Choppies Enterprises Limited · JSE:CHP
Choppies Enterprises — FY2017 Earnings Presentation
36 slides from Choppies Enterprises's earnings presentation, 2017
Slide 1: Choppies Enterprises Limited Annual Results Presentation 2017
CHOPPIES ENTERPRISES LIMITED ANNUAL RESULTS PRESENTATION 2017 1
Slide 2: Agenda
AGENDA • GROUP OVERVIEW • FINANCIAL HIGHLIGHTS • OPERATIONAL HIGHLIGHTS • EXPANSION PLANS 2
Slide 3: Choppies' Journey
CHOPPIES’ JOURNEY ~ Distribution centre opened . Acquisition in Zimbabwe _ a : \ of Chathley y/ _ and Food Mart Megasave and Supersave Acquisition in Botswana Acquisition of 10 Zimbabwe stores Opening of DC in Rustenburg ( RSA) JSE Listing in > May 2015 Opening of second — e in Botswana Openings of
Slide 4: Footprint
FOOTPRINT Kenya Geographic spread 11 stores 2 DCs Tanzania 1 store Zambia 12 stores 1 DC Mozambique Zimbabwe 1 store Namibia 32 stores Uganda FY 18 2 DCs Number of stores 30 Jun 17 30 Jun 16 Increase Current Botswana 84 stores Botswana 84 79 5 84 4 DCs South Africa 71 61 10 74 Zimbabwe 32 30 2 32 So
Slide 5: Financial Highlights
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) 342 297 15.15% EBITDA margin 3.86% 4.46% 0.60% PAT (BWP millio
Slide 6: Revenue Split by Region
REVENUE SPLIT BY REGION 2017 2016 Kenya Tanzania Zambia Kenya Mozambiqu 3.27% 0.07% 0.55% 0.63% Zambia e 3.09% 0.09% Zimbabwe Zimbabwe 16.31% 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
Slide 7: Revenue
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
Slide 8: Revenue Growth
REVENUE GROWTH 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 Li
Slide 9: Gross Profit
GROSS PROFIT 23.9% 24.0% 22.1% 22.0% 21.2% 21.7% 19.6% 19.5% 17.7% 16.3% 15.7% 14.2% Botswana SA - North west SA - KZN Zimbabwe Other regions Total 2017 2016 9
Slide 10: Normalised EBITDA
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 35 m P 39 m P 30 m P 9m P 8m 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
Slide 11: Segmental EBITDA
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
Slide 12: Segmental EBITDA
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
Slide 13: Segmental EBITDA
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
Slide 14: Profitability Analysis
PROFITABILITY ANALYSIS P 342 m EBITDA P 297 m 2017 P 203 m Depreciation P 149 m 2016 P 43 m • P45 m increase in EBITDA Net Interest P 21 m • Profitability impacted due to:- • P55 m increase in depreciation charge. P 96 m PBT • P21 m increase in net interest P 127 m costs. • P1 m decrease in tax char
Slide 15: Profitability Analysis (Normalised)
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: P 96 m • P55 m increase in depreciation charge. PBT P 76 m • P21 m increase in net interest costs. • P1
Slide 16: Profitability Analysis (Mature Regions)
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:- P 173 m • P40 m increase in depreciation PBT P 108 m charge. • P23 m increase in interest costs. • P22 m inc
Slide 17: Segmental Earnings Before Interest and Tax (EBIT)
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 2.52% 2.63% 1.85% -12.07% -27.75% 2017 2016 Normalised 2016 2017 2016 17
Slide 18: Segmental Return on Equity (ROE)
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
Slide 19: Segmental Return on Assets (ROA)
SEGMENTAL RETURN ON ASSETS (ROA) ROA (Group) 9.81% 6.19% 6.09% 2017 2016 Normalised 2016 ROA mature regions ROA new regions 11.91% 12.30% 8.31% -24.86% -36.45% 2017 2016 Normalised 2016 2017 2016 19
Slide 20: Working Capital Position
WORKING CAPITAL POSITION Inventory days 45 • Inventory days Net Working Capital 38 37 increased due to days opening of new stores in South Africa and new 12 2017 2016 2015 geographies. 1 Receivable days -0 6 • The majority of the 2017 2016 2015 group’s sales are in 4 cash. 3 • Receivables are associ
Slide 21: Cash Flow Summary
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 C
Slide 22: Balance Sheet Highlights and Net Debt Position
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 22
Slide 23: Operational Highlights
OPERATIONAL HIGHLIGHTS Great value for your money)
Slide 24: Retail Space Growth
RETAIL SPACE GROWTH 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 52,629 Total 308,704 256,075 21% 24
Slide 25: Botswana
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 el
Slide 26: 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. CFC brand well accepted. Rolled out CFC counters in 23 Botswana stores and achieved 49% sales growth in
Slide 27: Botswana
BOTSWANA 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 s
Slide 28: South Africa – North West Region
SOUTH AFRICA – North West Region 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 “Ch
Slide 29: South Africa – KZN Region
SOUTH AFRICA – KZN Region Like for like revenue growth of 18%. Increase in footfall of 10% and increase in basket size of 8%. 29
Slide 30: Zimbabwe
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 respon
Slide 31: Other Regions
OTHER REGIONS ZAMBIA • Adding an additional 7 more stores in Zambia. • Profitability now improving. • Expected to be EBITDA positive in FY 2018. KENYA • Signed more leases, opening 4 more stores before 31 December 2017. • A few more sites expected to be available, considering the current retail issu
Slide 32: Other Regions
OTHER REGIONS TANZANIA • Negotiating 2 existing sites in Tanzania, one new site will be opened in November 2017 to take the store footprint to 4. MOZAMBIQUE • Signed leases in Maputo, Xai Xai and Chimoyo. • Taking very cautious approach for expansion in this region. NAMIBIA • Two new stores are plan
Slide 33: Expansion Plans
EXPANSION PLANS 33
Slide 34: Planned New Stores Capex
Planned New Stores Capex Nos. Pula millions Country FY 2018 Country FY 2018 Botswana 3 Botswana 19.5 South Africa 13 South Africa 88.2 Zimbabwe 2 Zimbabwe 12.0 Zambia 8 Zambia 55.0 Kenya 4 Kenya 40.0 Tanzania 3 Tanzania 27.0 Namibia 3 Mozambique 18.0 Mozambique 4 Namibia 28.0 Total new stores 40 Tot
Slide 35: Funding
FUNDING 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.
Slide 36: Thank You
THANK YOU 36