CHOPPIES ENTERPRISES LIMITED ANNUAL RESULTS … PRESENTATION.pdf · FY 18 KZN (Durban) 21 stores 1 Production plant 1 DC Number of stores 30 Jun 17 30 Jun 16 Increase Current Botswana

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CHOPPIES ENTERPRISES LIMITEDANNUAL RESULTS PRESENTATION 2017

AGENDA

•GROUP OVERVIEW

•FINANCIAL HIGHLIGHTS

•OPERATIONAL HIGHLIGHTS

•EXPANSION PLANS

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FOOTPRINT

4

� Geographic spread Kenya11 stores 2 DCs

Tanzania1 store

Uganda

Botswana84 stores4 DCs

Mozambique1 store

South Africa (North West)50 stores2 DCs

Zambia12 stores1 DC

Zimbabwe32 stores

2 DCsNamibiaFY 18

KZN (Durban)21 stores 1 Production plant 1 DC

Number of stores 30 Jun 17 30 Jun 16 Increase Current

Botswana 84 79 5 84South Africa 71 61 10 74Zimbabwe 32 30 2 32Zambia 12 5 7 14Kenya 11 8 3 11Tanzania 1 - 1 1Mozambique 1 - 1 1Total 212 183 29 217

FINANCIAL HIGHLIGHTS

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Financial Metrics (Group) 2017 2016 Movement

No. of stores 212 183 � 29

Revenue (BWP millions) 8,852 ** 6,660 � 33%

Gross profit (BWP millions) 1,873 1,445 � 30%

Gross profit margin 21.16% 21.7% � 0.54%

EBITDA (BWP millions) 342 297 � 15.15%

EBITDA margin 3.86% 4.46% � 0.60%

PAT (BWP millions) 75 105 � 28.57%

PAT margin 0.85% 1.58% � 0.73%

Normalised

EBITDA (BWP millions) 342 246 � 39.02%

EBITDA margin 3.86% 3.69% � 0.17%

PAT (BWP millions)PAT margin

750.85%

650.98%

� 15.38%� 0.13%

Normalised EBITDA and PAT :- In 2016 operating results benefited from the profit on sale of aircraft amounting to P20m which was included in other income. In the current year there was a reduction in realised foreign exchange gains amounting to P 31m. Normalised EBITDA and PAT is obtained after eliminating P 51m from FY 2016 including its tax impact.

** Eliminating effects of Money Transfer accounted for as sales in FY 2016, for comparison purposes. Including Money Transfers yields FY 2016 revenue of P7,369m.

REVENUE SPLIT BY REGION

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2017 2016

• Reduced dependency on Botswana (from 77% revenue contribution in FY 2013, reduced to 46% contribution currently).

• New regions scaling up and contributing to diversified growth.

Botswana45.75%

Rustenburg22.32%

Jwayelani9.99%

Zimbabwe15.41%

Zambia3.09%

Kenya3.27%

Tanzania0.07%

Mozambique

0.09%

Botswana 60.67%Rustenburg

18.30%

Jwayelani3.54%

Zimbabwe 16.31%

Zambia 0.55%

Kenya 0.63%

REVENUE

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P 3302 m

P 4029 m

P 5012 m

P 5945 m

P 6660 m

P 8852 m

2012 2013 2014 2015 2016 2017

Demonstrated track record of strong, consistent revenue growth

REVENUE GROWTH

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Like for like (%) Overall (%)

Botswana 0% 5%

South Africa

� North West 31% 57%

� KZN 18% 234%

Zimbabwe (3)% 17%

Zambia 1% 540%

Kenya 77% 555%

Tanzania N/A N/A

Mozambique N/A N/A

Total Sales 7% 33%

Revenue post elimination of impact of Money Transfers accounted for as revenue in FY 2016

Like for like analysis 2017 2016 Movement

Sales (BWP millions) 6902 6469 � 7%

Footfall (millions) 131 131 -

Basket size (BWP) 52.7 49.4 � 7%

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GROSS PROFIT23.9%

19.6%

22.1%

17.7%

14.2%

21.2%

24.0%

19.5%

22.0%

15.7%16.3%

21.7%

Botswana SA - North west SA - KZN Zimbabwe Other region s Total

2017 2016

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NORMALISED EBITDA

�� P 96 m i.e. 39%P 321 m

-P 2 m

P 35 m P 39 m

-P 51 m

P 342 m

P 302 m

-P 52 m

P 9 m P 8 m

-P 21 m

P 246 m

Botswana SA - North west SA - KZN Zimbabwe Other region s Total

2017 2016

South Africa segment total �� P 76 m

�� P 31 m

�� P 30 m

After eliminating extra-ordinary items

�� P 19 m

• Botswana EBITDA was affected by two significant non-trading items:

• P31 m reduction in realised foreign exchange transaction gains in the first half of the year due to unpredicted strengthening of ZAR.

• P20 m profit realised on the sale of an aircraft accounted for in FY 2016.

