Lifting of BSE suspension puts supermarket giant Choppies on new growth path
Supermarket giant Choppies Enterprises Limited (CEL) is poised for a trajectory of growth as it resumes trading on the stock market.
This follows the announcement by the Botswana Stock Exchange (BSE) that with effect from the Monday 27 July 2020, Choppies Enterprises Limited securities will again trade on the market following a decision to lift their suspension by the BSE.
The Company has published the following financial statements, bringing it into compliance with BSE requirements: a) 31 December 2018 Reviewed Interim Financial Statements and the Auditor’s Review Report; b) 30 June 2019 AFS and the accompanying Independent Auditor’s Report; and c) 31 December 2019 Reviewed Interim Financial Statements and the Auditor’s Review Report.
An elated Ram Ottapathu, CEO and founder of Choppies, said the lifting of the stock market suspension paves the way for Choppies to regain its top position as a retailer in Botswana and reclaim the pride and support of the people.
The man who built what is arguably the Southern Africa region’s most ambitious retail brand said Choppies will claw its way back to being a star corporate performer with tighter governance structures, a clear succession plan and a watchful board.
The multinational grocery and general merchandise retailer headquartered in Gaborone, Botswana, has undertaken aggressive restructuring. It has recapitalised itself; appointed a Deputy CEO with over 25 years of grocery retail experience in Southern Africa, has appointed a new Chief Financial Officer (CFO); and appointed new auditors - international auditing firm, Mazars.
“We have made major strides in creating a solid foundation for the group to build on and believe this has set the course for a rebirth of the company which offers value for money to its customers in a challenging economic environment,” says Mr Uttum Corea, interim Chairman of Choppies Enterprises Ltd.
Choppies heightened corporate governance actions include:
the recapitalisation of the business by Pula 150 million comprising a loan of P100m from founding shareholders, Messrs Ottapathu and Ismail, and P50m from trading operations.
Amendments to the employment contract of Mr Ottapathu in accordance with the King IV Code on Corporate Governance. This includes a 43% reduction in the current guaranteed portion of the CEO’s remuneration to facilitate the introduction of short-term incentives;the appointment of a Deputy Chief Executive Officer with over 25 years of grocery retail experience in Southern Africa, who is expected to join during April 2020; and the appointment of a Chief Financial Officer from mid-April 2020. The CFO, a South African Chartered Accountant brings extensive JSE-listed company experience (including Nampak Group and Edcon). This is subject to the issuing of a work permit by the Botswana authorities.
The latest financials show negative equity for the Group owing to:
Unrealised foreign currency translation reserves of P300.8 million. The effect of the deterioration of the Zimbabwean currency alone accounts for P323.2 million of this amount with the balance of P22.4 million made up of a net profit on translating other currencies. These unrealised losses from Zimbabwe were partly offset by the recognition of a hyperinflation reserve of P71.3 million.
Trading losses of P435.6 million (2018: P375.1 million) from regions that were closed/discontinued since the June 2019 year-end namely South Africa P306.6 million (2018: P273.8 million), Kenya P95.3 million (2018: P83.7 million), Tanzania P18.2 million (2018: P5.9 million) and Mozambique P15.5 million) (2018:P11.7 million).
The above realised losses were mainly from South Africa, Tanzania, Kenya and Mozambique. As a result, the board took a decision to reduce the losses by exiting these operations.
Going forward, this is expected to build-up value for the Group as management’s focus will be on the profit-making operations, namely Botswana, Zambia, Zimbabwe and Namibia, which should help stabilise the Group and increase shareholder value.
The Board does not expect any material uncertainty over the Company or Group’s ability to continue as going concerns in the foreseeable future.