OK Zimbabwe profits up 20 percent

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LISTED retail group, OK Zimbabwe Limited’s after-tax profit for the year to March was up 20,1 percent to US$12,4 million driven by a significant growth in revenue, the company has announced.
Net operating costs increased to US$33 million from $27 million partly driven by the on-going expansion and refurbishment programmes with total assets growing to US$116 million from US$95 million.
The retail group, which runs OK shops, Bon Marché and OK Mart, last month opened a new branch along Wynne Street in Harare with three more branches planned for Chitungwiza, Hwange and Harare.
To widen its revenue inflows, the group announced that it had recently obtained a Money Transfer Agency licence and was currently developing other financial services products to expand this line of business.
OK Zimbabwe said overheads also increased by 19,2 percent to US$65,2 million in the previous year mainly due to increases in employee benefits as the company increased its workforce.
“Costs incurred in moving products to the branches increased pursuant to greater use of the distribution centre for warehousing and supply of imported products,” group chairman David Lake said in a statement accompanying the results.
“The cost of borrowing increased to US$80,000 from US$50,000 in the prior year as the convertible loan from Investec Africa Frontier (Private) Equity Fund and other bank facilities were accessed during the year.”
Revenue rose to US$479,6 million from US$421 million during the period under review buoyed by promotions and an on-going branch network expansion.
Management expects sales to increase further after the next harmonised elections set for July 31.
“The growth in revenue and earnings is acceptable, in a very difficult environment of low inflation at 2,8 percent per annum with gross domestic product growth of less than 5 percent,” group chief executive Willard Zireva said.
Operating cash flow was up 27 percent from US$14,9 million to close the year at US$19 million due to increased cash inflow from trading activities and a positive cash inflow from working capital changes.
Significant outflows were recorded in taxation with an outflow of US$3,5 million compared to US$3 million last year. Finance charges also reduced operating cash flow after almost doubling in the period under review.Advertisement

The company invested US$10,1 million in the replacement of property plant and equipment compared to US$8,4 million in the prior year.
Borrowings rose to US$2 million compared to US$5 million as the company drew down on lines of credit from Investec and other local institutions at an average cost of 12,5 percent.