CMA under scrutiny as Uchumi delays results

Investors in Nairobi Securities Exchange (NSE)-listed Uchumi Supermarkets #ticker:UCHM remain in the dark as the troubled retailer is yet to publish its financials for several months in an alarming regulatory breach.

The retailer missed the February deadline to publish its half-year results for the period to December 2018. And despite getting a five-month extension, it is yet to release its financials for the year ending June 2018.

The retailer was yet to respond to the Business Daily’s queries on the matter by the time of going of press Monday.

Uchumi acting chief executive Mohamed Mohamed had in April referred the Business Daily to the retailer’s statement linking the extended delay to its ongoing “turnaround” activities.

“In light of the various initiatives that we are undertaking to revive the chain, including preparation of the company voluntary arrangement, it was not possible to finalise the audit,” Mr Mohamed said in a statement in April.

The Capital Markets Authority (CMA) also did not respond to this writer’s queries on any actions the regulator plans to take despite promising to do so.

Experts have cautioned that Uchumi’s delay in opening its books to public scrutiny coupled with the regulator remaining mum on the matter is hurting investor confidence.

Analysts said earlier that the CMA must arrest the breaches by enforcing the law to protect investors as it was crucial in ensuring an orderly market.

“The listed companies are required to publish their accounts before a certain deadline so that the investors wanting to invest in these companies might be able to make an informed decision before buying their shares,” said Kunal Ajmera, chief operating officer at Grant Thornton in April.

“A delay in publishing these accounts signifies some challenges with the audit and may reflect negatively on the management of the company.”

Actions the CMA could take include suspending the retailer from trading on the NSE or penalising it.

“In other markets like the UK, the regulator has suspended trading in securities pending clarification of a company’s financial position,” Shitul Shah, a partner at Nairobi-based law firm Daly & Inamdar Advocates, told the Business Daily earlier.

Uchumi is fighting to stay afloat amid Sh900 million winding-up suits currently in court.

The retailer has struggled to raise new capital to fund its operations, even as it suffers closure of branches and frequent stock-outs.

Uchumi Supermarket’s uncertainty has shrunk its prices down to a 52-week low of 29 cents and is facing a second attempt to be wound up over insolvency.