Is something vrot stinking up the Choppies shop?
Fast-growing grocery chain’s release of year-end results delayed indefinitely, causing jitters among investors
Something unpleasant seems to be brewing at Botswana-based grocery retailer Choppies. The company, which has a primary listing in Botswana and a secondary listing on the JSE, was initially scheduled to release its year-end results on Friday. However, in September it informed shareholders that the release of the results would be delayed.
The company’s new auditor, PwC, which Choppies appointed in January, has uncovered information which the company is reassessing. The information relates to historical purchase-price allocations on business acquisitions, depreciation and amortisation accounting, valuation of inventory, and the impairment assessment of property.
What is perhaps most concerning is that the company, which is chaired by former Botswana president Festus Mogae, does not know when it will release the financials for the year ended June 30.
The company’s statement that its board and auditors had uncovered a number of matters relating to the current and earlier financial periods, “which require independent verification and expert legal analysis” will unsettle shareholders.
It is worrying that some of the information that needs to be reevaluated relates to recent acquisitions. This goes to the heart of the company’s growth strategy. Choppies’ expansion story – from a single store in Botswana in 1986 to more than 200 shops in different African countries – has been quite something.
It is hoped that these outstanding matters can be cleared up and the results released as soon as possible. It is essential the company moves to reassure investors at this time.