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Results for the 12 months to June 2015
Choppies Enterprises Limited
(Registration number 2004/1681)
JSE share code: CHP
BSE share code: CHOPPIES
ISIN: BW0000001072
("Choppies" or the "Company")
CHOPPIES ENTERPRISES: RESULTS FOR THE 12 MONTHS TO JUNE 2015
Key information
- Turnover increased 19% from BWP 5.0 billion to BWP 5.9 billion
- Gross profit increased 20% from BWP 1.0 billion to BWP 1.2 billion
- Listed on JSE raising BWP 448 million / R 574 million
- Acquired Kenyan retailer Ukwala
- Increased footprint to 129 stores across the three markets
- Kenyan acquisition concluded subject to Competition Authority Kenya approval
- Zambian stores ready for commencement of operation
- Retail space grew by 25.40% to 188 849 Sq m
- Operating margins negatively impacted by increase in administrative expenses
Mr Ram Ottapathu, CEO, said:
“Choppies took major steps forward over the past financial year. The secondary listing on the JSE in May has given us further impetus
to become a leading retailer across Sub-Saharan Africa. The African opportunity is supported by the rapid demand for quality branded
convenience across the continent. We continued with our store rollout with 24 stores opened. Our performance over the past year
was very satisfying and we are confident of continuing on the growth trajectory.”
OPERATING REVIEW
Store expansions
Choppies increased its footprint with store rollouts in existing markets. In Botswana, Choppies further strengthened its position as
biggest retailer to 73 stores from 69 stores in FY/14. Our move towards a break-even position in South Africa was accomplished with
an additional 11 stores from 26. There was a single store closure in South Africa due to relocation of said store. The Zimbabwean
expansion from Harare to the north of the country proceeded well with the addition of 7 new stores to take the in-country footprint
to 20.
Acquisitions
Choppies acquired a 75% stake in ten Ukwala Supermarkets in Kenya in May 2015. The transaction is in line with our strategy of
expanding into new markets in Sub-Saharan Africa and gives Choppies an immediate footprint of established stores and a platform to
grow in Kenya. Three of the supermarkets are located in Nairobi, two in Nakuru and five in the port city of Kisumu, the third largest
city in Kenya. The finalisation of the acquisition is subject to approval by the Competition Authority in Kenya, which is expected to be
granted by October 2015.
COMMENTS ON RESULTS
Income statement
Choppies revenue increased to BWP 5,945 million on group level, an increase of 19% from BWP 5 012 million and gross profit
increased 20% to BWP 1,291 million. The 26% hike in administrative expenses to BWP 817 million is associated with the once-off costs
of new stores openings. Profit after tax increased 11% to BWP 197 million. Earnings per share increased by 20% to 17.11 thebe and
headlines earnings per share increased by 22% to 16.92 thebe.
Balance sheet
Plant and equipment increased to BWP 746 million from BWP 597 million due to the rollout of 24 new stores across the three
markets. Cash and cash equivalents increased to BWP 344 million from BWP 103 million. The BWP 448 million proceeds from the JSE
listing was used to repay BWP 118 million in long term debt and prop up the cash position for further expansion. Long term
borrowings increased to BWP 353 million from BWP 276 million to fund capital expenditure.
Cash flow statement
Net cash flow for the financial year was BWP 223 million.
COUNTRY OVERVIEW
Botswana
Botswana posted revenue of BWP 3,806 million with EBITDA increasing to BWP 330 million and PAT of BWP 200 million. The in-
country staff compliment grew to 6,073 employees.
Botswana’s economic growth for 2015 was impacted by lower earnings from diamonds sales, the countries’ main export commodity.
Official estimates place the 2015 growth at 2.6%, but the 2016 projection is set at 4.9%. Choppies did well to maintain market share
and improve profitability.
South Africa
For South Africa revenue increased to BWP 1,275 million with gross profit improving to BWP 284 million EBTDA of BWP 23 million,
although a weaker Rand exchange rate eroded some of the gains made through the year.
