At least two local companies, G4S Botswana Limited and Sechaba Breweries Holdings Limited could have their shares delisted from the domestic board of the Botswana Stock Exchange (BSE).
The duo is said to have contravened the local bourse’s section 3.21 of the listing requirements which deals with publication of financial results of listed entities.
The section requires all the listed companies to publish their annual financial result within three months of financial year end, a requirement that both G4S Botswana and Sechaba Holdings have failed to meet.
The BSE Chief Executive, Thapelo Tsheole, on Friday confirmed the latest development.
“These companies have not published their Audited Financial Statements or Reviewed Financial Statements within three months of the financial year end. Shareholders are therefore hereby cautioned that the listing of these companies’ securities is under the threat of suspension and possible termination,” Tsheole noted in a statement released on Friday.
Whilst the two companies face the risk of having their shares delisted from the bourse, Sechaba Holdings came out this week to say that the delay to publicise its financial results for the year ended December 31, 2016 was necessary and taken in the best interest of shareholders.
Last Wednesday, Johan de Kok, Sechaba Holdings Managing Director said that the company directors elected to delay the publication of financial statements to April 30, 2017, so as to base the annual financial statements on the most credible and recent information available.
According to de Kok, as per the cautionary announcement that Sechaba made in October 2016, the company’s associate, Kgalagadi Breweries (Pty) Ltd (KBL), has since received notice from The Coca-Cola Company (“TCCC”) that the Bottlers’ Agreement in accordance with which KBL produces products licensed to TCCC, will be terminated.
“This notice triggered specific accounting treatment consideration in the financial statements of KBL for the reporting period ended December 31, 2016,” reads part of de Kok’s lengthy explanation to shareholders this week.
Whilst Sechaba has come out to give out an explanation of its “delay” to the capital markets, the security giant, G4S Botswana, on the other hand, has not yet issued a statement.
However, the capital markets seem to have temporarily “rejected” the company’s newly appointed managing director Mokgethi Magapa. Magapa was announced as the new managing Director of G4S Botswana late last month following the departure of Michael Kampani. His appointment was expected to raise the appetite of investors towards the company stock.
The stock price of the security giant has been languishing in the red on a weekly basis on the domestic board of the BSE. On annual basis, the share price has lost value of 4.4 percent whilst for the past week it went down by 2.5 percent to close it at 400 Thebe per share.
Financial analysts at local stock brokering firm, Motswedi Securities noted in their weekly commentary recently that the poor performance by the G4S Botswana stock at BSE is not surprising given the “not so inspiring” cautionary update it released recently in the local bourse. The security services company announced that its former managing director and the finance director resigned a month apart without disclosing more information behind the duo’s sudden resignations.
“This is very unusual especially in a big-listed company and is enough to scare investors. It could be a sign of a ‘house on fire’ and may affect the smooth operation of the business,” Motswedi Securities said.
At the same time, despite the delay to publish them, the company also announced that its financial results for the year ended December 31, 2016 are expected to be materially lower than those reported for the same period the previous year. The company attributed the poor run to modulated consumer spending in the wake of a challenging economic environment.victor