Choppies Enterprises Limited (CEL) has posted strong results for the year to June 2020 from its continuing southern African businesses in Botswana, Zambia, Namibia and Zimbabwe.
Despite COVID-19, which is estimated to have cost CEL BWP190m in revenue, CEL managed to increase its revenue by one percent to BWP5,421 million, increased gross profit by three percent to BWP1,253 million and raised its gross margin from 22,7 percent to 23,1 percent.
This comes off the back of a period of consolidation and restructure, improved corporate governance and the withdrawal from non-performing operations in markets including South Africa, Kenya, Tanzania, and Mozambique.
Choppies chief executive, Mr Ram Ottapathu, said, “These are solid results. Our continuing businesses are resilient. We have traded strongly following the exit from certain markets and the impact of COVID-19 and hyperinflation in Zimbabwe. We are particularly pleased by the strong growth in EBITDA and our ability to consolidate our continuing business in Botswana, Zambia, Namibia and Zimbabwe.”
The bottom line was adversely affected by the discontinuation/disposal of its operations in South Africa, Kenya, Tanzania, and Mozambique, and by the impact of IFRS 16- leases.
While the group showed a total loss of BWP371 million, this was down 14 percent on the BWP429 million loss in 2019.
Results in the continuing businesses surged:
- EBIDTA improved by 109 percent
- operating profit of BWP208 million grew by 126 percent
- operating profit of BWP208 million grew by 126 percent
- profit for the period grew by 1314 percent to BWP99,7 million (BWP7 million in 2019);
- earnings per share grew by 767 percent to 8,1 Thebe
- basic headline earnings per share increased by 227 percent
Revenue increases were inflation driven in Botswana and Zimbabwe against a backdrop of negative sales volumes due to the impact of COVID-19. The impact of the pandemic on the group’s continuing operations revenue was estimated at P420 million.
Group EBITDA on a comparable basis (i.e. before accounting for IFRS 16) increased strongly to BWP316,7 million (2019 BWP226,3 million) owing to the improvement in gross profit margins and strict cost control.
Total assets reduced by BWP346,3 million from BWP2 187,1 to BWP1 840,8 million despite the addition of right-of-use assets in terms of IFRS 16 to the value of P772,1 million. The net reduction in total assets was mainly as a result of the discontinued operations.
Net borrowings excluding the IFRS 16 lease liabilities decreased from BWP660,3 million to BWP636,1 million as the Group continues to prioritise the reduction of debt.
Ottapathu said,“The board continues to act in the best interests of the business and shareholders with a strong focus on debt reduction.”
All investigations are completed and there are no reported irregularities.
He assured shareholders that all recommendations on corporate governance have been implemented.
“Recognised corporate governance policies and structures are now in place. This continues to be the main focus areas for the Board. I am confident that the actions we have taken will reposition Choppies as the preferred retailer for mass grocery and financial services in the countries in which we operate, thereby maximising shareholder value,” he continued.
He revealed that a new CFO was in place, while an experienced retailer advisor had been appointed. Central to the group’s future growth plan is a ‘Shared-Value Strategy which involves working beneficially with all stakeholders including, among others, developing local businesses, care for the environment and population upskilling.
Ottapathu explained, “We are actively supporting farmers’ growth and quality by providing platforms and knowledge that bolster their financial and technical expertise. We also make our transport capacity available to local businesses to help small producers reach new markets whenever we can.”
Choppies is helping to train citizens in basic skills and crafts with a view to accelerating the productivity of its employees. And the group is partnering with universities to provide advanced courses in information technology and retail management.
“All of this helps develop people and skills to the benefit of the countries in which we operate,” Mr Ottapathu concluded.