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• South Africa achieved an overall EBITDA profit. North West region achieved EBITDA profit in the second half of FY 2017

SA (North West) 1 st Half FY 17 2nd half FY 17

EBITDA(P millions)

(11) 9

• Zimbabwe EBITDA grew by P31 m compared to FY 2016.

SEGMENTAL EBITDA

P 321 m

P 302 m

P 353 m

2017 2016 Normalised 2016

EBITDA Botswana region

P 39 m

P 8 m

2017 2016

EBITDA Zimbabwe region

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• EBITDA of mature regions (combining Botswana, South Africa, Zimbabwe) grew by P76 m.

• Removing the impact of non trading items amounting to P51m, Normalised EBITDA grew by P127 m.

• EBITDA margins achieved are as follows:

SEGMENTAL EBITDA

3.86%3.69%

4.46%


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SEGMENTAL EBITDA

-8.91%

-24.04%

2017 2016

EBITDA new regions

4.76%

4.06%

4.83%


EBITDA mature regions

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PROFITABILITY ANALYSIS

• P45 m increase in EBITDA• Profitability impacted due to:-

• P55 m increase in depreciation charge.

• P21 m increase in net interest costs.

• P1 m decrease in tax charge.

• Due to these factors, profit after tax is down by P30 m

Note: deferred tax asset for Mozambique amounting to P2 m is not recognised.P 105 m

P 22 m

P 127 m

P 21 m

P 149 m

P 297 m

P 75 m

P 21 m

P 96 m

P 43 m

P 203 m

P 342 m

PAT

Tax

PBT

Net Interest

Depreciation

EBITDA

2017

2016

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PROFITABILITY ANALYSIS (NORMALISED)

• P96 m increase in Normalised EBITDA.• Profitability impacted due to:

• P55 m increase in depreciation charge.• P21 m increase in net interest costs.• P10 m increase in tax charge.

• If we exclude the impact of extraordinary items and their consequential tax impact, PAT � P10 m

Note: deferred tax asset for Mozambique amounting to P2 m is not recognised.

P 65 m

P 11 m

P 76 m

P 21 m

P 149 m

P 246 m

P 75 m

P 21 m

P 96 m

P 43 m

P 203 m

P 342 m

PAT

Tax

PBT

Net Interest

Depreciation

EBITDA

2017

2016

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PROFITABILITY ANALYSIS (MATURE REGIONS)

• P127 m increase in EBITDA.• Profitability impacted due to:-

• P40 m increase in depreciation charge.

• P23 m increase in interest costs.• P22 m increase in tax charge.

• Increase in profit after tax by P42 m.

Note: Workings are after eliminating extra-ordinary items in Botswana regions.

P 90 m

P 18 m

P 108 m

P 13 m

P 146 m

P 267 m

P 133 m

P 40 m

P 173 m

P 36 m

P 185 m

P 394 m

PAT

Tax

PBT

Net Interest

Depreciation

EBITDA

2017

2016

SEGMENTAL EARNINGS BEFORE INTEREST AND TAX (EBIT)

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1.57% 1.47%

2.23%


EBIT (Group)

2.52%

1.85%

2.63%


EBIT mature regions

-12.07%

-27.75%

2017 2016

EBIT new regions

SEGMENTAL RETURN ON EQUITY (ROE)

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4.93%4.42%

7.12%


ROE (Group)

9.70%

5.91%

8.75%

2017 2016Normalised

2016

ROE mature regions

-24.85%

-25.28%

2017 2016

ROE new regions

SEGMENTAL RETURN ON ASSETS (ROA)

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6.19% 6.09%

9.81%


ROA (Group)

11.91%

8.31%

12.30%


ROA mature regions

-36.45%

-24.86%

2017 2016

ROA new regions

WORKING CAPITAL POSITION

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• Inventory days increased due to opening of new stores in South Africa and new geographies.

• The majority of the group’s sales are in cash.

• Receivables are associated with credit availed to buying groups.

• Payable days increased due to increase in inventories for South Africa and new geographies.

• The group’s working capital management was able to sustain NWC days at zero or negative.

• New regions are expected to meet these targets once they mature.

2017 2016 2015

45 38 37

Inventory days

2017 2016 2015

43

6

Receivable days

2017 2016 2015

49 40

31

Payable days

2017 2016 2015- 0

1

12

Net Working Capital days

CASH FLOW SUMMARY

BWP Millions 2017

Cash flows generated from operating activities 212

Investing activities (286)

- New store capex (211)

- Replacement capex (75)

Financing activities 99

- New loans 261

- Loan repayments (including interest) (162)

Net movement 25

Opening cash & cash equivalents 52

Closing cash & cash equivalents 77

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BALANCE SHEET HIGHLIGHTS AND NET DEBT POSITION

BWP Millions 2017 2016

Long term debt 672 518

Bank overdraft 111 80

Total debt 783 598

Cash 188 132

Net Debt 595 466

EBITDA 342 297

Equity 1,515 1,474

Total Debt to Equity 0.52 0.41

Net Debt to EBITDA 1.74 1.57

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OPERATIONALHIGHLIGHTS

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RETAIL SPACE GROWTH

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Region 2017 2016 �� Growth

Botswana 117,963 103,795 14,168

South Africa 116,240 95,734 20,506

Zimbabwe 37,841 35,841 2,000

Zambia 14,488 6,506 7,982

Kenya 20,199 14,199 6,000

Tanzania 469 - 469

Mozambique 1,504 - 1,504

Total 308,704 256,075 � 52,629� 21%

• 5 New stores added during the year with 5% revenue increase.

