Financial Reporting

Directive Financial Reporting

I. GENERAL PROVISIONS

Art. 1 Purpose

The purpose of this Directive is to set requirements in terms of financial reporting to enable investors to assess the quality of an issuer and the securities listed on MERJ Exchange.

Art. 2 Scope

This Directive governs:

1. The accounting standards recognized by the Listing Committee.

2. Interim financial reporting requirements.

3. Publication and submission deadlines for interim and annual financial reports.

4. Additional reporting requirements for investment entities and real estate entities.

II. RECOGNISED ACCOUNTING STANDARDS

Art. 3 Equity Securities

1. All (except Investment Entities)

   Issuers of equity securities, with the exception of Investment Entities, must adopt one of the following accounting standards:

   1. International Financial Reporting Standard (IFRS) published by the International Auditing and Assurance Standards Board (IAASB); or

   2. US GAAP (if the foreign issuer is listed on a US securities exchange).

2. Standard for Investment Entities

   IFRS or accounting standards prescribed under applicable laws specific to the entity.

Art. 4 Debt Securities

Issuers of debt securities, including bonds, derivatives and exchange traded products, must adopt one of the following accounting standards:

1. International Financial Reporting Standard (IFRS) published by the International Auditing and Assurance Standards Board (IAASB);

2. International Financial Reporting Standard (IFRS) adopted by the European Union (“EU IFRS”) if the foreign issuer is listed on an EU/EEA securities exchange; or

3. US Generally Accepted Accounting Principles (US GAAP) if the foreign issuer is listed on a US securities exchange.

Art. 5 Foreign Issuers

Foreign issuers may also adopt home country accounting standards (“Home Country Standards”) in place of one of the standards listed in Art. 3 if:

1. Their home exchange is a member of the World Federation of Exchanges (WFE) or is located in a recognized jurisdiction;

2. The foreign issuer is also listed on its domestic securities exchange (i.e. secondary listings on MERJ);

3. Equivalent disclosures and reconciliations to those required by IFRS are provided;

4. The material differences with IFRS are fully disclosed in listing particulars and annual reports as a supplement, prominently indicated in those documents including:

   1. A reconciliation of net income/profit under the Home Country Standard vs. IFRS;

   2. A reconciliation of equity under the Home Country Standard versus IFRS; and

   3. Reconciliation disclosures explaining material adjustments, with references to accounting principles causing the variance.

III. INTERIM FINANCIAL REPORTING

Art. 6 Principles

The same accounting standard and principles must be used for interim financial reports as for annual financial statements.

IV. PUBLICATION AND SUBMISSION

Art. 7 Annual Report

1. Issuers must publish annual reports, including audited financial statements, within 4 months of the balance sheet date.

2. If audited reports are delayed, provisional financial statements prepared in accordance with IFRS or other approved accounting standards must be published, with a market notice explaining the delay and expected publication date for audited accounts.

3. The audited financial statements must confirm compliance with the applicable accounting standards.

4. Issuers must maintain annual audited financial statements and related records for at least 7 years.

See also:

- Directive Regular Reporting Obligations

Art. 8 Interim Report

1. Interim reports must be published within 3 months of the periodic balance sheet date.

2. Content should include:

   1. Unaudited financial statements.

   2. Key performance metrics and business updates, if available.

See also:

- Directive Regular Reporting Obligations

Art. 9 Submission Requirements

1. Financial reports must be submitted to MERJ Regulation no later than the time of publication.

2. Submission methods include electronic formats with secure digital signatures where applicable.

Art. 10 Electronic Publication of Reports

1. All reports must be accessible electronically, free of charge.

2. Issuers must provide links to published reports in market disclosures.

V. SPECIAL PROVISIONS (NOTES IN ANNUAL REPORT)

Art. 11 Investment Entities

Investment entities must include additional disclosures in their annual reports, such as:

1. Detailed statements on investment strategies and objectives.

2. Risks associated with investments, including concentration risks.

3. Valuation methods and frequency for assets.

Art. 12 Real Estate Investment Entities

1. Reports must include information on property valuations, key assumptions, and methodologies.

2. Any significant changes to the portfolio or investment strategy must be clearly outlined.

See also:

- Directive Corporate Governance

VI. FINAL PROVISIONS

Art. 13 Entry Into Force

This Directive shall enter into force on 1 March 2025.

Art. 14 Transition Provisions

The requirements of this Directive must be complied with for all interim and annual reporting periods starting from 30 June 2025.