Shares in Sagicor X Fund ticked upwards after the release of its first-quarter results, but dipped following the announcement of a change of auditor.
Richard Byles, chairman of the X Fund, indicated that the change in auditors from PwC St Lucia to Grant Thornton reflected an avoidance of conflict of interest rather than a disagreement of the change in the method of accounting.
“In short, it has to do with PwC USA doing audit work for Playa,” Byles said in response to Financial Gleaner queries.
The drop in share price reflected arguable concerns by investors that PwC did not agree with the change by Sagicor in recognising Playa Hotels & Resorts on its books.
“It is the wrong interpretation by the market,” added Byles.
X Fund traded at $9.90 on Thursday or down 3.0 per cent since the start of the month. The stock traded up to 10.25 a day after the release of first-quarter results which referenced increased earnings. Then on May 31 it dipped on news of the change in auditors. X Fund CEO Brenda Lee Martin was not reached for comment.
Sagicor previously recognised Playa Hotels & Resorts as a portfolio investment, reflecting the change in market value of its shares, then changed to an associated company, reflecting share of operating earnings since the 2018 fourth quarter.
If PwC disagreed with the treatment of Playa on the books of X Fund, then the auditor would have disclosed that and objected to the new treatment, said CFO of Sagicor Group Jamaica, Ivan Carter.
“The change in the treatment was agreed to by the auditors. That was not an issue. The auditors had to make sure there was no conflict of interest or independence issues,” he added.
PwC corroborated statements on the matter when contacted. A partner at the auditing firm told the Financial Gleaner that strict policy within PwC restricted the St Lucia operation from continuing audit work for X Fund.
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