REVENUE | OPERATING PROFIT | PROFIT AFTER TAX | BASIC EPS | FREE CASH FLOW |
Continuing Operations | Continuing Operations | Total Operations | Continuing Operations | Total Operations |
18.9% | 31.2% | 184.2% | 60.0% | BWP |
72m |
Choppies Enterprises Limited
Condensed Reviewed Interim Group Financial
Results for the Six Months Ended 31 December 2021
Registration Number: BW00001142508
Consolidated Statements of profit or loss and other comprehensive income
for the six months ended 31 December 2021
(Reviewed) | (Reviewed) | (Audited) | ||||||
6 Months ended | 6 Months ended | 12 Months ended | ||||||
31-Dec-21 | 31-Dec-20 | 30-Jun-21 | ||||||
Figures in Pula millions | BWPm | BWPm | BWPm | |||||
Continuing operations | ||||||||
Revenue | 3 223 | 2 711 | 5 331 | |||||
Cost of sales | (2 537) | (2 113) | (4 142) | |||||
Gross profit | 686 | 598 | 1 189 | |||||
Other operating income | 25 | 23 | 45 | |||||
Operating Income | 711 | 621 | 1 234 | |||||
Expenditure | (530) | (483) | (1 008) | |||||
Loss on disposal of plant and equipment | (2) | - | - | |||||
Movement in credit loss allowances | - | 16 | 17 | |||||
Administrative expenses | (476) | (414) | (856) | |||||
Selling and distribution expenses | (13) | (8) | (16) | |||||
Other operating expenses | (68) | (63) | (135) | |||||
Foreign exchange gains/(losses) on lease liability | 29 | (16) | (19) | |||||
Net monetary gain on translating Zimbabwean entities | - | 2 | 1 | |||||
Operating profit | 181 | 138 | 226 | |||||
Finance costs | (51) | (49) | (110) | |||||
Profit before taxation | 130 | 89 | 116 | |||||
Taxation | (22) | (25) | (34) | |||||
Profit from continuing operations | 108 | 64 | 82 | |||||
Discontinued operations | ||||||||
Loss from discontinued operations | - | (26) | (22) | |||||
Profit for the period | 108 | 38 | 60 | |||||
Other comprehensive profit/(loss) for the period not | ||||||||
Other Comprehensive loss for the period | ||||||||
Exchange differences on translating foreign operations in | 27 | (27) | 34 | |||||
Hyperinflationary economies | ||||||||
Exchange differences on translating foreign operations | (21) | (16) | (75) | |||||
Other comprehensive loss for the period | 6 | (43) | (41) | |||||
Total comprehensive profit/(loss) for the period | 114 | (5) | 19 | |||||
Profit/(loss) attributable to: | ||||||||
Owners of the parent | 105 | 44 | 68 | |||||
Non-controlling interest | 3 | (6) | (8) | |||||
108 | 38 | 60 | ||||||
Profit/(loss) attributable to: | ||||||||
Owners of the parent: | ||||||||
From continuing operations | 105 | 65 | 85 | |||||
From discontinued operations | - | (21) | (17) | |||||
105 | 44 | 68 | ||||||
Non-controlling interest: | ||||||||
From continuing operations | 3 | (2) | (3) | |||||
From discontinued operations | - | (4) | (5) | |||||
3 | (6) | (8) | ||||||
Total comprehensive profit/(loss) attributable to: | ||||||||
Owners of the parent | 112 | (3) | 25 | |||||
Non-controlling interest | 2 | (2) | (6) | |||||
114 | (5) | 19 | ||||||
Earnings per share | ||||||||
Basic & Diluted earnings/(loss) per share | ||||||||
Basic earnings per share (thebe) - continuing operations | 8.0 | 5.0 | 6.5 | |||||
Basic loss per share (thebe) - discontinued operations | - | (1.7) | (1.3) | |||||
8.0 | 3.3 | 5.2 |
Consolidated Statements of financial position
as at 31 December 2021
(Reviewed) | (Reviewed) | (Audited) | |||||||
31-Dec-21 | 31-Dec-20 | 30-Jun-21 | |||||||
Figures in Pula millions | BWPm | BWPm | BWPm | ||||||
Non-current assets | 1 227 | 1 207 | 1 160 | ||||||
Property, plant and equipment | 1 137 | 1 133 | 1 088 | ||||||
