More trouble beckons for Choppies
Mbongeni Mguni | Friday December 21, 2018 13:17
Choppies dominated news in the business sector this year, after a 76% share price drop in September. The group had announced it could not say when its results for the year ended June 30 would be released as its new auditors were reassessing historical figures related to business acquisitions, value of inventory, property and others.
Choppies also said an ownership dispute was further complicating matters. The group had also previously delayed the release of its interims citing similar issues. Market watchers this week said the regional grocer was in danger of being the first counter to be transferred to the BSE’s new “default board” where companies not complying with the listing rules are moved to. The default board is part of new listing rules, which kick in on January 1, 2019.
According to the current listing rules, companies on the local exchange are required to publish their financial results no more than three months after the end of the relevant financial reporting period. For Choppies, that period expired on September 30.
The BSE suspended Choppies in October for the non-compliance and warned of a possible delisting. Companies on the default board, according to the new rules passed by the Non-Bank Financial Institutions Regulatory Authority earlier this year, are fined P500 daily up to maximum of P150,000 before sterner actions are taken.
Choppies has already been put on notice of a possible delisting, although the local exchange has been reluctant to take the extreme step in previous years. Under the new rules, once delisted a company would have to wait 10-years before seeking relisting.
“Once the rules kick in, every counter to whom they apply has to face them, whether they are suspended or not,” said a market analyst, who requested anonymity for professional reasons.
“The BSE will however watch they way they handle Choppies simply because it carries a lot of weight in the exchange and in the economy. “It is one of the highest private sector employers and has at least 40 companies dependent on its survival. It is a company whose health is key to the economy.”
Mystery has cloaked Choppies’ future since the developments in September, with precious few official announcements from the group. This week, however, Choppies told investors that its chief financial officer had quit, but would continue to “offer his assistance” until the production of the full year results.
Due to the suspension, Choppies’ 8,200 investors cannot take any action on whatever information emerges from the group.