HVA avoids trading suspension, takes Rs140mn provision to resolve accounting issues

March 15, 2019 (LBO) – Colombo Stock Exchange CSE listed HVA Foods (HVA) has avoided an impending trading suspension by resolving accounting issues flagged by the CSE. Shares were set to be suspended from trading next week.

Shares spiked almost 40% on the news on a light Rs4mn in trading volume.

The CSE released the following disclosure on the subject:

“ENFORCEMENT ACTION IN TERMS OF CSE LISTING RULES:NOTIFICATION RE.TRADING SUSPENSION

15 March 2019

The company has resolved the matters giving rise to the Modified Audit Opinion in the Audited Financial Statements of the company for the year ended 31st March 2018. Therefore, the Trading of the securities of the company will not be suspended with effect from 19th March 2019.”

The accounting issues were resolved by taking provisions of approximately Rs140mn for doubtful amounts relating to VAT receivable and amounts due from related parties.

The provisions will likely result in a large loss in the March 2019 quarter, and a reduction in NAV/share from over Rs7 per share from the December 2018 quarter down to near Rs5/share.