Choppies shareholders ought to be calling for a few heads
What its auditors are busy uncovering will be deeply unnerving for investors who haven’t yet bailed
That its stock won’t take another beating at the hands of the market appears to be one of the few certainties for Choppies management right now. Shares in the Botswana-based retailer remain suspended.
Not only is the company still unsure when it will be able to publish its audited financials for the 2018 year ended June, but what its auditors are busy uncovering will be deeply unnerving for investors who haven’t yet bailed.
To recap, auditors PwC have been combing Choppies’s books since they raised a number of red flags over certain commercial deals struck in Botswana in years past; Choppies’s compliance with international reporting standards; and, to top it all off, a forensic investigation into certain “transactions”.
So far, Choppies can now say that its net income for the 2018 financial year should in fact be 389 million pula (R515m) lower than previously estimated, while its equity for the year ended 2017 should be worth 378 million pula (R501m) less.
Impairments and inventory losses are to blame. More worryingly still, those numbers could yet change depending on the outcome of the forensic probe.
What all this means is that results for the half year to end December are backed up too, and it’s now in breach with its lenders, who understandably want a set of the company’s results under the terms of their loans.
When Choppies eventually does reopen trade, it may be safe to assume that its days on the JSE are numbered.