• Botswana performance is affected by the following non trading items:

• Reduction in realised forex gain :: P31 million

• Profit realised on sale of aircraft

included in other income:: P20 million

• EBITDA up by P19 million eliminating the impact of the above items

• Added clothing section in 9 stores in Botswana.

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BOTSWANA

BOTSWANA

� Lobatse distribution centre moved to Francistown in Jan 2017 which has increased the efficiency of northern Botswana operations.

� In-store subletting under way in stores with excess space.

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� CFC brand well accepted.

� Rolled out CFC counters in 23 Botswana stores and achieved 49% sales growth in last 12 months.

� Added 12 SKUs to the range, including a range of 5 types of burgers.

� In South Africa rolled out CFC counters in 11 Jwayelani stores; currently constitutes 1% of revenue.

� Also started rolling out CFC counters in 15 stores in the North West region.

BOTSWANA

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� Value added services:

� Value added services include Money transfer, Airtime, Data, Prepaid electricity. Included DStv subscription payments in FY 2017.

� 18% growth in value added services during FY 2017.

� Post year end, in partnership with Blue Label Telecoms, Choppies launched the following services in 4 Hyper stores in Botswana for the following South African services:

� South African DStv subscription payments, Sports and events tickets, Utility payments, Airtime and Traffic fines.

SOUTH AFRICA – North West Region

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� Achieved strong sales growth.

� 10 new stores added in the North West region.

� Overall sales growth of 57%.

� Like for like sales growth of 31%.

� Increase in footfall of 12% and basket size of 17%.

� Value added services:� In partnership with Blue-Label Telecoms installed

“Choppies Money ” counters across 48 stores.� Volume grew from R52 m to R142 m mainly by

adding more services in addition to airtime and lottery compared to FY 2016.

� Services offered:� Airtime, Data, Electricity, Bill payments, Bus tickets,

Handset, Cellphone starter packs, Betting, Sports and events tickets.

SOUTH AFRICA – KZN Region

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� Like for like revenue growth of 18%.

� Increase in footfall of 10% and increase in basket size of 8%.

ZIMBABWE

� Overall revenue growth of 17%, with like for like sales down by 3% amid extremely challenging trading conditions.

� Cash crisis in the economy is a primary matter of concern.

� However, the business continued to do well in spite of this.

� Expansions in the country have been slowed down in response to the challenges being experienced.

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OTHER REGIONS

• Adding an additional 7 more stores in Zambia.

• Profitability now improving.

• Expected to be EBITDA positive in FY 2018.

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• Signed more leases, opening 4 more stores before 31 December 2017.

• A few more sites expected to be available, considering the current retail issues being experienced in Kenya.

ZAMBIA

KENYA

OTHER REGIONS

• Negotiating 2 existing sites in Tanzania, one new site will be opened in November 2017 to take the store footprint to 4.

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TANZANIA

MOZAMBIQUE

• Signed leases in Maputo, Xai Xai and Chimoyo.

• Taking very cautious approach for expansion in this region.

NAMIBIA

• Two new stores are planned to open in November 2017 in Northern Namibia.

EXPANSION PLANS

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Planned New Stores

Country FY 2018

Botswana 3

South Africa 13

Zimbabwe 2

Zambia 8

Kenya 4

Tanzania 3

Namibia 3

Mozambique 4

Total new stores planned

40

Cumulative no. of stores

252

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Capex

Country FY 2018

Botswana 19.5

South Africa 88.2

Zimbabwe 12.0

Zambia 55.0

Kenya 40.0

Tanzania 27.0

Mozambique 18.0

Namibia 28.0

Total 287.7

Pula millionsNos.

FUNDING

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Funding requirements

Proposed acquisition of supermarket chain in KZN R100 m P78 m

Expansion capex P288 m

Total capex requirement P366 m

Net inflow from debt restructuring P205 m

Cash in hand and internally generated funds P161 m

• Debt restructuring planned to be executed in November 2017.

• Due to the attractive interest rate environment, Choppies intends to access the

capital markets as a key funding source over the coming financial year.

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THANK YOU

Documents

CHOPPIES ENTERPRISES LIMITED ANNUAL RESULTS … PRESENTATION.pdf · FY 18 KZN (Durban) 21 stores 1 Production plant 1 DC Number of stores 30 Jun 17 30 Jun 16 Increase Current Botswana