Choppies releases the anticipated 2019 audited results alongside its interim financials

BOTSWANA – Botswana based retailer, Choppies Supermarket has finally released its long awaited audited financial results for the year end-June 2019, citing the changing of its auditors when PricewaterhouseCoopers (PwC) resigned in September 2019 and replaced by Mazars in February 2020, as the reason for the delaying in publication.

The group also faced legal and forensic investigations as well as the COVID -19 outbreak and the lock-downs in the countries it operates which added to the hold up of results, highlighted the company.

According to the company, its revenue for the year ended June 2019 decreased by 10.85% from P10. 7 billion (US$935.2m) to P9.620 billion (US$840.8m).

This was due to a P1.1 Billion (US$96.1m) decline in turnover from the Zimbabwe segment on the back of a volatile macro-economic situation that led to a 84% currency weakness against the Pula.

Its gross profit decreased from P2 billion (US$174.8m) to P1.8 billion (US$157.3m) whilst the gross profit margin remained flat at around 19.71%.

Its operating loss increased from P316m (US$27.6m) to P323m (US$28.2m), mainly due to reported losses from the SA segment on the back of dismal trading conditions in the North West.

In order to consolidate the business so as to focus on value adding subsidiaries, the Board took the decision to divest from South Africa, Kenya, Tanzania and Mozambique. The group now has operations in Botswana, Zimbabwe, Zambia and Namibia.

As it released its audited full year results for 2019, the retailer also published its Interim results for the half year ended December 2019.

The multinational grocery and general merchandise retailer, reported a 15% in profits to P65.5 million (US$5.7m) from P76.6 million (US$6.7m) reported in 2018 the same period.

The group cited the continued weakening of the Zimbabwe currency against the Pula as the reason for the decline in its profits.

Its revenue from continuing operations declined by 17.5 percent to P2.97 billion (US$259.5m) while gross margins improved slightly to 22.9 percent compared to 22.5 percent a year earlier following another good performance in the Botswana operations.

Its earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 13.69 percent to P171.5m (US$15m) from P198.7m (US$17.3m) of 2018.

However, the group’s Botswana business continued to show strong resilience in an increasingly competitive market, with revenue increasing by 6.6 percent to P2.29bn (US$200m).

Its gross profit margins increased to 24.5 percent, with increased consumer demand in an economic environment of low interest rates and a weak rand.

“In addition, improved buying and further addition of house brands contributed to profitability. Financial services and value-added segments contributed well to the bottom line with significant effort and resources placed behind these to improve the service delivery and profitability,” the group said.

The business reported a 26 percent increase in Ebitda to P182m (US$15.9m).

In Zimbabwe, revenue declined by 26 percent to P268m (US$23.4m), resulting from a 145 percent weakening of the local currency against the Pula during the previous 18 months.

The group said Zimbabwe is one of the most challenging markets to operate in, with hyperinflation in three digits, concerns surrounding the economy, changes in the money market and public disturbances.

In Zambia, revenue fell by 3.7 percent to P340m (US$27.7m) and the gross profit margin declined to 16.5 percent.

“The Zambian economy has been hard hit by the weakening global demand for commodities which has led to depressed commodity prices. In addition, the Kwacha depreciated a further 27 percent against the Pula. All this hampered domestic demand,” the group said.

The Namibian operation reported a 14.6 percent increase in revenue to P69.2m (US$6m) and gross profit margins improved to 17.8 percent. The group said this operation is still relatively small, with five stores, and is yet to reach a critical mass needed to generate sustainable profitability levels.

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