Goodwill and intangible asset | 85 | 69 | 64 | ||||||
Investments in new projects | 5 | 5 | 8 | ||||||
Current assets | 733 | 608 | 543 | ||||||
Inventories | 482 | 390 | 341 | ||||||
Amounts due from related entities | 6 | 5 | 5 | ||||||
Advances and deposits | 36 | 29 | 44 | ||||||
Trade and other receivables | 103 | 95 | 64 | ||||||
Current tax receivable | 10 | - | 10 | ||||||
Restricted cash | - | 9 | 5 | ||||||
Cash and cash equivalents | 96 | 80 | 74 | ||||||
Assets of disposal groups | - | 20 | - | ||||||
Total assets | 1 960 | 1 835 | 1 703 | ||||||
Equity and liabilities | |||||||||
Equity | (334) | (472) | (448) | ||||||
Stated capital | 906 | 906 | 906 | ||||||
Treasury shares | (29) | (29) | (29) | ||||||
Foreign currency translation reserve | (494) | (417) | (474) | ||||||
Hyper inflationary reserve | 220 | 132 | 193 | ||||||
Retained loss | (833) | (963) | (938) | ||||||
Non-controlling interest | (104) | (101) | (106) | ||||||
Non-current liabilities | 1 176 | 959 | 1 207 | ||||||
Long-term borrowings | 583 | 335 | 616 | ||||||
Lease liabilities | 578 | 601 | 572 | ||||||
Deferred taxation liabilities | 15 | 23 | 19 | ||||||
Current liabilities | 1 118 | 1 213 | 944 | ||||||
Trade and other payables | 741 | 621 | 568 | ||||||
Amounts due to related entities | 49 | 63 | 44 | ||||||
Current portion of long-term borrowings | 81 | 218 | 86 | ||||||
Current portion of lease liabilities | 182 | 151 | 149 | ||||||
Current tax payable | 20 | 10 | 29 | ||||||
Bank overdraft | 45 | 150 | 68 | ||||||
Liabilities of disposal groups | - | 135 | - | ||||||
Total liabilities | 2 294 | 2 307 | 2 151 | ||||||
Total equity and liabilities | 1 960 | 1 835 | 1 703 | ||||||
Headline earnings per share computation
(Reviewed) | (Reviewed) | (Audited) | |
6 Months ended | 6 Months ended | 12 Months ended | |
31-Dec-21 | 31-Dec-20 | 30-Jun-21 | |
Figures in Pula millions | BWPm | BWPm | BWPm |
Basic Earnings | 105 | 44 | 68 |
Loss on disposal of assets | 2 | (3) | 2 |
Impairment losses | - | 13 | 14 |
Tax impact | (1) | 1 | - |
Headline earnings | 106 | 55 | 84 |
Number of shares for basic earnings | 1 303 628 000 | 1 303 628 000 | 1 303 628 000 |
Weighted average Number of Shares | 1 303 628 000 | 1 303 628 000 | 1 303 628 000 |
Basic Headline Earnings per share | 8.1 | 4.2 | 6.5 |
Diluted Headline Earnings per share | 8.1 | 4.2 | 6.5 |
Consolidated statements of cash flows
(Reviewed) | (Reviewed) | (Audited) | |
6 Months ended | 6 Months ended | 12 Months ended | |
31-Dec-21 | 31-Dec-20 | 30-Jun-21 | |
Figures in Pula millions | BWPm | BWPm | BWPm |
Profit before taxation | 130 | 89 | 116 |
Non-cash & other adjustments | 188 | 180 | 377 |
Changes in working capital: | 6 | (76) | (69) |
Taxation paid | (34) | (17) | (22) |
Cash flows of discontinued operations | - | (8) | (43) |
Net cash generated from operating activities | 290 | 168 | 359 |
Net cash flows used in investing activities | (77) | (31) | (61) |
Net cash flows generated from financing activities | (141) | (134) | (224) |
Net movement in cash and cash equivalents | 72 | 3 | 74 |
Cash and cash equivalents at beginning of the period | 6 | (88) | (88) |
Cash balances from discontinued operations | - | 1 | 2 |
Effect of translation of foreign entities | (27) | 14 | 18 |
Cash and cash equivalents at end of the period | 51 | (70) | 6 |
Consolidated Statements of changes in equity
for the six months ended 31 December 2021
Total | ||||||||||||||
Stated | Foreign | Hyper | attributable | |||||||||||
capital & | currency | inflationary | to equity | Non- | ||||||||||
