Choppies remains a going concern

Choppies Enterprises will continue to operate as a going concern for a period of 12 months as it remains on negative equity.

The Group’s negative equity reduced from P448 million to P341 million in the year ended June 2022. Commentary on the published financial results signed by Group Chief Executive Officer, Ramachandran Ottaphathu points out that in ensuring the ability of the Group to operate as a going concern for at least 12 months, the Board considered the detailed cash flow forecasts as prepared by management, undertakings of financial support by the founding shareholders, the economic outlook of the countries in which it operates as well as the intensity of global credit conditions which have turned more negative “The Board, relying on the presentations by management, concluded that the Group would be a going concern for the foreseeable future.” The group retail sales increased by 13 percent to P6 billion driven by seven new stores and strong volume and price growth across Africa. In spite of the challenging trading conditions, the group business in Botswana continued to show a modest sales growth. “Sales from Botswana increased by 1.5 percent as the business continued to show strong resilience in an increasingly challenging economic environment. The Botswana economy experienced elevated inflation, high unemployment, and lower economic growth.” Gross profit grew by 9,9 percent to P1.3 billion despite the challenging economic environment. The gross profit margin decline was related to higher than expected supply chain costs, including fuel and managing prices due to higher cost inflation. The Group’s inventory grew 35.2 percent reflecting the higher costs of goods due to inflation and increased inventory buys over the past quarter to address global supply chain constraints. Ottaphathu highlighted that the Group continues to manage its cash resources and liquidity prudently with a reduction of P 62 million in net debt over the past 12 months. Net cash generated was P 458 million, increasing by 23.8 percent from last year’s P 378 million. Free cash flow of P19 million was generated during the year compared to P85 million last year. Capital expenditure increased to P115 million from P60 million last year. “As we invested in new stores and maintained our distribution fleet. The Group settled gross debt of P 103 million.”