HISTORICAL FINANCIAL HIGHLIGHTS
- Revenue up 494% to ZWL 26.9 billion
- EBITDA up 221% to ZWL 2.7 bilion
- Profit for the year up 252% to ZWL 2.0 billion
- Earnings per share up 245% to ZWL 1.60
- Net asset value per share up 258% to ZWL 2.91
- Proposed final dividend of 54 ZWL cents per share
CHAIRMAN’S STATEMENT
OVERVIEW
The operating environment for the financial year under review was affected by Covid-19, with lockdown restrictions in place throughout the period.
The lockdown measures negatively impacted business through supply chain disruptions and reduced consumer disposable incomes. The Group was also unable to hold its flagship promotion, the Grand Challenge. As a result, volumes for the year declined by 13% from prior year. The improvement in volume performance relative to the decline of 27% reported for the half year is on the back of easing of the restrictions during the second half of the financial year.
Inflation levels were high particularly during the first half of the financial year, with official annual inflation peaking at 837.5% in July before gradually declining to close at 240.6% in March 2021. Foreign currency availability and exchange rate stability improved during the year mainly due to the success on the foreign currency auction system introduced in June 2020. This together with the liberalisation on the use of foreign currency for domestic sales under Statutory Instrument 185 of 2020 brought some stability into pricing and product supply. The foreign currency component of the Group’s sales remained low, although this was largely adequate for the Group’s inventory and capital expenditure import requirements.
The Group’s capital expenditure programme continued during the year with refurbishments completed at OK Avonlea, OK Machipisa, Bon Marché Belgravia, Bon Marché Eastlea, OK Kadoma, OK Rusape and OK Hwange. Two new stores were opened, an OK store in Harare’s Sanganayi Inn area and an OKmart store in Victoria Falls. The refurbished stores and new branches were well received in their respective markets and made a significant contribution to the Group’s sales.
The Group embarked on a brand repositioning exercise for all its store brands, namely OK, Bon Marché and OKmart to meet emerging customer requirements and market trends.
GROUP PERFORMANCE
The results were inflation adjusted to reflect the impact of the change in the general purchasing power of the reporting currency (ZWL) in accordance with IAS 29, Financial Reporting in Hyperinflationary Economies.
Revenue for the year declined by 2% to ZWL 34.3 billion from ZWL 35.0 billion in the prior year. Profit before tax of ZWL 2.0 billion was 42% below prior year’s of ZWL 3.4 billion, while profit after tax declined by 46% to ZWL 1.1 billion from ZWL 2.0 billion in prior year.
Overheads grew by 6% over prior year. The measures implemented by the Group to curtail the spread of Covid-19 increased the cost base. Electricity charges, staff costs, cleaning costs and security expenses also contributed to overheads growth.
Capital expenditure for the year was ZWL 1.2 billion down from ZWL 1.5 billion in prior year. Most of the capital expenditure was on store refurbishments and equipping the new stores.
SUSTAINABLE BUSINESS PRACTICES
The Covid-19 pandemic had a strong impact on our customers, the business and supply chain. As such, we took precautionary measures to protect our customers and stakeholders while ensuring business operations are safe from Covid-19 exposure. In addition, the Group adopted sustainability reporting to reinforce our responsible business values. Sustainability will now drive our future business strategy and practices.
DIVIDEND
The Directors declared a final dividend of 54 ZWL cents per share to be paid to the shareholders on or about the 1st of July 2021. The final dividend brings the total dividend declared for the year to 80 ZWL cents per share.
OUTLOOK
The impact of Covid-19 on future operations remains uncertain. However, the Group’s financial status remains solid and mitigatory measures are in place to ensure continuity and viability of operations. The health and safety of employees, customers and all stakeholders remain of paramount importance and the Group will continue to follow Covid-19 protocols for their safety.
The economy is expected to benefit from the anticipated good harvest from the 2020/2021 agricultural season, availability of foreign currency on the auction system and declining inflation. The Group has been investing in capacity enhancement and is therefore well poised to maximize on the anticipated economic rebound. The resumption of the Grand Challenge promotion in the current financial year is expected to underpin volume growth in the first quarter. The Group will also continue to pursue more innovative initiatives to grow market share profitably. The refurbishment and expansion drive will be reinforced, with a number of stores targeted for refurbishment and potential new sites under consideration.
DIRECTORATE
Mr. Alex Edgar Siyavora, the Group’s Chief Executive Officer from April 2017, and a senior executive of the Group since 2001, retired on 31 March 2021 after having served the Group for twenty years. The Board extends its gratitude to Alex for his invaluable contribution to the Group.
The Board is pleased to announce the appointment of Mr. Maxen Phillip Karombo to the position of Group Chief Executive Officer with effect from 1 April 2021. Maxen joined the Group from Delta Corporation where he was Executive Director – Operations and Marketing for ten years. The Board is delighted to welcome Maxen to the Group, where he will undoubtedly apply his vast marketing and business experience to drive the Group’s leadership in the retail space.
The Board also wishes to announce the resignation of Mr. Bruce Armstrong Carter as non-executive director with effect from 1 December 2020 and the appointment of Mr. Simon Masanga as a non-executive Director with effect from 1 April 2021. The Board extends its appreciation to Bruce for his
service to the Group and wishes Simon success in his new role.
H. NKALA
CHAIRMAN