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CHOPPIES ENTERPRISES LIMITED - Abridged audited Group financial results for the year ended 30 June 2017 and cash dividend declaration

Release Date: 06/10/2017 17:35
Code(s): CHP     PDF:  
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Abridged audited Group financial results for the year ended 30 June 2017 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 : ABRIDGED AUDITED GROUP FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2017 AND CASH DIVIDEND DECLARATION

Key information
     -  Revenue up 20%
     -  Gross profit up 30%
     -  Asset value up 20%
     -  Footfall up 29%
     -  HEPS down 8%
     -  EBITDA up 15%
     -  Retail space up 21%

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
                                                                                                          Year ended 30 June 2017       Year ended 30 June 2016
                                                                                                                          P ' 000                       P ' 000

Revenue                                                                                                                 8 852 397                     7 369 005
Cost of sales                                                                                                          (6 979 223)                   (5 924 214)
Gross profit                                                                                                            1 873 174                     1 444 791
Other income                                                                                                               39 749                        52 265
Operating income                                                                                                        1 912 923                     1 497 056

Expenditure                                                                                                            (1 773 975)                   (1 348 442)                     
Administrative expenses                                                                                                (1 430 322)                   (1 086 843)
Selling and distribution expenses                                                                                         (56 416)                      (49 022)
Other operating expenses                                                                                                 (287 237)                     (212 577)

Operating profit before interest                                                                                          138 948                       148 614
                                                                                                                             1.57%                        2.02%
Interest cost                                                                                                             (53 889)                      (26 664)                                                                                                         
Interest income                                                                                                            10 930                         5 450
Profit before taxation                                                                                                     95 989                       127 400                                              
Taxation                                                                                                                  (21 349)                      (22 495)
Profit for the year                                                                                                        74 640                       104 905
Attributable to:
   Owners of the company                                                                                                   83 923                       109 527
   Non-controlling interests                                                                                               (9 283)                       (4 622)

Other comprehensive income
Foreign currency translation differences from foreign operations (net of taxes)                                             3 186                       (19 861)
Attributable to:
   Owners of the company                                                                                                    5 721                       (21 055)
   Non-controlling interests                                                                                               (2 535)                        1 194

Profit and total comprehensive income for the year                                                                         77 826                        85 044
Attributable to:
   Owners of the company                                                                                                   89 644                        88 472
   Non-controlling interests                                                                                              (11 818)                       (3 428)

Basic earnings per share - Thebe                                                                                             6.50                          8.48
Diluted earnings per share - Thebe                                                                                           6.50                          8.48
Basic Headline earnings per share - Thebe                                                                                    6.68                          7.25
Diluted headline earnings per share - Thebe                                                                                  6.68                          7.25


CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                                                          Year ended 30 June 2017       Year ended 30 June 2016
                                                                                                                          P ' 000                       P ' 000
Assets

Non-current assets                                                                                                      1 874 559                     1 740 579  
   Plant and equipment                                                                                                  1 206 087                     1 082 968
   Deferred taxation                                                                                                      105 267                        51 431
   Investments in new projects                                                                                             46 651                        95 560
   Goodwill                                                                                                               516 554                       510 620

Current assets                                                                                                          1 547 005                     1 115 556
   Inventories                                                                                                          1 006 479                       703 539
   Investments                                                                                                                  3                             3
   Advances and deposits                                                                                                   93 638                        83 212
   Taxation refundable                                                                                                      2 045                             -
   Trade and other receivables                                                                                            238 043                       191 444
   Amounts due from related entities                                                                                       19 051                         4 901
   Cash and cash equivalents                                                                                              187 746                       132 457

Total assets                                                                                                            3 421 564                     2 856 135

Equity and liabilities

Equity                                                                                                                  1 514 889                     1 473 593
   Stated capital                                                                                                         906 196                       875 476
   Preference shares                                                                                                           87                            87
   Retained earnings                                                                                                      682 216                       634 823
   Treasury shares                                                                                                        (30 720)
   Non-controlling interests                                                                                              (13 211)                       (1 393)
   Foreign currency translation reserve                                                                                   (29 679)                      (35 400)

Non-current liabilities                                                                                                   670 695                       468 072
   Long term borrowings                                                                                                   557 546                       412 897
   Deferred taxation                                                                                                       38 298                             -
   Deferred lease liabilities                                                                                              74 851                        55 175

Current liabilities                                                                                                     1 235 980                       914 470
   Current portion of deferred lease liabilities                                                                            5 988                         4 651
   Bank overdrafts                                                                                                        110 977                        80 371 
   Trade and other payables                                                                                               994 055                       694 411
   Amounts due to related entities                                                                                          1 499                         9 551
   Taxation payable                                                                                                         9 370                        20 027
   Current portion of long term borrowings                                                                                114 091                       105 459

