March 5, 2019 / 5:58 PM / 2 months ago

Botswana retailer Choppies forecasts full-year income drop

GABORONE, March 5 (Reuters) - Botswana budget retailer Choppies Enterprises said on Tuesday it estimated net income after tax for the year ended June 30, will be 389 million pula ($36.41 million) lower than the previous year partly due to impairments.

Choppies, which also operates supermarkets in South Africa and Zimbabwe and has a second listing in Johannesburg, has seen its shares plunge by over 60 percent since announcing a delay to the publication of its financial statements in September.

This was due to the company’s external auditors PricewaterhouseCoopers (PwC) raising certain concerns with the board in respect of the audit for the year ended June 30, 2018.

“In relation to the audit queries, the issues underpinning PwC’s enquiries have been substantially addressed by the group, with PwC’s audit of these matters currently ongoing,” Choppies said in a statement.

An investigation has also started into certain transactions which the group was party to.

As of June 2017, Choppies’ operating income was at 1.9 billion pula.

In an unaudited assessment of its results for the year ended June 30, Choppies said certain amounts and balances reported in prior periods required restatement or re-presentation.

As a result, the cumulative impact of such restatements will be to reduce the total equity of the group as at June 30, 2017 by an estimated 378 million pula.

Both bourses in Botswana and South Africa have suspended trading in the food retailer for failing to release its annual results within three months of its financial year-end. It has also breached contractual covenants with a number of lenders.

“Some of the group’s directors and members of the executive have met and continue to meet regularly with lenders in order to ensure that the group has continued access to existing lending facilities (which remain adequate for operational purposes),” Choppies said.

As at June 2017, Choppies owed 667 million pula in long-term borrowings and bank overdrafts.

The retailer added it is still unable to say when it will release its annual audited results.

$1 = 10.6838 pula Reporting by Brian Benza; editing by David Evans

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