Picture: ISTOCK
Picture: ISTOCK

Retail group Choppies has yet to give a full explanation on why it has not yet published its results for the year to end-June.

The Botswana and JSE-listed group first said on September 21 that its results would come out late, and also warned that after-tax profit would be at least 20% lower when compared to the 74.64 pula in the previous corresponding period. This was despite after-tax profit rising 21% to 67.65m pula in its half-year results.

A few days later is said that the delay stemmed from its new auditors, PwC pointing out several accounting matters that required “independent verification and expert legal analysis”.

Choppies said the predicted decline in earnings was a result of difficult trading conditions in SA, Mozambique and East Africa and a “material increase” in inventory losses as a result of it improving the stock counting procedures it used during the last quarter of the year.

Keith McLachlan, fund manager at AlphaWealth said it looked like the real issue was how Choppies accounted for its stock. Instead of using the Ifras accounting method, which did a complete inventory of its stock, it used a rotational sampling method, which only measures a small portion of it.

The drawback in using this sampling approach to measure stock was that it meant auditors could not be totally sure that these samples were accurate.

The group’s former auditors, KPMG noted this in its latest auditor’s report. “Where significant differences were identified between the inventories counted and the inventory records, management performed recounts subsequent to year-end. The recounts covered significant product categories in Botswana and complete counts for selected locations in SA”.

KPMG was replaced as auditors at an extraordinary general meeting on February 26.

Choppies CEO Ram Ottapathu and Sanooj Pullarote did not respond to queries on the reasons for the delay or when its results would be released.

The group’s failure to release its results led the JSE and the Botswana Stock Exchange, where it has a primary listing, suspending trade in its shares on November 1.