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CHOPPIES ENTERPRISES LIMITED - Results for the 12 months to June 2016 and cash dividend declaration

Release Date: 20/09/2016 17:00
Code(s): CHP     PDF:  
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Results for the 12 months to June 2016 and cash dividend declaration

Choppies Enterprises Limited
(REgistration number 2004/1681)
BSE Share code : CHOPPIES (Primary Listing)
JSE share code : CHP  ( Secondary Listing)
ISIN: BW0000001072
("Choppies" or the "Company")

CHOPPIES ENTERPRISES : RESULTS FOR THE 12 MONTHS TO JUNE 2016 AND CASH DIVIDEND DECLARATION

Key information
     -  Turnover increased 24% from BWP 5.9 billion to BWP 7.4 billion
     -  Gross profit increased 12% from BWP 1.29 billion to BWP 1.44 BILLION
     -  Asset Value up by 18%
     -  Footfall increased by 25%
     -  Strong trading profit improvement in Botswana
     -  Strong footfall growth in Zimbabwe even though the economy deteriorated and basket size reduced considerably
     -  Commenced operation in Kenya with 8 stores and 2 distribution centres
     -  Commenced operation in Zambia with 5 stores and a distribution centre
     -  Retail space grew by 36% to 256 075 Sq m
     -  Operating margins negatively impacted by pre-operative expenses and increase in administrative expenses
     -  EBITDA down by 23% from BWP 384 Million  to BWP 297 Million

Financial Overview and Review of Operations

Store expansions
Choppies increased its footprint by adding 6 stores in Botswana, 25 stores in south africa, 10 stores in Zimbabwe, 5 stores in Zambia and 8 stores in kenya
including 21 Jwayelani stores acquired in KZN and Eastern Cape

GROUP HIGHLIGHTS

Strategy
Choppies strategy of creating a strong African supermarket business moved forward at an accelerated pace during the past year with the establishment of businesses in Zambia and Kenya

Botswana
Despite challenging economic conditions, the Botswana operations traded well and maintained market share. The continued devaluation of the Rand put downward pressure on prices and thus 
revenues. EBITDA increased by 7% with the net profit after tax increasing by 1%, due to an increase in the depreciation charge related to the Botswana operations.

South Africa
The South African business, other than the newly acquired business, Jwayelani, incurred significant losses occasioned by very depressed trading in areas dominated by mining. 
Focused management action has resulted in an improvement in sales and margins. While trading conditions remain challenging, early indications are 
that these actions will advance South Africa to improved results.The acquisition of Jwayelani, which trades in KwaZulu-Natal and the Eastern Cape, was successfully executed. 
Jwayelani consists of 21 stores, a distribution centre and a meat processing factory. The business has performed well and added to the critical mass of our South African operations.

Zimbabwe
Losses were incurred in Zimbabwe due to depressed economic conditions, which have resulted in a shortage of cash in circulation, causing customer purchases per transaction to drop markedly. 
However, footfall increased strongly demonstrating the desire of customers to shop at Choppies. Renewed management focus has resulted in improved margins in recent months. 
We anticipate returning to profitability in the coming year.


Zambia and Kenya
Operations commenced in Zambia and Kenya with the opening of 5 and 8 stores, respectively, as well as establishing distribution facilities. Our operations in these countries will remain 
loss making in FY2017 as we continue to build our store base and invest in operational infrastructures.    

Overall trading
Group operating margins were negatively impacted by the costs of establishing new geographical locations and opening new stores and distribution centres. 


PROSPECTS

While profits suffered due to the reasons noted above, cash flows remain robust. Strong growth in group revenue and a 25% increase in footfall, facilitated by new store openings, further 
demonstrates the strong consumer appeal of Choppies. The group’s expansion plans are progressing well. Choppies expects to commence operations in Tanzania and 
Mozambique in the coming months. The group plans to roll out more than 20 stores in all regions by the close of FY 2017.


DIVIDENDS

Final Distribution 

Notice is hereby given that the gross final dividend of 2.8266 thebe (or South African Rand cents equivalent) per share in respect of the year ended 30 June 2016 was declared on 20 September 2016, for payment 
to those ordinary shareholders registered in the books of the Company at the close of business on 21 October 2016. Net dividend cheques will be dispatched or electronically paid by the 
transfer secretaries on or about 21 November 2016. 

Notice is hereby given that, as approved by the Botswana Stock Exchange, dividend payments of less than P50 will be paid electronically to shareholders. We now request all shareholders 
to contact the transfer secretaries, Grant Thornton Business Services (Proprietary) Limited, by post/fax/hand delivery providing their bank account details to enable dividends to be paid 
electronically.

