Cash-rich OK goes debt free

LISTED retailer, OK Zimbabwe, operated free of debt during the year ended March 31, 2018, as record breaking revenues boosted the company’s coffers.
In a statement accompanying the company’s financials, board chairman David Lake said the group generated enough funds from its operations to finance all its working capital and capital expenditure requirements during the year.
“The group operated free of debt as internally generated funds were adequate for working capital and capital expenditure requirements,” Lake said.
The supermarket group’s capital expenditure for the year was $15,5 million, up from $10,9 million in prior year. The company continued with its refurbishment exercise to improve existing facilities as well as expand its trading footprint with two new stores being opened during the period under review.
Last week, the company released very positive financial results for the year ended March 2018. Revenue and profit after tax were reported at record high levels. Revenues grew 23,4 percent to $582,9 million, a record high for the company. With the company’s revenues growing at an average four percent over the past five years, the period’s growth rate of 23,4 percent was also a stand out.
Against this backdrop, the company posted a profit after tax of $16,6 million representing a 174,6 percent increase from the previous period.
Lake said the strong performance was as a result of “improved product availability, successful promotions, focus on customer service and tighter internal controls”. Local research firm, Equity Axis, however, says “industry and broader economic trends show that a resurgence in aggregate demand caused by inflation and buttressed by increased usage of electronic means of transacting, resulted in sharp sales and revenue growth”.
Group chief executive officer Alex Soyavora told an analysts briefing last week that an inflation adjustment of the revenue growth rate, using latest Zimbabwe National Statistics Agency figures, would put it at 19,4 percent.
“But it depends on whether the inflation figure is accurate, if it is understated then the inflation adjusted growth would be less,” he added.
Official inflation as at March stood at 2,68 percent. Siyavora said the group’s estimated internal inflation rate for the period under review was seven percent.
The group said gross margins were marginally lower as the sales mix shifted in favour of low margin goods. The group plans to continue improving profitability through growing sales and managing its costs. Refurbishment work will also be carried out on a number of stores and expansion is planned in identified areas where the retail group presently is inadequately represented.
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