After recovering from the impact of lengthy strikes in the productive industries in 2014, the South African economy faced a new
round of challenges over the past 12 months. A steep drop in commodity prices combined with electricity shortages have placed
significant pressure on the mining sector, which is the main activity in the South African regions with a Choppies presence. Operations
have achieved EBITDA breakeven, but are not yet profitable on a net income basis. Gross profit have improved significantly due to
efficiencies in centralized distribution.
Zimbabwe
In Zimbabwe sales improved in the year to deliver BWP 863 million in revenue and an EBITDA of BWP 30 million.
The dollarized Zimbabwe economy remains fragile. Average basket sizes dropped considerably but footfall growth was very strong
indicating a growing popularity of the Choppies brand.
PROSPECTS
The roll out plans are progressing as anticipated bearing a few months delay in Zambia and Tanzania. Choppies plans to roll out a total
of 35 new stores (i.e. excluding acquisitions) in the coming financial year in line with our target to have 200 stores by the end of the
2016 calendar year.
While we expect some pressure on sales, there is sufficient measures in place to protect our profit margins. Our expanding own brand
range and cost containment thanks to improved logistical efficiencies will support margins across the region in the event of a
weakening in the consumer environment. In addition, our expansion in Kenya will help to spread our risk further and of course drive
group-level sales volume growth.
CHOPPIES ENTERPRISES LIMITED
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE, 2015
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 30 Year ended 30
June, 2015 June, 2014
P ' 000 P ' 000
Revenue 5 945 234 5 012 418
Cost of sales (4 653 413) (3 933 347)
Gross profit 1 291 821 1 079 071
Other income 8 611 8 729
Operating income 1 300 432 1 087 800
Expenditure (1 032 864) (846 389)
Administrative expenses (817 993) (650 279)
Selling and distribution expenses (48 322) (44 976)
Other operating expenses (166 549) (151 134)
Operating profit before interest 267 568 241 411
4.50% 4.82%
Interest cost (28 522) (15 566)
Interest income 4 180 3 589
Profit before taxation 243 226 229 434
Taxation (45 988) (52 274)
Profit for the year 197 238 177 160
Attributable to:
Owners of the company 202 826 167 882
Non-controlling interests (5 588) 9 278
Other comprehensive income
Foreign currency translation differences from foreign operations (16 068) 3 487
Attributable to:
Owners of the company (16 542) 5 616
Non-controlling interests 474 (2 129)
Profit and total comprehensive income for the year Attributable to: 181 170 180 647
Owners of the company 186 284 173 498
Non-controlling interest (5 114) 7 149
Earnings per share - Thebe 17.11 14.30
Headline earnings per share - Thebe 16.92 13.88
Dividend per share - Thebe ( declared and paid ) 4.51 4.25
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Year ended Year ended
30 June, 2015 30 June, 2014
P ' 000 P ' 000
Assets
Non current assets 1 269 312 1 094 808
Plant and equipment 746 049 597 040
Deferred taxation 19 572 15 217
Investments in new projects 30 165 28 509
Goodwill 473 526 454 042
Current assets 1 149 383 654 663
Inventories 535 653 407 871
Investments 3 3
Advances and deposits 66 023 53 872
Trade and other receivables 186 148 84 082
Amounts due from related entities. 17 735 5 336
Cash and cash equivalents 343 821 103 499
Total assets 2 418 695 1 749 471
Equity and Liabilities
Equity 1 451 538 869 323
Share capital 875 476 421 474
Preference shares 86 85
Retained earnings 588 286 438 418
Non controlling interests 2 035 7 149
Foreign currency translation reserve (14 345) 2 197
Non - current liabilities 312 429 244 447
Long term borrowings 273 591 210 164
Deferred lease liabilities 38 838 34 283
Current liabilites 654 728 635 701
Current portion of deferred lease liabilities 4 805 4 139
