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AGENDA Group overview Financial highlights Operational highlights Expansion plans 2
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CURRENT FOOTPRINT Kenya 12 stores 2 DCs Tanzania 2 stores Number of stores 31-Dec-16 31-Dec-17 Increase: Dec-16 to Dec-17 Current (Apr-18) Botswana 83 85 2 85 Zambia 16 stores 1 DC South Africa 68 88 20 88 Zimbabwe 31 32 1 32 Namibia 3 stores Uganda Botswana 85 stores 3 DCs Zimbabwe 32 stores 2 DCs Mozambique 1 store Zambia 10 15 5 16 Kenya 9 11 2 12 Tanzania 1 2 1 2 Mozambique - 1 1 1 South Africa (North West) 57 stores 2 DCs Arizona 8 stores Namibia - 1 1 3 Total 202 235 33 239 Durban 23 stores 1 Factory 1 DC 4
Financial highlights Financial Metrics (Group) HY 2018 HY 2017 Movement No. of stores 235 202 33 Revenue (BWP millions) 5 762 4 714 22% Gross profit (BWP millions) 1 122 915 23% Gross profit margin 19.5% 19.4% 0.1% EBITDA (BWP millions) 251 189 33% EBITDA margin 4.4% 4.0% 0.4% PAT (BWP millions) 68 56 21% PAT margin 1.2% 1.2% 0% Like for like revenue (BWP millions) 5 054 4 306 17% Like for like footfall (in millions) 84 82 2.4% Like for like basket size (BWP) 60.17 52.51 14.6% Number of employees 17 182 14 672 17.1% Return on net assets 5.55% 3.74% 1.81% Revenue per sqm 17 485 15 664 11.6% 5
Revenue split by region HY 2018 HY 2017 Zambia, 4.2% Kenya, 3.6% Tanzania, Namibia, 0.1% 0.1% Mozambique, 0.2% Zambia, 2.5% Kenya, 2.7% Tanzania, 0.0% Zimbabwe, 15.2% Zimbabwe, 15.6% Jwayelani, 9.1% Botswana, 40.3% Jwayelani, 9.5% Botswana, 48.5% SA total 36.2% Rustenburg, 27.1% SA total 30.6% Rustenburg, 21.1% Reduced dependency on Botswana (from 49% revenue contribution in HY 2017, to 40% contribution in HY 2018). 6% contribution increase in SA. New regions scaling up and contributing to diversified growth. 6
Revenue growth P 5762 m P 4714 m P 3531 m P 3008 m P 2504 m P 2005 m HY 2013 HY 2014 HY 2015 HY 2016 HY 2017 HY 2018 Consistent revenue growth, with a 5-year compounded annual growth rate of 23.5%. 7
Revenue growth Segment wise Existing Stores (%) New Stores (%) Total (%) Botswana 2% 4% 6% South Africa 32% 27% 59% North West 43% 33% 76% KZN 10% 12% 22% Zimbabwe 20% 5% 25% Zambia 13% 105% 118% Kenya 28% 40% 68% Tanzania 95% 132% 227% Mozambique N/A N/A N/A Namibia N/A N/A N/A Total Sales 17% 13% 29% Like for like analysis HY 2018 HY 2017 Movement Sales (BWP millions) 5 054 4 306 17% Footfall (millions) 84 82 2.4% Basket size (BWP) 60.17 52.51 14.6% 8
Gross Profit 22.3% 20.8% 19.8% 18.1% 23.1% 21.9% 16.5% 18.3% 14.4% 15.9% 19.5% 19.4% Botswana SA - North west SA - KZN Zimbabwe Other regions Total HY 2018 HY 2017 9
EBITDA P 62 m P 19 m P 251 m P 185 m P 166 m P 189 m SA Total P 46 m P 3 m Loss P 6 m P 41 m P 18 m P 24 m P 33 m P 30 m Botswana SA - North west SA - KZN Zimbabwe Other regions Total -P 11 m -P 26 m -P 20 m HY 2018 HY 2017 10
Profitability analysis EBITDA P 189 m P 251 m Depreciation P 127 m P 100 m Net interest PBT Tax PAT P 31 m P 16 m P 93 m P 73 m P 25 m P 17 m P 68 m P 56 m P 62 m increase in EBITDA Profitability increase of P 12 m due to: P 27 m increase in depreciation P 15 m increase in net interest P 8 m increase in tax HY 2018 HY 2017 11
Gross profit margin KPIs 19.5% 19.4% Gross profit: Positive increase in Gross Profit Margin, mainly from the Botswana and South Africa North West regions. Gross Profit increased by 23% in value YoY. Dec-17 Dec 16 EBITDA margin 4.4% 4.0% EBITDA: Improved performance of Botswana and SA regions resulted in improved total group EBITDA margin. Dec-17 Dec 16 12
1.12 Current ratio 1.14 KPIs Current ratio: Current ratio for HY 2018 reduced to 1.12x, compared to 1.26x for FY 2017. Current ratio reduced mainly due to increase in working capital days Dec-17 Dec 16 Interest coverage ratio 10.24 7.68 Interest coverage ratio: Ratio improved to 7.68x for HY 2018, compared to 6.34x for FY 2017. Dec-17 Dec 16 13
Inventory days 52 46 Dec-17 Dec 16 Receivable days 4 3 Dec-17 Dec 16 Working capital Inventory days increased due to opening of new stores in South Africa and new geographies. The majority of the group s sales are in cash. Receivables are mainly associated with credit extended to buying groups. Due to increases in stock holding, NWC days is positive. The group s objective is to maintain zero or negative NWC days. New regions are expected to meet these targets, once they mature. Net working capital days 3 Payable days Payable days increased 53 50 mainly due to increases in inventories for South Africa and new geographies. (0.28) Dec-17 Dec 16 Dec-17 Dec 16 14
