Choppies loses P1.7bn in value after sell-off frenzy

Choppies' share price is reeling from an ongoing audit review
Choppies' share price is reeling from an ongoing audit review

Choppies investors saw P1.7 billion in value wiped off their holdings in the space of five days last week, as grim news of an audit review and Zimbabwe shareholder dispute triggered a sell-off stampede.

Choppies opened the week trading at P1.69 with a market capitalisation of P2.2 billion and by last Friday, was trading at P0.40 with a market capitalisation of P521 million. By Wednesday, the first day of trading after the long weekend, the regional supermarket group had recovered slightly to P0.62, still in record low territory however.

Choppies’ troubles began last Thursday when the Botswana Stock Exchange halted trading of its shares and requested clarification on the reasons for a delay in results for the year ended June 30, 2018. Choppies subsequent clarification triggered a sell-off stampede after the group said its new auditors were reassessing historical figures related to business acquisitions, value of inventory, property and others. Further alarm was raised when Choppies directors, in their clarification statement, could not state when the results would eventually be made available to investors. “Such reassessments are ongoing, complex by nature and require careful analysis in order to determine the impact on prior and current periods,” the directors said.  “The board and the company’s auditors identified a number of matters relating to the current and earlier financial periods, which require independent verification and expert legal analysis and advice before the impact thereof on accounting recognition, measures and disclosures can be determined. “Certain transactions and business relationships were not made fully apparent and were therefore not sufficiently considered in preparation of historical financial statements.”  Choppies directors also said a raging shareholder dispute in Zimbabwe, involving that country’s former vice president, was adding uncertainty on the situation. This week, analysts told BusinessWeek that investors, some of them major institutional entities, were losing trust in the group, particularly as the delay in results was the second such announcement this year.

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