Omni Industries reported incorrect earnings per share for the year to September and for the third quarter with the report with the errors remaining on the Jamaica Stock Exchange to date.
Last year May 250 million new shares were offered to the public, effectively increasing the total issued shares to 2.5 billion units. In a strange twist, the company reported an average number of shares at just 1.402 billion units, far less than the amounts originally issued, instead of approximately 2.376 billion. Accounting standards require that the average number of shares in issue is the weighted number of shares outstanding during the period. The company split the 20.9 million shares before the IPO into 2.25 billion. The effective number of shares from the beginning of January is total after the split, of 2.25 billion. The 250 million new shares issued in May are to be taken together with the 2.25 billion units to compute the weighted average share issued in computing the earnings per share for the year to date and the total issued shares of 2.5 billion are used to compute the EPS for the quarter as there is no average as all 2.5 billion shares were issued before the quarter started.
The effect of the error is that the critically important earnings per share reported in the quarterly are severely overstated. Instead of 2.7 cents for the quarter and 10.4 cents for the nine months, earnings should be 6 cents for the nine months and 1.5 cents for the September quarter.
The company seems to have used the originally stated capital and computed the average based on that. Stock splits or bonuses do not change the equity capital of a company, all they do is to increase the number of issued shares. There is no averaging of the amounts before and after the split as the new shares in issue replaces the original amount. Only freshly issued shares will result in the need for a weighted averaging of the amounts in issue.
Almost three months have elapsed since those results were posted with the glaring error and it still remains on the website of the Jamaica Stock Exchange. This and other issues are reminders that investors are not well served in Jamaica.