Choppies posts positive results despite COVID-19 effects

THE Botswana-headquartered supermarket chain, Choppies Enterprises Limited, has posted positive results for the year to June this year from its southern African business despite the COVID-19 pandemic which cost the company about P190 million in revenue.

Choppies has operations in Botswana, Zimbabwe, Namibia and Zambia.

Despite COVID-19, the company said it managed to increase its revenue to P5,421 million; increased gross profit by 3% to P1,253 million and raised its gross margin from 22,7% to 23,1%.

This comes as a result of the consolidation and restructuring by the retail group, improved corporate governance and the withdrawal from non-performing operations in markets including South Africa, Kenya, Tanzania, and Mozambique.

Choppies chief executive Ram Ottapathu said the results were solid and showed continuing business resilience.

"We have traded strongly following the exit from certain markets and the impact of COVID-19 and hyperinflation in Zimbabwe. We are particularly pleased by the strong growth in earnings before interest, taxes, depreciation, and amortisation (EBITDA) and our ability to consolidate our continuing business in Botswana, Zambia, Namibia and Zimbabwe," Ottapathu said in a statement.

The supermarket chain said the bottom line was adversely affected by the discontinuation of its operations in South Africa, Kenya, Tanzania, and Mozambique; and by the impact of IFRS 16 leases.

While the group recorded a total loss of P371 million, this was down 14% on the P429 million loss it incurred in 2019.

Results in the business surged, with EBIDTA improving by 109%; operating profit by 126% to P208 million; profit for the period grew by 1 314% to P99,7 million; earnings per share grew by 767% to 8,1 thebe; and basic headline earnings per share increased by 227%.

The company said revenue increases were inflation driven in Botswana and Zimbabwe on the backdrop of negative sales volumes due to the impact of COVID-19. The impact of the pandemic on the group's operations revenue was estimated at P420 million.

Group EBITDA on a comparable basis (before accounting for IFRS 16) increased strongly to P316,7 million (2019 P226,3 million) owing to the improvement in gross profit margins and strict cost control.

Total assets reduced by P346,3 million from P2 187,1 to P1 840,8 million despite the addition of right-of-use assets in terms of IFRS 16 to the value of P772,1 million. The net reduction in total assets was mainly as a result of the discontinued operations.

Net borrowings excluding the IFRS 16 lease liabilities decreased from P660,3 million to P636,1 million as the group continues to prioritise the reduction of debt.

Ottapathu said the board continued to act in the best interests of the business and shareholders with a strong focus on debt reduction. He said all investigations were completed and there were no reported irregularities.

"Recognised corporate governance policies and structures are now in place. This continues to be the main focus areas for the board. I am confident that the actions we have taken will reposition Choppies as the preferred retailer for mass grocery and financial services in the countries in which we operate, thereby maximising shareholder value," he said.

He revealed that a new chief finance officer and an experienced adviser had been appointed.