The share capital of SNMVT, which runs the “Monoprix” retail brand, will be increased by 10,752,728 dinars, from 39,938,744 to 50,691,472 dinars.
As regards the reasons for this increase, the prospectus points out that “in recent years, the SNMVT group, like the entire mass retail sector, has been adversely affected by the prevailing socio-economic context (growth of the informal market, increased competition, general price increases, deterioration in purchasing power, health crisis, etc.)”.
And ‘faced with this situation, the Group has implemented a recovery and investment plan aimed at improving its financial and operational performance in the medium term. This includes strengthening the financial structure of the group’s most vulnerable companies, mainly MMT and Monogros.
Rescuing subsidiaries in financial difficulty
MMT and Monogros, which supply the Monoprix stores with fresh produce, pastries, bakery products and packaged delicacies, as well as logistics and warehousing, are two companies of strategic importance to the group’s business that have been severely affected by the market turbulence.
They suffer from a balance sheet imbalance resulting from a low level of equity relative to their business. Both companies are now clearly in need of a capital injection.
The capital increase at the level of SNMVT is intended to support the group’s recovery and investment plan by financing its two subsidiaries, MMT, which operates in the agricultural sector, and Monogros, which operates in the wholesale sector.
At December 31, 2002, the former had a deficit of 238,874 TND and the latter a deficit of more than 3,987 TND.
These two companies of the group were not the only ones in deficit. “Stone Heart”, aptly named for a company operating in the property development sector, owns a shopping center called “Monastir Mall”, which consists mainly of a Monoprix supermarket and a shopping mall.
At December 31, 2021, the company recorded a net loss of TND -676 951 and its equity was negative by TND 283 530.
On the other hand, its financial commitments exceeded 10,176 MTD, including more than 6,532 MTD of short-term debt.
And moreover, for the “Société Nouvelle Maison de la Ville de Tunisie”, in 2021, it was a total of 154,059,714 TND in bank commitments, of which 93,220,121 TND in short-term debts, before a net result of the consolidated whole which was, in the same year, in deficit of 1,082 TND. In consolidated of the same exercise, the incomes exceeded indeed the 657,9 MTD, for expenses of almost 654,5 MTD and more than 10,369 MTD in financial expenses.
The funds raised by SNMVT will be injected into those subsidiaries by way of a capital increase, which will make it possible to rebalance the financial structure of the two subsidiaries, each of which has excessive financial debt (long and short term) and negative equity at the end of 2021. Secondly, to reduce the financial costs, which are too high in relation to each company’s ability to generate cash flow.
The parent company itself is in the red
For the 2021 financial year, SNMVT’s own revenues fell from 624.1 MTD to 618.3 MTD, a decrease of 0.9%. The onset of the COVID-19 health crisis, the effects of which continued into 2021, weighed on activity. The commercial margin fell by 2% to 110.5 MTD under the impact of the pressure on costs and the constraints of price revision in a context of deteriorating purchasing power. The year ended with a deficit of 0.4 MTD. In contrast to the two previous years, 2022 saw a recovery in activity.
SNMVT achieved a turnover of 627.1 MTD, an increase of 1.4% compared to 2021. Thanks to improved management (known and unknown discounts) and a more favorable structure of products sold, the company managed to improve its commercial margin by 3.4% to 114.2 MTD.
The commercial margin rate was 18.22%. The prospectus for the capital increase did not give details of the balance sheet for 2022, but it is known that at the end of June this year Monoprix had a deficit of more than 3,628 MTD.
