CHOPPIES ENTERPRISES LIMITED ANNUAL RESULTS PRESENTATION 2017 1
AGENDA • GROUP OVERVIEW • FINANCIAL HIGHLIGHTS • OPERATIONAL HIGHLIGHTS • EXPANSION PLANS 2
FOOTPRINT Kenya � Geographic spread 11 stores 2 DCs Tanzania 1 store Zambia 12 stores 1 DC Mozambique Zimbabwe 1 store 32 stores Namibia Uganda 2 DCs FY 18 Number of stores 30 Jun 17 30 Jun 16 Increase Current Botswana Botswana 84 79 5 84 84 stores 4 DCs South Africa 71 61 10 74 Zimbabwe 32 30 2 32 Zambia 12 5 7 14 South Africa (North West) 50 stores Kenya 11 8 3 11 KZN (Durban) 2 DCs Tanzania 1 - 1 1 21 stores 1 Production plant Mozambique 1 - 1 1 1 DC Total 212 183 29 217 4
FINANCIAL HIGHLIGHTS 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) � 15.15% 342 297 EBITDA margin � 3.86% 4.46% 0.60% PAT (BWP millions) � 28.57% 75 105 PAT margin � 0.85% 1.58% 0.73% Normalised � 39.02% EBITDA (BWP millions) 342 246 � EBITDA margin 3.86% 3.69% 0.17% � 15.38% PAT (BWP millions) 75 65 � PAT margin 0.85% 0.98% 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. 5
REVENUE SPLIT BY REGION 2017 2016 Kenya Zambia Kenya Tanzania Mozambiqu 0.63% 3.27% 0.55% 0.07% e Zambia 0.09% 3.09% Zimbabwe 16.31% Zimbabwe 15.41% Jwayelani 3.54% Botswana 45.75% Jwayelani Botswana 9.99% 60.67% Rustenburg 18.30% Rustenburg 22.32% • 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. 6
REVENUE P 8852 m P 6660 m P 5945 m P 5012 m P 4029 m P 3302 m 2012 2013 2014 2015 2016 2017 Demonstrated track record of strong, consistent revenue growth 7
REVENUE GROWTH Overall (%) Like for like (%) 0% 5% Botswana South Africa � North West 31% 57% � KZN 18% 234% Zimbabwe (3)% 17% 1% 540% Zambia Kenya 77% 555% N/A N/A Tanzania N/A N/A Mozambique 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 � 7% Sales (BWP millions) 6902 6469 Footfall (millions) 131 131 - � 7% Basket size (BWP) 52.7 49.4 8
GROSS PROFIT 24.0% 23.9% 22.1% 22.0% 21.7% 21.2% 19.5% 19.6% 17.7% 16.3% 15.7% 14.2% Botswana SA - North west SA - KZN Zimbabwe Other regions Total 2017 2016 9
NORMALISED EBITDA � P 19 m � � � � � P 96 m i.e. 39% � � P 342 m P 321 m P 302 m After eliminating extra-ordinary items P 246 m South Africa segment total � � P 76 m � � � � � P 31 m � P 39 m P 35 m � � P 30 m � � P 9 m P 8 m Botswana SA - North west SA - KZN Zimbabwe Other regions Total -P 2 m -P 21 m -P 52 m -P 51 m 2017 2016 10
SEGMENTAL EBITDA EBITDA Botswana region • Botswana EBITDA was affected by two significant P 353 m non-trading items: P 321 m • P31 m reduction in realised foreign exchange P 302 m 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. 2017 2016 Normalised 2016 1 st Half FY 17 2 nd half FY 17 SA (North West) • South Africa achieved an overall EBITDA profit. North West region achieved EBITDA profit in the EBITDA (11) 9 second half of FY 2017 (P millions) EBITDA Zimbabwe region P 39 m • Zimbabwe EBITDA grew by P31 m compared to FY 2016. P 8 m 2017 2016 11
SEGMENTAL EBITDA • 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: 4.46% 3.86% 3.69% 2017 2016 Normalised 2016 12
SEGMENTAL EBITDA EBITDA mature regions 4.83% 4.76% 4.06% 2017 2016 Normalised 2016 EBITDA new regions -8.91% -24.04% 2017 2016 13
PROFITABILITY ANALYSIS P 342 m EBITDA P 297 m 2017 P 203 m Depreciation 2016 P 149 m • P45 m increase in EBITDA P 43 m Net Interest • Profitability impacted due to:- P 21 m • P55 m increase in depreciation charge. P 96 m • P21 m increase in net interest PBT P 127 m costs. • P1 m decrease in tax charge. P 21 m Tax • Due to these factors, profit after tax is P 22 m down by P30 m Note: deferred tax asset for Mozambique P 75 m PAT amounting to P2 m is not recognised. P 105 m 14
