SIMBISA PROFIT UP 26PC:
QUICK service restaurant operator, Simbisa Brands announced a strong set of financials with profit for the year ended June 30, 2017 rising 26 percent to $6,355 million driven by growth in the group’s largest markets, Zimbabwe and Kenya.
Overall revenue was 8 percent stronger to $158 million compared to $146 million achieved in the prior year due to strong performance in key markets despite some economic challenges.
Profit before tax increased 41 percent to $10 million. As a result, profit attributable to equity holders rose 36 percent to $6,8 million from prior year’s $5 million while basic earnings per share increased 35 percent to 1,23 cents.
Cash generated from operations after changes in working capital increased to $21 million.
Of the working, Simbisa invested $10,6 million mainly in expansion activities in Zimbabwe, Mauritius and Kenya, which is lower than $17,7 million that was spent last year.
“The reduction in capital expenditure is a result of changes in the capital allocation strategy which takes into account our focus on high return investments and our objective to grow in footprint.
“This approach has also allowed the group to allocate more financial and human resources to improving operating efficiencies in existing stores,” said chairman Mr Addington Chinake.
Net cash outflow from financing activities was $3,8 million for the year while total borrowings remained relatively flat with a marginal reduction of $0,5 million.
In Zimbabwe, revenue increased by 9 percent to $100 million from the prior year’s $92 million on the back of higher customer counts with significant growth coming from existing stores.
The market also contributed $15,5 million to overall operating profit which closed the year 23 percent higher at $18,3 million.
“We are impressed by the organic growth in the market which reflects management’s effort over the last year to improve customer service and provide value offerings,” said Mr Chinake.
The store count increased by four to 194 in the market. This is in addition to completing the purchase of a factory to house the rolls and confectionery production and central stores functions in Zimbabwe which provides local restaurants with key supplies.
Regional operations in Kenya, Zambia, Ghana, DRC and Mauritius contributed $58 million to group total revenue representing a 7 percent increase.
Mr Chinake said the regional operations were at various stages of maturity and have potential to contribute significantly to the group’s profitability over the next few years.
In Kenya, the group opened eight new stores and closed four loss making entities, bringing the total count to 121 in the year under review.
In Mauritius, four new counters were opened while four were closed. Business was subdued in DRC with declines in both revenue and profitability.
The group anticipates investing in innovation as it moves towards growing into the largest Pan African quick service restaurant operator.