Total equity and liabilities                                                                                            3 421 564                     2 856 135


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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

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

Total comprehensive income for the year                    -                     -                83 923                  -                   5 721          (11 818)       77 826
   Profit                                                  -                     -                83 923                  -                       -           (9 283)       74 640
   Other comprehensive income                              -                     -                     -                  -                   5 721           (2 535)        3 186

Transactions with owners                              30 720                     -               (36 530)           (30 720)                      -                -       (36 530)
   Issue of ordinary shares                           30 720                     -                     -                  -                       -                -        30 720
   Purchase of treasury shares                             -                     -                     -            (30 720)                      -                -       (30 720)
   Dividend declared                                       -                     -               (36 530)                 -                       -                -       (36 530)

Balance at 30 June 2017                              906 196                    87               682 216            (30 720)                (29 679)         (13 211)    1 514 889


SEGMENTAL RESULTS

2017                                                 Botswana          South Africa              Zimbabwe              Other regions               Total
                                                      P ' 000               P ' 000               P ' 000                   P ' 000               P '000
Statement of profit or loss and other comprehensive
income
 Revenue:
   Trading income                                   4 044 027             2 864 087             1 366 116                   578 167            8 852 397            
   Other income                                        26 446                10 077                 1 592                     1 634               39 749 

Total segment revenue                               4 070 472             2 874 164             1 367 708                   579 801            8 892 145

Reportable segment gross profit                       967 047               582 455               241 635                    82 037            1 873 174

Reportable segment profit/(loss) before taxation      212 002               (56 528)               11 124                   (70 609)              95 989

Reportable segment depreciation                        92 294                72 008                20 668                    18 239              203 209                 

Reportable segment EBITDA                             321 064                33 386                39 228                   (51 522)             342 156

Reportable segment profit/(loss) after taxation       164 557               (43 955)                6 038                   (52 000)              74 640

Statement of financial position
 Reportable segment assets                          1 478 828             1 067 879               508 902                   365 955            3 421 564
 Reportable segment liabilities                       920 080               596 626               233 234                   156 735            1 906 675

2016                                                 Botswana          South Africa              Zimbabwe              Other regions               Total    
                                                      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                    87 316            7 369 005      
   Other income                                        45 926                 4 540                 1 762                        37               52 265                   

Total segment revenue                               4 591 023             1 539 539             1 203 355                    87 353            7 421 270          

Reportable segment gross profit                       925 692               316 153               188 709                    14 237            1 444 791                  

Reportable segment profit/(loss) before taxation      261 791               (93 630)              (16 225)                  (24 536)             127 400                 

Reportable segment depreciation                        77 517                49 911                17 433                     3 243              148 104             

Reportable segment EBITDA                             353 134               (43 105)                7 679                   (20 991)             296 717           

Reoportable segment profit/(loss) after taxation      203 202               (68 079)              (12 384)                  (17 834)             104 905            

Statement of financial position
 Reportable segment assets                          1 384 022               745 168               531 327                   195 618            2 856 135             
 Reportable segment liabilities                       750 693               291 250               270 262                    70 337            1 382 542  

CONSOLIDATED STATEMENT OF CASH FLOWS

Particulars                                                                                                Year ended 30 June 2017       Year ended 30 June 2016
                                                                                                                           P ' 000                       P ' 000 

Net cash flows generated from operating activities                                                                         211 655                       199 039
Net cash flows used in investment activities                                                                              (286 364)                     (567 125)
Net cash flows generated from financing activities                                                                          99 392                       138 917
Movement in cash and cash equivalents                                                                                       24 683                      (229 169)
Cash and cash equivalents at the begining of the year                                                                       52 086                       281 255
Cash and cash equivalents at the end of the year                                                                            76 769                        52 086           
                     
COMMENTARY           
                                                        
1. Basis of preparation and accounting policies
The abridged consolidated financial results and financial position of Choppies Enterprises Limited are extracted from the group annual financial statements prepared in accordance with International Financial Reporting Standards ("IFRS").  
The accounting policies applied during the current year are consistent with those applied in the previous year.

2. Group Results
The Group operates predominantly in commodity dependent markets, and despite the difficult trading circumstances, Choppies performed well.  
Balanced growth in revenue and gross profit was achieved. The 2016 operating results benefited from the profit on sale of an aircraft of P20m and higher realised foreign exchange gains of P31m compared to the current financial year. 
Excluding these two items, group operating profit improved by 28%.  

