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Choppies posts impressive 2020 results

Choppies Ramachandaran Ottapathu

Last year was a brutal one for businesses due to the coronavirus pandemic and related restrictions and safety concerns. But with the vaccine slowly rolling out throughout 2021, many companies are optimistic of a rebound soon – retail giant, Choppies would want to do so on the backdrop of impressive financials from the torrid year.

The food retailer Choppies released its Reviewed Interim Financial Statements for the six months ended 31 December 2020, and the numbers are quite remarkable, as compared to the previous half year ended 30 June 2020. In 2018, Choppies results were delayed by more than a year and a forensic investigation uncovered accounting irregularities. New auditors PwC, who had replaced KPMG, refused to sign them off.  Its 2017 results were also restated, moving from a profit to a loss.

Nonetheless, Choppies reported its first profit since 2016 of P37.7 million (2019: Loss of P139.2 million), as the benefits from restructuring the business following the exit from underperforming investments, were realized. The 2019 loss was perpetuated by the strain of the COVID-19.

The group said in its financial report last year that the pandemic had negative impacts on sales and production, supply-chain, customers, equity and revenue. Choppies suffered from donations made towards the State COVID-19 Relief Fund and other devastating economic consequences.

During the year ended 31 December 2020, the group’s revenue decreased by 8.7% to P2 711 million (2019: P2 969 million). This decrease was a result of negative volume growth due to the impact of the Covid-19 pandemic and currency weaknesses in Zimbabwe and Zambia. Choppies has approximately five stores in Zambia.

Choppies has sold its stores and distribution centres in South Africa to King Investments for R1, due to huge losses incurred over the years. The losses were worsened by the “lack of cash flow (that) resulted in trade creditor suppliers not being paid on their applicable due date and hence refusing to supply stock, causing stores in South Africa to become understocked and lose market share.”

The group said it was not able to continue to fund the losses of the South Africa subsidiaries from Botswana. It said the continued failure to service debt exposed it to threats of application for the winding up of the South Africa subsidiaries.

In spite of the lock downs implemented in the group’s largest operations, being Botswana and Zimbabwe, coupled with the currency depreciation in Zambia and Zimbabwe, the group did well to reduce the possible huge revenue losses which resulted in a reduced impact on the gross profit.

Consequently, gross profit margins reduced slightly to 22.0% (2019: 22.9%). In response to lower volumes, the group managed costs aggressively by reducing its total expenditure by 14.3% resulting in a 4.7% decline in EBIT as the drop in gross profit was offset by lower expenditure.

During FY2020, the board decided to discontinue its operations in Kenya, Tanzania, and Mozambique. Accordingly, the results of these operations are disclosed with effect from 1 July 2019 in terms of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. As a result, total assets for the period under review are significantly lower than the December 2019 levels.

The Botswana business continued to show strong resilience in an increasingly competitive operating environment and poor trading conditions. Revenue declined by 4.6% despite volumes reducing by 6.4%. The gross profit margin, albeit lower at 22.3% (2019: 24.5%) remains relatively healthy despite the extremely challenging trading conditions. Expenditure was well controlled with total expenditure reducing by 15.6% negating some of the decline in gross profit. One additional store was opened bringing the total number of stores in Botswana to 91 stores (2019: 90 stores).

The Namibian operation continued to show improvement in gross profit even though it still has a very small footprint. Revenue for this segment increased by 3.2% with gross profit margins improving to 19.3% (2019: 17.9%). EBIT losses reduced by 95% due to improved gross profit margins coupled with an 8.2% reduction in expenditure.

The Zambia operation also showed an improvement in gross profit but the continued weakness of the Kwacha against the Pula had a very significant impact on the trading results and expenses. Even though the Pula revenue declined by 28.5%, revenue in Kwacha grew by 2.4% despite volumes reducing by 8.9%, gross profit margins improved to 18.9% (2019: 16.5%) driven by price inflation.  EBIT losses reduced by 33% due to effective cost control. The Zambian segment consists of 25 stores (2019: 21).

The changes and volatility of the Zimbabwean currency makes operating in this market extremely difficult, as gains obtained at country level gets eliminated when converted at group level due to the weak currency when compared to the Botswana Pula.

Revenue declined by 21.3% to P211.4 million (2019: P268.6 million) resulting from a weakening of the local currency against the Pula during the previous 6 months. Gross profit margins improved to 24.1% (2019: 18.3%). EBIT reduced to P7.9 million (2019: P10.2 million).

Even though this business remains self-sustaining without any cash flow constraints, repatriation of profits to Botswana will continue to be difficult until the economy undergoes a structural change. The segment consists of 32 stores (2019: 32). The Board has considered it prudent not to declare a dividend for the period under review.

Business

Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Business

Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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Business

BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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