Choppies’ profits surpass P100 million
Botswana retail giant, listed in the local bourse and Johannesburg Stock Exchange, Choppies Enterprise Limited is expecting exceptional financial results for the full year ended June 2022, despite difficult trading conditions in the local and global economy.[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”1,2,3″ ihc_mb_template=”1″ ]
In a trading statement released by Botswana Stock Exchange this week, the retail giant selling fast-moving consumable goods noted that profits from continuing operations are expected to rise from P82 million recorded in 2021 and reach P137 million-P153 million in 2022.
Choppies noted that currently its financial results for the 12 months ended 30 June are being finalized and expects profit after tax for the full year to increase by 67%-87%, from P82 million recorded during the full year ended June 2021. In monetary terms, the profit is projected to rise by P137 million -P153 million during the full year ended June 2022. According to the financial results earning per share is also expected to increase by 95%-115% from 5.2 thebe per share recorded during the full year ended June 2021, to 10.2 thebe-11.3 thebe during the full year ended June 2022.
Earlier on, Choppies management said profits are expected improve and added that the entity is willing to turnaround its performance and become cash flow positive. “Going forward, operating profits from the continuing operations are expected to build‐up value for the group as management’s focus will be on the operations that have an operating profit namely Botswana Zambia, Zimbabwe and Namibia, which should help stabilise the group and restore equity. The Board has put in place various measures and procedures to improve governance at entity and operational levels. The Board is confident that the group has the capacity and goodwill to turn the performance around and thus become cash flow positive.”
The company management indicated that stress testing used to forecast financial results for the Group for the next five years indicated improvements in overall performance going forward. “The consolidated and individual subsidiary budgets for the 2022 financial year indicate that the ongoing operations will be profitable from year 2022 onwards.”
According to the retail company, Choppies has not lost any key supplier or service agreements which are vital for generating revenue and profits and is looking forward to further strengthen relationships with suppliers and venture into new areas of revenue generation. “Relationship with suppliers strengthened further compared to prior years. The inventory levels are therefore expected to remain at required levels to enable the group to generate the budgeted revenue and achieve customer satisfaction and brand loyalty. Management is aware of the competition in the markets in which they operate. They are confident of retaining and increasing the market share in the coming years through effective service delivery.”
The group assured shareholders that it has identified several measures available to limit the negative financial impact of COVID‐19 on its business and added that the measures include: cost saving measures, which have been implemented to reduce costs and increase profitability, online sales and other sale processes to enhance customer service delivery considering that the business was declared an essential service during the lockdown period. “These are now continuing services and the measures also include better inventory management processes to ensure appropriate stock levels are maintained for fast moving goods and ensuring sales level are met.”
Choppies indicated that its management have assessed the economic and operational environment in the countries where the ongoing subsidiaries operate and realized that Zimbabwe is the only country where trading will continue to be challenging. “The Group reviewed the projections and operations of the regions. Botswana, Namibia and Zambia remains optimistic as they are showing good growth and value add to the group. As a result, the group did not impair these investments in the financial year 2021 due to the expected positive EBIDTA and increase in value based on future projections. Zimbabwe situation will continue to be challenging with currency volatility and restrictions on profit repatriation expected to continue.”
The company management stated that during the financial year 2020, Choppies Enterprises Limited Board decided to discontinue the operations of Kenya, Tanzania, Mozambique and South Africa. According to the management South Africa’ entire issued shares were sold to each of its wholly owned subsidiaries while in Kenya and Tanzania, the operations were closed and the Group exited these countries. The company added that Mozambique operations were closed and the assets transferred to Choppies Zambia. “At the end of 2021 financial year we transferred any remaining assets and liabilities to continuing business. The remaining assets relating to the disposal group are BWP 5.1 million which are all considered recoverable. The remaining liabilities relating to the disposal group are BWP 69.0 million which will be settled by the group in the ordinary course of business.”
Commenting on the impact of COVID-19, management noted that the impact of the pandemic during the financial year in the countries in which Choppies trade did have a negative impact on the operations of the company. “The duration and impact of the COVID‐19 pandemic currently remains unclear. It is not possible to reliably estimate the duration and severity of these consequences on the economies of the countries in which we operate.”
The company’s audited financials show that profits after tax from continuing operations for the full year ended June 2021, declined from P98.9 million in 2020 to P81.89 during the full year ended June 2021. In 2021 the retail company had 154 stores operating across Southern Africa in four countries and made P5.3 billion in revenues.[/ihc-hide-content]
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.