Figures in Pula millions | treasury | translation | translation | Retained | holders of | controlling | Total | |||||||
shares | reserve | reserve | loss | the group | interest | equity | ||||||||
Balance at 1 July 2020 | 877 | (396) | 159 | (1 007) | (367) | (100) | (467) | |||||||
Total comprehensive loss for the period | - | (21) | (27) | 44 | (4) | (1) | (5) | |||||||
Profit/(loss) for the period | - | - | - | 44 | 44 | (6) | 38 | |||||||
Other comprehensive (loss)/income | - | (21) | (27) | - | (48) | 5 | (43) | |||||||
Balance at 31 December 2020 (Reviewed) | 877 | (417) | 132 | (963) | (371) | (101) | (472) | |||||||
Totalcomprehensive(loss)/ incomefortheperiod | - | (57) | 61 | 25 | 29 | (5) | 24 | |||||||
Profit/(loss) for the period | - | - | - | 25 | 25 | (3) | 22 | |||||||
Other comprehensive (loss)/income | - | (57) | 61 | - | 4 | (2) | 2 | |||||||
Balance at 30 June 2021 (Audited) | 877 | (474) | 193 | (938) | (342) | (106) | (448) | |||||||
Totalcomprehensive(loss)/incomefortheperiod | - | (20) | 27 | 105 | 112 | 2 | 114 | |||||||
Profit for the period | - | - | - | 105 | 105 | 3 | 108 | |||||||
Other comprehensive (loss)/income | - | (20) | 27 | - | 7 | (1) | 6 | |||||||
Dividends | - | - | - | - | - | - | - | |||||||
Balance at 31 December 2021 (Reviewed) | 877 | (494) | 220 | (833) | ( 230) | (104) | (334) | |||||||
Operating segmental information
for the six months ended 31 December 2021
Rest of Africa Includes Namibia, Zambia & Zimbabwe | BWPm | |||||
Total for | ||||||
Figures in Pula millions | Botswana | Rest of | Namibia | Zambia | Zimbabwe | Continuing |
DECEMBER 2021 (Reviewed) | operations | |||||
Africa | ||||||
Statement of profit or loss | ||||||
Revenue | 2 231 | 992 | 119 | 404 | 469 | 3 223 |
EBITDA | 228 | 53 | 1 | 38 | 14 | 281 |
Movement in credit loss allowance | - | - | - | - | - | - |
Foreign exchange gains on lease liability | - | 29 | - | 29 | - | 29 |
Depreciation & Amortisation | (97) | (32) | (6) | (20) | (6) | (129) |
Operating Profit/(Loss) (EBIT) | 131 | 50 | (5) | 47 | 8 | 181 |
Statement of financial position | ||||||
Assets | 1 310 | 650 | 113 | 237 | 300 | 1 960 |
Liabilities | 1 879 | 415 | 63 | 216 | 136 | 2 294 |
DECEMBER 2020 (Reviewed) | Botswana | Rest of | Namibia | Zambia | Zimbabwe | Total for |
Continuing | ||||||
Africa | operations | |||||
Statement of profit or loss | ||||||
Revenue | 2 186 | 525 | 71 | 243 | 211 | 2 711 |
EBITDA | 228 | 39 | 3 | 23 | 13 | 267 |
Movement in credit loss allowance | 16 | - | - | - | - | 16 |
Foreign exchange losses on lease liability | - | (16) | - | (16) | - | (16) |
Depreciation & Amortisation | (99) | (30) | (5) | (20) | (5) | (129) |
Operating Profit/(Loss) (EBIT) | 145 | (7) | (2) | (13) | 8 | 138 |
Statement of financial position | ||||||
Assets | 1 332 | 483 | 96 | 180 | 207 | 1 815 |
Liabilities | 1 849 | 323 | 60 | 186 | 77 | 2 172 |
JUNE 2021 (Audited) | Botswana | Rest of | Namibia | Zambia | Zimbabwe | Total for |
Continuing | ||||||
Africa | operations | |||||
Statement of profit or loss | ||||||
Revenue | 4 145 | 1 186 | 154 | 495 | 537 | 5 331 |
EBITDA | 430 | 57 | 4 | 40 | 13 | 487 |
Movement in credit loss allowance | 17 | - | - | - | - | 17 |
Foreign exchange losses on lease liability | - | (19) | - | (19) | - | (19) |
Depreciation & Amortisation | (201) | (58) | (10) | (38) | (10) | (259) |
Operating Profit/(Loss) (EBIT) | 246 | (20) | (6) | (17) | 3 | 226 |
Statement of financial position | ||||||
Assets | 1 224 | 479 | 100 | 151 | 228 | 1 703 |
Liabilities | 1 197 | 954 | 144 | 336 | 474 | 2 151 |
