Saturday, November 27, 2021

Choppies founders in yet another Open Market share purchase

Founding shareholders at Choppies Enterprise – Farouk Ismail and Ram Ottapathu on Friday purchased yet another significant number of shares of the Botswana Stock Exchange (BSE) listed retailing group. The motive to purchase extra shares through an open market transaction remains unknown. 

This is not the first time that both Ismail and Ram buy the company’s shares through the same platform ever since the suspension of its securities was lifted in 2020. In October 2020, Ismail and his business partner – Ram each bought five million shares at a price of 60 thebe per share. In December 2020, Ram once again reached out to the capital market this time around purchasing meagre 5000 shares worth P3000. Farouk on the hand bought 4 000, 000 shares worth P2 400, 000.00 – also through an open market purchase but three days later after Ram’s purchase. 

Fast forward to April 2021, a notice from the company to other shareholders shows that on the 23rd of April 2021 Ismail purchased 1, 855, 369 shares valued at P1, 113, 221.40 at P0.60 per share. His counterpart – Ram also the exact purchase of 1, 855, 369 shares valued at P1, 113, 221.40 at P0.60 per share. 

The purchase follows the company’s recently published financial statements which showed that the retailer recoded its first profit in more than four years. 

For the six months ended December 2020, Choppies Enterprises, reported a profit of P37.7 million, a turnaround from the P139.2 million loss registered in the 2019’s half year results. The return to profitability comes after the retailer shut down some of its loss-making stores outside Botswana. 

“ 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,” the company said in a commentary accompanying the financials released recently.  

Choppies last year closed its retailers in South Africa, Kenya, Tanzania and Mozambique  following a failed expansion strategy that nearly sunk the company. The expansion weighed heavily on Choppies and caused a rift between company founders and shareholders who were troubled by the diminishing profits and dividends. 

Matters came to head in 2018 when the retailer got in trouble with regulators for failure to publish audited financial results on time after the company external auditor flagged some processes and transactions that could distort the true picture of the company’s financial health. 

The review of past records uncovered losses and in the ensuing drama, Choppies decided to quit and exit the loss-making markets. The delayed June 2018 financials released in December 2019 stunned shareholders and market observers: a P445 million loss in 2018 and another shocking loss of P170 million for 2017 which was initially reported as a P74.6 million profit when KPMG did Choppies’ books.  The losses extended to 2019, with retailer booking in a P428 million loss, and followed with a loss of P370.6 million for the year ended June 2020. 

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