Cash flow BWP Millions HY 2018 Cash flows generated from operating activities 332 Investing activities - New store capex (161) - Replacement capex (73) Financing activities - New loans 32 - Loan repayment (including interest) (49) Net movement 81 Opening cash & cash equivalents (Net of overdraft) 76 Closing cash & cash equivalents (Net of overdraft) 157 15
Net debt position BWP Millions HY 2018 HY 2017 Long term debt 687 580 Bank overdraft 37 51 Total debt 724 631 Cash (194) (221) Net Debt 530 410 EBITDA 251 189 LTM EBITDA 404 271 Equity 1 564 1 506 Total Debt to Equity 0.46x 0.42x Net Debt to LTM EBITDA 1.31x 1.51x 16
Operational highlights 17
Retail space growth Region (all values in sqm) HY 2018 HY 2017 Growth Botswana 119,493 116,430 3,063 South Africa 139,778 108,706 31,072 Zimbabwe 37,841 37,041 800 Zambia 18,668 12,007 6,661 Kenya 20,199 16,315 3,884 Tanzania 1,575 469 1,106 Mozambique 1,504-1,504 Namibia 1,915-1,915 Total 340,973 290,968 50,005 18
Botswana Despite aggressive store roll outs by competitors, we were able to achieve decent growth in Botswana, whilst maintaining our strong market share in the region. 5.9% increase in overall revenue. 2.3% like for like revenue increase. Value added financial products / services continue to grow in Botswana, and we expect to add more products in the calendar year. 19
Botswana Whilst Botswana experienced continued subdued economic activity and increased competition, we managed to maintain market share in this market. We expect the economy to improve under Botswana s new political leadership. 20
South Africa North-West region: Region demonstrated strong like for like growth of 43%, and overall growth of 76%. This was achieved mainly due to competitive buying, ensuring stock availability in stores and improvements in product range. Achieved profitability in the first half of the year. Significant improvement in financial services. 21
KZN region: South Africa The KZN business was hard hit by the import ban on chickens and production stoppages by local chicken farmers. Gross margin was severely compromised to maintain volumes, and we only expect this to change post June 2018. 8 new stores were acquired in KZN effective from 1 November 2017. These are expected to benefit the group in terms of enhanced scale and efficiencies. 22
Zimbabwe Despite liquidity issues in the economy, our segmental revenue grew by 25%, with like for like growth of 20%, and 12% growth in EBITDA. Under the new political dispensation, we expect the economy to rebound quickly. There are a few initiatives in the pipeline to streamline financial services. We expect a significant turnaround once the necessary financial approval is obtained from regulatory authorities. 23
Zambia: Other Regions We continue to aggressively promote the brand for market share. We expect to be able to achieve breakeven profitability with the opening of a few more stores, which are scheduled before the end of this calendar year. Kenya: Planned revamp of stores taken over from Ukwala have started, and we expect to finish renovations by end of July 2018. The market is ripe for a turnaround, and we are hopeful that this will pay off. 24
Tanzania: Other Regions We expect to open the third store by the end of May 2018 this will provide some good volumes, as it will be the biggest Choppies retail outlet in Tanzania. Retail site development is generally very slow in Tanzania, and we expect to grow at a slow pace in this market. Namibia: Commenced operations in Namibia in November 2017. Currently we operate 3 stores in Namibia. Preliminary indications are very good, and the market has similar characteristics to Botswana. We are confident that we will excel in this market. 25
Other Regions Mozambique: Due to continued economic issues in the Mozambique market, we are taking a very cautious approach going forward. 2 leases are in the pipeline, but will commence operations at a slow pace. 26
EXPANSION PLANS 27
Planned New Stores & Capex Planned New Stores (Post Dec 17) Country FY 2018 (# stores) Botswana - South Africa 3 Zimbabwe 2 Zambia 2 Kenya 2 Tanzania 1 Mozambique - Namibia 2 Total 12 Estimated Capex Country FY 2018 (Pula millions) Botswana - South Africa 24 Zimbabwe 11 Zambia 15 Kenya 24 Tanzania 8 Mozambique - Namibia 15 Total 97 Cumulative no. stores 247 28
THANK YOU 29