco’s auditors have provided Trustco with unmodified (unqualified) audit reports for the last 29 years, the latest thereof being published on 31 January 2022,” the statement continued. 

Trustco was referring to an announcement published on SENS, the JSE’s news service, on 29 June this year, where Trustco’s interim financial statements were posted for the period ended 28 February 2022. The SENS also provided an update on the ongoing litigation between the JSE and Trustco. 

Trustco’s audited consolidated annual financial statements of 31 March 2019 and interim results of 30 September were selected for review by the JSE. 

“The two remaining matters in dispute between Trustco and the JSE relate to classification of the gain recognised in profit and loss by Trustco following two separate loan waivers by the majority shareholder in the amounts of N$546 million and N$1 billion, respectively, and the re-classification of a portion of a property development from inventory to investment property. The dispute affects only Trustco’s investments in the property portfolio entity and the resources portfolio entity, and has no effect on the net asset value (NAV) of the group,” Trustco maintained.  

But, the JSE and its advisory body the financial reporting investigation panel (FRIP), disagreed with Trustco’s accounting treatment, and asked for rectification. 

But Trustco maintains the JSE has not been able to point to any breached accounting standards, and as the Financial Services Tribunal gave deference to the JSE, Trustco approached the High Court of South Africa for an urgent interdict against the JSE. 

“It is notable that the JSE (and FRIP), did not, as per their mandate and in accordance with the listings requirements, refer the matter to the South African Institute of Chartered Accountants (SAICA), the Independent Regulatory Board for Auditors (IRBA) or any relevant professional body for a further independent opinion, should an issuer fail to comply with IFRS,” said Quinton van Rooyen, group managing director of Trustco. 

“Furthermore, the decision of the JSE was made by a person not authorised to make such a decision, and imposes a sanction that the JSE was not empowered to make, a sanction that is absent and not provided for in the JSE listings requirements,” he added. 

Meanwhile, Trustco stated that its board of directors, “having consulted with its external JSE-accredited IFRS experts and auditors, and having concluded multiple unmodified and unqualified audits by two independent JSE-accredited audit firms, maintains their stance that the transactions were correctly accounted for, reported and disclosed”. 

Trustco remains adamant its board, and not the JSE, remains responsible and accountable to shareholders for the preparation and presentation of the financial statements and their compliance with IFRS. 

“The board cannot abdicate this responsibility to third parties who are not the group’s appointed professional advisors,” the statement read.