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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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