The Botswana Accountancy Oversight Authority (BAOA) is this month looking forward to visit troubled local retail giant Choppies Enterprises Limited to scrutinize its financial reporting monitoring and corporate governance.
The Botswana leading grocer, which has had it rough since late 2018 after failing to comply with the stock exchanges regulations and subsequently leading to its dual suspension from the stock exchanges, finally released its financial results for the year 2018 in December 2019.
Things came to a jam in 2018 when the Choppies shares were suspended from trading both at the Botswana Stock Exchange and Johannesburg Stock Exchange following revelations of impropriety by management which was picked up by the company’s new auditors, resulting in delay of the audited financial statements.
Although he could not be drawn to get into details of any analysis on the troubled retailer, BAOA chief executive officer, Duncan Majinda briefly revealed to this publication that he had sent Choppies an engagement letter in December 2019 for the Authority to start its investigation this month (January 2020) when they return from festive leave.
“I also want to involve the new Board chairman who is still on leave to assist in facilitating the reviews,” he briefly indicated.
Choppies Chief Executive Ramachandran Ottapathu referred this publication to the Board Chairman Uttum Corea for any media inquiries, who is unfortunately still on leave abroad.
The embattled Choppies has at the end of 2019 exited the troublesome South African market following a costly expansion strategy that threatened to sink the entire group after accumulating massive debts, forcing the company to make desperate move to save the business by selling the South Africa.
Choppies, which remains suspended on both the Botswana Stock Exchange and Johannesburg Stock Exchange, in early December 2019 shocked the markets by announcing the disposal of its South Africa operations for R1 or 73 thebe of all issued shares held by Choppies to Kind Investments, a newly set up South African company for the purpose of the transaction.
Though it might seem like a loss, for Choppies it was a necessary move to exit South Africa as debts mounted while the creditors and lessors were prepared go after Choppies’ assets, including the profitable stores in Botswana. Choppies sojourn in South Africa which began in 2008 has failed to turn profitable, yet the company continued with building its footprint in Africa’s most advanced economy.
Those close to the developments told this publication that, “this was not a desperate move as people suggest, and again the P73 thebe equivalent was not a loss as it is perceived. The company which bought these shares, it had to take it with the liabilities that amounted to P400million.”
Choppies Board decided to consolidate the business to focus on value adding subsidiaries. Apart from exiting the South African market, group has also since discontinued its other operations in Tanzania, Kenya and Mozambique. The retail giant operator is only operational in Botswana, Zimbabwe, Zambia and Namibia.
As to what will happen going forward as 2020 continues to unfold, close sources have indicated that the Choppies management is working tirelessly to bring the leading grocer into profitability and retaining the market share. The 2019 financial results are expected to be released in the next two months, and going back to the stock exchanges is another development to look out for this year.
After the release of the 2018 financials last December; the BSE has since advised shareholders that the suspension of trading Choppies shares will only be lifted once the company is in full compliance with the BSE equity listings requirements including submission of the following: – unaudited financial statements for the half year ended 31st December 2018; and audited financial statements for the year ended 30th June 2019 together with the independent auditor’s report.