The Zambian and Zimbabwean operating segments are now identified as a reportable segment in the current period due to their contribution to revenue exceeding the quantitative threshold of ten per cent. The prior- period segment data presented for comparative purposes have been restated to reflect the newly reportable segments. By default, the Namibian operating segment is disclosed despite its contribution to revenue not exceeding the quantitative threshold of ten per cent.
Commentary
1. Nature of business
Choppies Enterprises Limited ("the Company") is a Botswana-based investment holding company operating in the retail sector in Southern Africa. Dual-listed on the Botswana Stock Exchange ("BSE") and Johannesburg Stock Exchange ("JSE"), its operations are food and general merchandise retailing as well as financial service transactions supported by centralised distribution channels through distribution and logistical support centres.
Each week, approximately 1.8 million customers visit 159 stores under four formats in four countries. With annual revenue of BWP 5.8 billion, Choppies employs over 9 000 people and is the largest grocery retailer in Southern Africa, outside of South Africa.
2. Basis of preparation and accounting policies
The reviewed condensed consolidated interim financial statements for the six months ended 31 December 2021 have been prepared and presented in accordance with the requirements of the BSE Limited ("BSE Listings Requirements") and JSE Limited (JSE Listing Requirements), as well as the requirements of the Botswana Companies Act, as amended.
The interim reports have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards ("IFRS") and also contain the information required by IAS 34 Interim Financial Reporting.
The accounting policies used in the preparation of the condensed consolidated interim financial statements are in terms of IFRS and are consistent with those applied in the previous year and the methods of computation are consistent with those of the previous annual financial statements.
3. Director's responsibility for the condensed financial statements
The directors are responsible for the preparation of the condensed reviewed group financial results and financial position of the Company in accordance with BSE and JSE Listings Requirements and the Companies Act of Botswana.
4. Going concern
The Group's negative equity reduced from BWP 448 million as at June 2021 to BWP 334 million as at December 2021, due to trading profits.
In ensuring the ability of the Group to operate as a going concern for at least the following 12 months, the Board considered the detailed cash flow forecasts as prepared by management, undertakings of financial support
by the founding shareholders, the economic outlook of the countries in which it operates as well as the probable future impact of the COVID-19 pandemic.
The Board, relying on the presentations by management, concluded that the Group would be a going concern for the foreseeable future.
5. Group results
The Group's revenue increased by 18.9% to BWP 3 223 million (2020: BWP 2 711 million), driven by seven new stores coupled with strong volume and price growth in the Rest of Africa. The Group's like for like sales growth was 13.9%.
Botswana experienced modest revenue growth to BWP 2 231 million (2020: BWP 2 186 million) mainly as a result of negative volume growth due to the impact of the COVID-19 pandemic on the economy and consumer spend- ing. The Rest of Africa revenue increased by 89.0% to BWP 992 million (2020: BWP 525 million) driven by the addition of five new stores, inflationary increases in Zimbabwe and Zambia and volume growth in all countries.
