Overcomes P370.6m loss in previous year
Offloaded assets in SA, Kenya, Tanzania, Mozambique
Strengthened governance, become lean and mean
Local retail behemoth Choppies has gone full circle – bouncing back from a loss in the previous financial year to post a Profit after Tax growth of between 106 and 126 percent.
The company said in a trading statement posted on the local bourse – Botswana Stock Exchange (BSE) – that: “Choppies is currently finalising its financial results for the 12 months ended 30 June 2021 and expects the consolidated Profit after Tax including discontinued operations for the period FY2021 to be between 106% to 126% better than the Loss after Tax of BWP 370.6 million reported for the period FY2020, representing a Profit after Tax of between BWP 22.6 million and BWP 96.7 million”.
The cautionary further declares that “The Profit before Tax for the period FY2021 is expected to be between 1% and 21% higher (BWP 105.7 million and BWP 126.7 million) than the Profit before Tax of BWP 105.0 million reported for the period FY2020”.
The return of Choppies to profitability follows a number of drastic steps taken by company leadership to streamline its operations by ceding unprofitable assets in South Africa, Tanzania, Mozambique and Kenya while also improving its governance structure.
Two years ago Choppies suffered major setback when it was suspended from trading on the Botswana Stock Exchange (BSE) and Johannesburg Stock Exchange (JSE) for failing to publish its financial results on time. While trade was still under suspension, the Board slapped CEO Ramachandran Ottapathu with suspension over various allegations.
When external independent auditors cleared Ottapathu the shareholders chose to elect new Board with the old losing re-election bid at the Special Ordinary General Meeting.
Ottapathu resumed his duties and anew board chaired by Uttu Corea was appointed and work started to publish the long awaited results, which ultimately led to the lifting trading at the BSE and JSE. Mazaars were appointed as new auditors.
Choppies leading shareholders Ottapathu and founder Farouk Ismail are now suing the previous auditors PwC for P450 million for failing to sign off on the company’s 2018 accounts, which led to a share price collapse and suspension of trading as well as for not acting independently as the PwC officer in-charge of audit was negotiating a job to be the CFO of the company. This matter is on-going at the High Court.
Corea, in his Chairman’s Letter to Stakeholders in the 2020 Annual Report, said: “The past year has been focused on restructuring and consolidation and returning to profitability and stability. We have reassessed our previous pan-African expansion strategy and having taken the lesson learnt, we are now focused on southern Africa and our remaining countries of operation being Botswana, Zimbabwe, Zambia and Namibia. Botswana itself offers a number of opportunities for growth. Once we have perfected the working models in Botswana we will seek to introduce them in our other countries of operation. Innovation is the key for us going forward and our short-term focus will be on benchmarking against peers and international trends. .. We look forward to growth going forward and embodying our shared value approach where, “if all our stakeholders prosper we also prosper.”
Despite COVID-19, Choppies – in the 2020 financial year – managed to increase revenue by 1% to P5, 421 million; increase gross profit by 3% to P1, 253 million and raise its gross margin from 22, 7% to 23, 1%.
At the time referring to the 2020 results Ottapathu declared: “These are solid results. Our continuing businesses are resilient. We have traded strongly following the exit from certain markets and the impact of Covid19 and hyperinflation in Zimbabwe. We are particularly pleased by the strong growth in EBITDA and our ability to consolidate our continuing business in Botswana, Zambia, Namibia and Zimbabwe.”
A total loss of P371 million incurred in 2020 was down 14% on the P429 million loss suffered in 2019.