In respect of shareholders registered on the Johannesburg Stock Exchange:
The last date to trade shall be Tuesday, 18 October 2016 and shall commence trading ex the dividend on Wednesday, 19 October 2016. The record date to appear in the register to participate 
in the dividend will be Friday, 21 October 2016 and the dividend will be paid on Monday, 21 November 2016. The South African branch register will be closed for the purposes of 
dematerialisation, rematerialisation and transfers between the South African register and the South African and Botswana registers from Wednesday, 21 October 2016 to Friday, 21 October 2016, 
both dates inclusive. The exchange rate applicable for the conversion of Thebe to ZAR for payment to shareholders on the South African register will be confirmed in a separate announcement 
to be released on SENS on Tuesday 11 October, being the finalisation date. The issued shares at the declaration date is 1 291 628 341. The dividend has been declared from income reserves.

Distributable reserves available for the final dividend are net of Botswana withholding taxes at 7.5% deducted from dividends received from group entities, and as such, can be distributed
to shareholders registerred on Botswana Stock Exchange free of any further deduction. In respect of shareholders registered on the Johannesburg Stock Exchange, the dividends payable are subject to withholding tax as 
required under the South African Income Tax Act. This Dividend is treated as a foreign Dividend.


CHOPPIES ENTERPRISES LIMITED
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE, 2016

ABRIDGED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


                                                                                                          Year ended 30 June 2016       Year ended 30 June 2015
                                                                                                                          P ' 000                       P ' 000

Revenue                                                                                                                 7 369 005                     5 945 234
Cost of sales                                                                                                          (5 924 214)                   (4 653 413)
Gross profit                                                                                                            1 444 791                     1 291 821
Other income                                                                                                               52 265                         8 611
Operating income                                                                                                        1 497 056                     1 300 432

Expenditure                                                                                                            (1 348 442)                   (1 032 864)                     
Administrative expenses                                                                                                (1 086 843)                     (817 993)
Selling and distribution expenses                                                                                         (49 022)                      (48 322)
Other operating expenses                                                                                                 (212 577)                     (166 549)

Operating profit before interest                                                                                          148 614                       267 568
                                                                                                                             2.02%                        4.50%
Interest cost                                                                                                             (26 664)                      (28 522)                                                                                                         
Interest income                                                                                                             5 450                         4 180
Profit before taxation                                                                                                    127 400                       202 826                                              
Taxation                                                                                                                  (22 495)                      (45 988)
Profit for the year                                                                                                       104 905                       197 238
Attributable to:
   Owners of the company                                                                                                  109 527                       202 826
   Non-controlling interests                                                                                               (4 622)                       (5 588)

Other comprehensive income
Foreign currency translation differences from foreign operations                                                          (19 861)                      (16 068)
Attributable to:
   Owners of the company                                                                                                  (21 055)                      (16 542)
   Non-controlling interests                                                                                                1 194                           474

Profit and total comprehensive income for the year                                                                         85 044                       181 170
Attributable to:
   Owners of the company                                                                                                   88 472                       186 284
   Non-controlling interests                                                                                               (3 428)                       (5 114)

Earnings per share - Thebe                                                                                                   8.48                         17.11
Headline earnings per share - Thebe                                                                                          7.25                         16.92
Dividend per share - Thebe (declared and paid)                                                                               4.88                          4.51



ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                                                          Year ended 30 June 2016       Year ended 30 June 2015
                                                                                                                          P ' 000                       P ' 000
Assets

Non-current assets                                                                                                      1 740 579                     1 269 313  
   Plant and equipment                                                                                                  1 082 968                       746 050
   Deferred taxation                                                                                                       51 431                        19 572
   Investments in new projects                                                                                             95 560                        30 165
   Goodwill                                                                                                               510 620                       473 526

Current assets                                                                                                          1 115 648                     1 149 383
   Inventories                                                                                                            703 539                       535 653
   Investments                                                                                                                  3                             3
   Advances and deposits                                                                                                   83 213                        66 023
   Trade and other receivables                                                                                            191 444                       186 148
   Amounts due from related entities                                                                                        4 993                        17 735
   Cash and cash equivalents                                                                                              132 456                       343 821

Total assets                                                                                                            2 856 227                     2 418 696

Equity and liabilities

Equity                                                                                                                  1 473 593                     1 451 538
   Share capital                                                                                                          875 476                       875 476
   Preference shares                                                                                                           87                            86
   Retained earnings                                                                                                      634 823                       588 286
   Non-controlling interests                                                                                               (1 393)                        2 035
   Foreign currency translation reserve                                                                                   (35 400)                      (14 345)

Non-current liabilities                                                                                                   468 072                       312 429
   Long term borrowings                                                                                                   412 897                       273 591
   Deferred lease liabilities                                                                                              55 175                        38 838

Current liabilities                                                                                                       914 562                       654 729
   Current portion of deferred lease liabilities                                                                            4 651                         4 805
   Bank overdrafts                                                                                                         80 371                        62 566 
   Trade and other payables                                                                                               694 503                       453 130
   Amounts due to related entities                                                                                          9 551                        38 301
   Taxation payable                                                                                                        20 027                        16 742
   Current portion of long term borrowings                                                                                105 459                        79 185

Total equity and liabilities                                                                                            2 856 227                     2 418 696


ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Particulars                                   Stated capital     Preference shares     Retained earnings     Foreign currency     Non-controlling         Total
                                                                                                             translation reserve  interest     
                                                     P ' 000               P ' 000               P ' 000                 P ' 000          P ' 000       P ' 000

Balance at 30 June 2014                              421 474                    85               438 418                   2 197            7 149       869 323

Total comprehensive income for the year                    -                     -               202 826                 (16 542)          (5 114)      181 170
   Profit                                                  -                     -               202 826                       -           (5 588)      197 238
   Other comprehensive income                              -                     -                     -                 (16 542)             474       (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 at 30 June 2015                              875 476                    86               588 286                 (14 345)           2 035     1 451 538

Total comprehensive income for the year                    -                     -               109 527                 (21 055)          (3 428)       85 044
   Profit                                                  -                     -               109 527                       -           (4 622)      104 905
   Other comprehensive income                              -                     -                     -                 (21 055)           1 194       (19 861)

Transactions with owners                                   -                     1               (62 990)                      -                -       (62 989)
   Dividend declared                                       -                     -               (62 990)                      -                -       (62 990)
   Issue of preference shares                              -                     1                     -                       -                -             1

Balance at 30 June 2016                              875 476                    87               634 823                 (35 400)          (1 393)    1 473 593


ABRIDGED STATEMENT OF CHANGES IN CASH FLOWS


Particulars                                                                                                Year ended 30 June 2016       Year ended 30 June 2015
                                                                                                                           P ' 000                       P ' 000 

Net cash flows generated from operating activities                                                                         198 757                         5 196
Net cash flows used in investment activities                                                                              (566 845)                     (283 687)
Net cash flows generated from financing activities                                                                         138 918                       501 907
Net movement in cash and cash equivalents                                                                                 (229 170)                      223 416
Cash and cash equivalents at the begining of the year                                                                      281 255                        57 839
Cash and cash equivalents at the end of the year                                                                            52 085                       281 255


ABRIDGED SEGMENTAL RESULTS

2016                                                 Botswana          South Africa              Zimbabwe                  Zambia            Kenya         Total
                                                      P ' 000               P ' 000               P ' 000                 P ' 000          P ' 000       P ' 000
Statement of profit or loss and other comprehensive
income
 Revenue:
   Trading income                                   4 545 097             1 534 999             1 201 593                  40 844           46 472     7 369 005
   Other income                                        45 926                 4 540                 1 762                      24               13        52 265

Total segment revenue                               4 591 023             1 539 539             1 203 355                  40 868           46 485     7 421 270

Reportable segment gross profit                       925 692               316 153               188 709                   6 133            8 104     1 444 791

Reportable segment profit/(loss) before taxation      261 792               (93 630)              (16 225)                 (7 282)         (17 255)      127 400

Reportable segment depreciation                        77 517                49 911                17 433                   1 409            1 834       148 104

Reportable segment EBITDA                             353 134               (43 105)                7 679                  (5 873)         (15 118)      296 717

Reoportable segment profit/(loss) after taxation      203 202               (68 079)              (12 384)                 (4 694)         (13 140)      104 905

Statement of financial position
 Reportable segment assets                          1 382 114               745 168               531 327                  82 894          112 724     2 856 227
 Reportable segment liabilities                       750 787               291 250               270 262                  29 257           41 080     1 382 636


2015                                                 Botswana          South Africa              Zimbabwe                  Zambia            Kenya         Total
                                                      P ' 000               P ' 000               P ' 000                 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                       -                -     5 945 234
   Other income                                         5 220                 2 322                 1 069                       -                -         8 611

Total segment revenue                               3 811 413             1 277 911               864 521                       -                -     5 953 845

Reportable segment gross profit                       851 713               284 248               155 860                       -                -     1 291 821
 
Reportable segment profit/(loss) before taxation      253 761               (23 712)               13 177                       -                -       243 226 

Reportable segment depreciation                        59 631                45 343                11 506                       -                -       116 480

Reportable segment EBITDA                             330 649                23 052                30 349                       -                -       384 050     

Reoportable segment profit/(loss) after taxation      200 979               (12 008)                8 267                       -                -       197 238

Statement of financial position
 Reportable segment assets                          1 510 388               509 705               398 603                       -                -     2 418 696 
 Reportable segment liabilities                       556 803               144 754               265 601                       -                -       967 158


Headline Earnings per Share  (HEPS)

                                                                        P'000
Basic Earnings                                                        109 527
Remeasurements 
Profit on sale of asset                                               (20 387)
Tax Impact                                                              4 496
Headline Earnings                                                      93 636
Weighted Average Number of Shares                               1 291 628 341
HEPS Thebe                                                               7.25

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 certain financial instruments
which are disclosed at fair value.

Botswana
20 September 2016

Enquiries:
Choppies
Ramachandran Ottapathu                  +267 3186657    ram@choppies.co.bw
Sanooj Pullarote                        +267 3971855    sanooj@choppies.co.bw

Sponsor
RAND MERCHANT BANK(A division of FirstRand Bank Limited)
                         
Date: 20/09/2016 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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