Bank overdraft 62 566 45 660
Trade and other payables 453 129 404 160
Amounts due to related entities 38 301 101 404
Taxation payable 16 742 14 152
Current portion of long term borrowings 79 185 66 186
Total equity and liabilities 2 418 695 1 749 471
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non Controlling Foreign currency
Particulars Stated Capital Preference Shares Retained Earnings Interests translation reserve Total
P ' 000 P ' 000 P ' 000 P ' 000 P ' 000 P ' 000
Balance at 30 June 2013 421 474 85 320 461 - (3 419) 738 601
Total comprehensive income for the year - - 167 882 7 149 5 616 180 647
Profit - - 167 882 9 278 - 177 160
Other comprehensive income - - - (2 129) 5 616 3 487
Transactions with Owners - - (49 925) - - (49 925)
Dividend declared - - (49 925) - - (49 925)
Issue of preference shares - - - - - -
Balance at 30 June 2014 421 474 85 438 418 7 149 2 197 869 323
Total comprehensive income for the year - - 202 826 (5 114) (16 542) 181 170
Profit - - 202 826 (5 588) - 197 238
Other comprehensive income - - - 474 (16 542) (16 068)
Transactions with Owners 454 002 1 (52 958) - - 401 045
Issue of ordinary shares 454 002 - - - - 454 002
Dividend declared - - (52 958) - - (52 958)
Issue of preference shares - 1 - - - 1
Balance as at 30 June 2015 875 476 86 588 286 2 035 (14 345)
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
Particulars Year ended Year ended
30-Jun-15 30 June, 2014
P ' 000 P ' 000
Net cashflows generated from operating activities (243) 196 615
Net cashflows used in investment activities (278 247) (528 056)
Net cashflows (used in)/ generated from financing activities 501 906 174 150
Net movement in cash and cash equivalents 223 416 (157 291)
Cash and cash equivalents at begining of the year 57 839 215 130
Cash and cash equivalents at end of the year 281 255 57 839
ABRIDGED SEGMENTAL RESULTS
2015 Botswana South Africa Zimbabwe
P ' 000 P ' 000 P ' 000
Statement of profit or loss and other comprehensive Income
Revenue :
Trading income 3 806 193 1 275 589 863 452
Other income 5 220 2 322 1 069
Total segmental revenue 3 811 413 1 277 911 864 521
Reportable segment gross profit 851 713 284 248 155 860
Reportable segment profit/(loss) before taxation 253 761 (23 712) 13 177
Reportable segment Depreciation 59 631 45 343 11 506
Reportable segment EBIDTA 330 645 23 052 30 349
Reportable segment profit/(loss) after taxation 200 979 (12 008) 8 267
Statement of financial position
Reportable segment assets 1 510 387 509 705 398 603
Reportable segment liabilities 556 802 144 754 265 601
2014 Botswana South Africa Zimbabwe
P ' 000 P ' 000 P ' 000
Statement of profit or loss and other comprehensive Income
Revenue :
Trading income 3 586 393 1 001 693 424 332
Other income 7 324 1 226 179
Total segmental revenue 3 593 717 1 002 919 424 511
Reportable segment gross profit 789 151 203 054 86 866
Reportable segment profit/(loss) before taxation 233 623 (28 525) 24 336
Reportable segment Depreciation 76 667 30 298 3 276
Reportable segment EBIDTA 318 576 3 018 30 058
Reportable segment profit/after taxation 178 022 (19 056) 18 194
Statement of financial position
Reportable segment assets 1 124 217 347 588 277 666
Reportable segment liabilities 524 979 112 809 242 360
The abridged consolidated financial results and financial position of Choppies Enterprises Limited are extracted from the audited group annual financial statements
prepared in accordance with International Financial Reporting Standards ("IFRS"), under the historical cost convention except for financial instruments which are disclosed at fair value.
Botswana
22 September 2015
Enquiries:
Choppies
Ram Ottapathu +267 318 6657 ram@choppies.co.bw
Vidya Sanooj +267 318 6657 vidya@choppies.co.bw
Instinctif Partners +27 11 447 3030
Nicholas Williams +27 11 050 7515
Pietman Roos +27 72 360 5575
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank)
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