- Expects up to 260% rise
- Profits to reach P108m
Now that the troubled fast moving consumer goods (FMCG) giant, Choppies Enterprises Limited has disposed of non-perform-ing operations, its profitability for the year ended 30 June 2020 will rise by a staggering 240 percent, the board of directors announced.
Led by Chairman Uttum Corea, the board of directors announced this Tues-day that Choppies is expecting profit be-fore tax to be between P102 million and P108 million as compared to the previous reporting period, where only P30 million was raked in. The increase will be an equivalent of between 240 percent and 260 percent.
The trading statement was published on the Botswana Stock Exchange (BSE) X-News in line with listings requirements through which listed companies are expected to announce any material changes to profitability. The BSE expects any company to announce a 10 percent change in profitability while the Johannesburg Stock Exchange (JSE) expects companies to announce any 20 percent change during their closing period.
The expected surge in profitability comes just a few months after Botswana Stock Exchange (BSE) CEO Thapelo Tsheole lifted the suspension of Chop-pies shares, and allowed them to trade on the domestic bourse.
In an interview, Choppies CEO, Ramachandran Ottapathu said now that Choppies has gotten rid of loss making operations which were bankrolled by the Choppies group, growth should be expected.
To him, disposing of those operations was a strategy geared at ensuring liquidity, profitability as well as self-sustainability.
Choppies has disposed of its South African operations. South Africa has never been profitable to Choppies, which drained the Choppies coffers. “We had around 92 stores in South Africa, and yet it was such a small number for us to be profitable. We needed a large number of stores to be profitable in that market. It was drain-ing Choppies financially,” he said in the interview.
Choppies also sold its Mozambique operations because they were loss making. The company is currently winding down in Kenya and Tanzania as well.
Post the disposal, Ramachandran said Choppies is now fairly liquid. The remaining operations are in Botswana, Choppies’s home ground and most profitable of operations. Further, Choppies operates in Zimbabwe, where Ram said it is profitable, as well as in Zambia, which is self sustainable.
“Namibia is still a small operation with only 5 stores. If we open 5 more stores, Namibia will be profitable. All Choppies operations will then be profitable and our shareholders will be happy,” he revealed, adding that Choppies no longer has cash-flow challenges.
Choppies has also addressed its corporate governance shortfalls. “We have undertaken an aggressive restructuring. Choppies has recapitalized itself; appointed a Deputy CEO with over 25 years of grocery retail experience in Southern Africa and a new Chief Financial Officer (CFO); and appointed new auditors – international auditing firm, Mazars,” he revealed, adding that all of them have commenced work, although some are still out of the country owing to travel restrictions.
Some of the measures taken by Choppies include the recapitalization of the business by P50 million com-prising a loan of P100million from founding shareholders, Ramachandran Ottapathu and Farouk Ismail, and P50 million from trading operations.
Choppies also announced amendments to Ram’s employment contract in accordance with the King IV Code on Corporate Governance. This includes a 43 percent reduction in the current guaranteed portion of the CEO’s remuneration to facilitate the introduction of short-term incentives.