Choppies strategy of creating a strong African supermarket business moved forward during the past year with the establishment of businesses in Tanzania and Mozambique.
The store footprint increased from 183 to 212 during the financial year.

3. Segmental reporting
The group operates in seven geographic areas: Botswana, South Africa, Zimbabwe, Zambia, Kenya, Tanzania and Mozambique.  Due to its increased geographical spread, the company has changed its segmental reporting by disclosing matured markets separately. 

Botswana
Despite challenging economic conditions the Botswana operations traded well and maintained market share. As noted above, the last years operating profits were enhanced by an aircraft sale and higher realised foreign exchange gains.  Excluding these two items, the segment’s 
EBITDA grew by 6% .  

South Africa
South African business achieved an EBITDA profit of 1.17% compared to a loss of 2.81% in the previous financial year and reduced net losses by 55%.  North West region stores achieved a like for like growth of 31% and broke even in the last quarter of the year. 
The continuation of this trend will result in an improved performance for the region. KZN performed well under the prevailing difficult trading circumstances, showing a like for like stores growth of 18% compared to the same period operated in FY16. 

Zimbabwe and other regions
Depressed economic conditions in Zimbabwe were exacerbated by a shortage of cash in circulation. Despite this revenue grew by 14%. Management focus has resulted in improved margins and profits.
Operations commenced in Tanzania and Mozambique and we expanded our presence in Zambia and Kenya.  

4. Prospects and events after balance sheet date
Expansion is continuing in accordance with the long term strategy. Five more stores have been added post year end increasing the store total to 217. The acquisition of a further eight stores in KZN is being negotiated, which, if concluded, 
will be complementary to our current business and will bring significant operating synergies. There were no significant events that occurred after the reporting date that require adjustment to or disclosure in the financial statements 
for the year ended 30 June 2017.

5. Employee share incentive scheme (Treasury shares)
On 22 May 2017, the Group issued 12 000 000 ordinary shares valued at P30 720 000 to the Choppies Group Share Incentive Trust. The fair value of the shares was based on the market price at the date of issue. The shares will be issued to employees
 as part of an employee share incentive scheme. The vesting of the shares will be dependent on conditions stipulated in the trust deed. Of the 12 000 000 shares, 1 475 000 shares were granted to selected employees on 30 June 2017 at 
the market price of the shares on that date. No shares had vested to these employees at the reporting date. The shares remain under the control of the trust, and ultimately the Group, until they have vested. As such, all the 12 000 000 shares
 issued to the trust were classified as treasury shares at the reporting date. 

6.  Dividends
Dividend per share of 2.83 thebe in respect of the year ended 30 June 2016 was declared and paid during the year compared to 4.88 thebe for 30 June 2015 declared and paid during 2015-16.

Final Distribution
Notice is hereby given that the gross final dividend of 2.1459 (2016: 2.8266)thebe (or ZAR equivalent) per share in respect of the year ended 30 June 2017 was declared on 20 September 2017, for payment to those ordinary shareholders 
registered in the books of the Company at the close of business on 20 October 2017. In line with our dividend policy, dividend was maintained at 1/3rd of the distributable profit.
 
Net dividend cheques will be dispatched or electronically paid by the transfer secretaries on or about Tuesday, 21 November 2017.
 
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, 17 October 2017 and shall commence trading ex dividend on Wednesday, 18 October 2017. The record date to appear in the register to participate in the dividend will 
be Friday, 20 October 2017 and the dividend will be paid on Tuesday, 21 November 2017. The South African register will be closed for the purposes of dematerialisation, rematerialisation from Wednesday, 18 October 2017 to Friday, 20 October 2017, 
both dates inclusive, and for transfers between the South African register and the South African and Botswana registers between Tuesday, 10 October 2017 and Friday 20 October 2017 both dates inclusive. The exchange rate applicable for the conversion 
of Pula to ZAR and tax implications for payment to shareholders on the South African register will be confirmed in a separate announcement to be released on SENS on Tuesday, 10 October 2017, being the finalisation date. The issued shares at the declaration 
date is 404 232 042 . 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 registered 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


Headline Earnings per Share Computation
Basic Earnings                             83 923
Remeasurements 
Loss on disposal of asset                   3 013
Tax Impact                                   (669) 
Headline Earnings                          86 267
Number of shares for basic earnings 1 291 628 341                    
Weighted Average Number of Shares   1 291 789 985
Basic HEPS Thebe                             6.68
Diluted HEPS Thebe                           6.68


Botswana
06 October 2017

Sponsor
RAND MERCHANT BANK LIMITED( A division of First Rand Bank)                       
Date: 06/10/2017 05:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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