PROFITABILITY ANALYSIS (NORMALISED) P 342 m EBITDA P 246 m 2017 P 203 m Depreciation P 149 m 2016 P 43 m Net Interest P 21 m • P96 m increase in Normalised EBITDA. • Profitability impacted due to: • P55 m increase in depreciation charge. P 96 m PBT • P21 m increase in net interest costs. P 76 m • P10 m increase in tax charge. • If we exclude the impact of extraordinary P 21 m items and their consequential tax impact, Tax PAT � P10 m P 11 m Note: deferred tax asset for Mozambique amounting to P2 m is not recognised. P 75 m PAT P 65 m 15
PROFITABILITY ANALYSIS (MATURE REGIONS) P 394 m EBITDA P 267 m P 185 m 2017 Depreciation P 146 m 2016 P 36 m Net Interest P 13 m • P127 m increase in EBITDA. • Profitability impacted due to:- • P40 m increase in depreciation P 173 m PBT charge. P 108 m • P23 m increase in interest costs. • P22 m increase in tax charge. P 40 m • Increase in profit after tax by P42 m. Tax P 18 m Note: Workings are after eliminating extra- ordinary items in Botswana regions . P 133 m PAT P 90 m 16
SEGMENTAL EARNINGS BEFORE INTEREST AND TAX (EBIT) EBIT (Group) 2.23% 1.57% 1.47% 2017 2016 Normalised 2016 EBIT mature regions EBIT new regions 2.63% 2.52% 1.85% -12.07% -27.75% 2017 2016 Normalised 2016 2017 2016 17
SEGMENTAL RETURN ON EQUITY (ROE) ROE (Group) 7.12% 4.93% 4.42% 2017 2016 Normalised 2016 ROE mature regions ROE new regions 9.70% 8.75% 5.91% -24.85% -25.28% 2017 2016 2016 Normalised 2017 2016 18
SEGMENTAL RETURN ON ASSETS (ROA) ROA (Group) 9.81% 6.19% 6.09% 2017 2016 Normalised 2016 ROA mature regions ROA new regions 12.30% 11.91% 8.31% -24.86% -36.45% 2017 2016 Normalised 2016 2017 2016 19
WORKING CAPITAL POSITION Inventory days • Inventory days Net Working Capital 45 38 37 increased due to days opening of new stores in 12 South Africa and new geographies. 2017 2016 2015 1 Receivable days - 0 • The majority of the 6 2017 2016 2015 group’s sales are in cash. 4 3 • Receivables are associated with credit • The group’s working availed to buying capital management groups. was able to sustain 2017 2016 2015 NWC days at zero or negative. • Payable days increased Payable days • New regions are due to increase in 49 expected to meet 40 inventories for South 31 these targets once Africa and new they mature. geographies. 2017 2016 2015 20
CASH FLOW SUMMARY BWP Millions 2017 Cash flows generated from operating activities 212 Investing activities (286) - New store capex (211) - Replacement capex (75) 99 Financing activities - New loans 261 (162) - Loan repayments (including interest) Net movement 25 Opening cash & cash equivalents 52 77 Closing cash & cash equivalents 21
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 188 132 595 466 Net Debt EBITDA 342 297 Equity 1,515 1,474 0.52 0.41 Total Debt to Equity Net Debt to EBITDA 1.74 1.57 22
OPERATIONAL HIGHLIGHTS 23
RETAIL SPACE GROWTH � � Growth � � Region 2017 2016 117,963 103,795 14,168 Botswana South Africa 116,240 95,734 20,506 37,841 35,841 2,000 Zimbabwe 14,488 6,506 7,982 Zambia Kenya 20,199 14,199 6,000 469 - 469 Tanzania Mozambique 1,504 - 1,504 � 52,629 308,704 256,075 Total � 21% 24
BOTSWANA • 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. 25
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