In Pula terms, gross profit grew by 14.7% to BWP 686 million (2020: BWP 598 million) despite the challenging economic environment.
Total operating costs increased by 9.7%, mainly driven by a 15.0% increase in administrative expenses which was offset a BWP 29 million foreign exchange gain on lease liabilities from the Zambian operation following the strengthening of the Kwacha. As a result, operating profit (EBIT) increased by 31.2% from BWP 138 million to BWP 181 million. EBIT margins improved from 5.1% to 5.6%.
The effective tax rate reduced from 28.1% to 16.9% due to unrecognised tax losses in Zambia.
The Group continues to manage its cash resources and liquidity prudently with a reduction of BWP 83 million in net debt over the past six months. Free cash flow of BWP 72 million (2020: BWP 3 million) was generated during the past six months compared to BWP 74 million for the 12 months to June 2021.
6. Operational overview Botswana
Revenue from Botswana increased by 2.1% as the business continued to show strong resilience in an increasingly challenging economic en- vironment. The Botswana economy experiences a confluence of elevated inflation, high unemployment, and lower economic growth.
Operating expenditure was managed well, increasing by 6.5% despite two new stores and increasing by 1.8% after excluding once-off bad debt recoveries from last year's costs.
Due to extremely challenging trading conditions, operating profit (EBIT) reduced by 9.7% but the EBIT margin remains healthy at 5.9%.
Rest of Africa consisting of Namibia, Zambia and Zimbabwe.
The segment has shown a significant improvement in EBIT with the segment moving into profitability of BWP 50 million from last year's EBIT loss of BWP 7 million.
Revenue increased by 89.0%, driven by five new stores, inflation, and volume growth.
Operating expenditure grew 20.4%, driven by inflation in Zambia and Zimbabwe and five new stores.
EBIT margin is a healthy 5.0% versus the negative 1.3% for the prior period.
7. Events after reporting date
We expect continued uncertainty in our business and the Southern African economy due to the duration and intensity of the COVID-19 pandemic; the duration and extent of economic stimuli; timing and effectiveness of global and regional vaccines; and volatility in employment trends and consumer confidence, all of which may impact our results.
8. Review Opinion
Mazars, the Group's independent auditor, has reviewed the condensed consolidated interim financial statements for the six month period ended 31 December 2021 and has expressed an unmodified review conclusion there- on.
A copy of the auditor's review report is available for inspection at the Com- pany's registered office together with the financial information identified in the auditor's report.
The auditor's review report does not necessarily report on all the information in these interim financial statements. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the audi- tor's engagement, they should obtain a copy of the auditor's review report together with the accompanying financial information from the Company's registered office and on the company website.
Mazars' review report is published on XNews and SENS simultaneously with this condensed release of results and is also available on the Group's website:
https://choppiesgroup.com/investor-relations/.
9. Changes in board members
As reported in our June 2021 Annual Integrated Report, the Company appointed a new independent non-executive director, Mr Valentine Chitalu, as recommended by the nominations committee and approved by the Board with effect from 5 August 2021. Mr Chitalu has also been appointed to the audit and risk committee and is appointed as Chairman of the human resources committee.
10. Dividend
The Board has resolved not to declare an interim dividend given the prolonged impact of the Covid-19 pandemic, the continuing uncertain economic environment as well as the rebuilding phase of the Group's capital structure (2020: Nil).
For and on behalf of the Board
D. K. U. Corea | R. Ottapathu | |||||
(Chairman) | (Chief Executive Officer) | |||||
15th February 2022 | ||||||
REGISTERED OFFICE | SPONSORS | COMPANY SECRETARY | AUDITORS | |||
Plot 50371, | BSE: Stockbrokers | DPS Consulting Services | Mazars | |||
Fairgrounds office park, | Botswana | (PTY) Ltd. | Plot 139, | |||
Gaborone, Botswana. | JSE: PSG Capital | Plot 54513, | Finance Park, | |||
Unit 6A | Gaborone, | |||||
Courtyard Village, | Botswana. | |||||
Gaborone, Botswana. | ||||||
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Choppies Enterprises Ltd. published this content on 21 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 February 2022 13:50:06 UTC.