Choppies postpones release of audited financial results due to the Covid-19 pandemic

BOTSWANA – Botswana based retailer, Choppies supermarket whose 2018 results were delayed by more than a year has once again delayed its 2019 financial audit citing the lockdown in Botswana as the reason behind it.

The discount trader’s share trading has been suspended on both the JSE and Botswana Stock Exchange for over a year after it had difficulties releasing its audit results in 2018 following a forensic investigation that uncovered accounting irregularities.

The retailer has said the lockdown has delayed Mazars’ completion of the end-June 2019 annual financial statements and the auditor’s report.

Choppies has further stated that the auditor’s report will be released on or around July 30, if the lockdown is lifted at the end of the month. If the lockdown is extended it will further postpone the release.

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In 2019, the retailer announced an investigation by EY forensic team, which uncovered accounting irregularities in how it recorded sales and inventory stocks in SA and Zimbabwe shops.  The board then suspended CEO Ramachandran Ottapathu who was later reinstated.

Financial constrains led to the company considering disposal of its South African business together with its Kenyan and Tanzanian business.

In December 2019, Choppies Group offloaded its South Africa stores and distribution centres to King Investments following the launch of open bids for its 88 stores in October to settle its outstanding debt.

The planned closure and exit from Kenya has intensified a tax dispute with the Kenya Revenue Authority (KRA) and the retailer.

On 22nd April 2020, the High Court in Nairobi gave Choppies and the KRA 14 days to explore an amicable settlement of the dispute.

Choppies had opposed KRA’s move to freeze its bank accounts to secure Sh173.3 million (US$1.6m) in taxes.

The move, KRA argued, was informed by the fact that Choppies is in the process of winding up business in Kenya and it may quit without settling tax obligations.

In March, Choppies put up for sale equipment and property in Kenya. This came weeks after scaling down local stores from more than 15 to two.

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The retailer, which did not specify in regulatory filings in March how much it expected to fetch, said proceeds would help retire some debt.

“Operations have since been scaled down to only two stores and negotiations are on-going to sell equipment to local operators and/or existing landlords to clear some of the outstanding liabilities,” said the Botswana Stock Exchange-listed retailer in a circular to shareholders.

The sale plan came four years after it acquired Ukwala stores for Sh1 billion (US$9.3m) as a launch pad to East Africa.

Choppies owns 75 per cent of the Kenyan unit with the balance held by local shareholders Export Trading Group.

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