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Ok Zimbabwe Limited FY 2014 financial results presentation

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Ok Zimbabwe Limited FY 2014 financial results presentation

  1. 1. Full year results for the year ended 31 March 2014 Presentation to Analysts 5 June 2014
  2. 2. Presentation Outline Item Presenter Welcome & Introduction V.W. Zireva Operating Environment & Group Performance Highlights V.W.Zireva Financials A.E.Siyavora Outlook V.W. Zireva Questions & Discussions All Refreshments All
  3. 3. Size of operation F 13 F 14 45 48 7 8 2 2 0 1 Total stores 54 59 Number of staff 4 028 4 142
  4. 4. •A poor 2013 agricultural season •High & increased unemployment •Tighter liquidity limited demand •Deflationary cycle for retail trade set in +/-July 2013. Official Operating environment •Deflationary cycle for retail trade set in +/-July 2013. Official negative inflation was -0.91% by March 2014 •Virtually no growth in revenue in an environment of reducing prices. Reversals in sales growth at some locations. •Reduced profits as margins come under pressure and overheads increase
  5. 5. •Significant amount of goods imported, mainly from South Africa •Local industry supply continues to be hamstrung by lack & cost of capital, as well state & cost of utilities, inter alia •Import quotas were imposed for certain products, but Operations review:- supply & price of goods •Import quotas were imposed for certain products, but permits were not difficult to secure •Own brands developed constitute 27 lines; contribution of only 1% as volume is constrained by local industry manufacturing limitations •Continued to procure in US$ •Suppliers reducing prices to stimulate demand (into retail)
  6. 6. Operations review:- Capacity enhancement F14 shrinkage control M2 Trading New shops:- OK Wynne Street 1 200 OK Chitungwiza 1 200 OK Mabvuku 817 OK Hwange 1 211 Bon Marche Parklands 984 Closures :- OK Rezende (371) Refurbishments :- OK Waterfalls 1 182 OK Bindura 1 569
  7. 7. In addition to capacity enhancement, these initiatives were taken:- •Financial Services •Kawena Operations review:- Growth initiatives •i-Tech
  8. 8. Operations review:- Our brands and our promotions
  9. 9. HOUSE BRANDS
  10. 10. SHOPPERS CHOICE
  11. 11. Top Notch
  12. 12. Winning the customers’ following with promotions that change lives
  13. 13. •OUR IN-HOUSE IT SYSTEMS CONTINUE TO GIVE US AN EDGE WITH REAL- TIME PROCESSING CAPABILITY •CONTINUED DEVELOPMENT HAS INTEGRATED ALL OPERATIONS: – Procurement & Supply Chain, Finance, Operations review:- Technology Finance, Store Operations, Distribution Centre & Logistics, Inventory Management, Financial Services Webstores- OKmart, up and running OK & Bon Marche in development
  14. 14. Bon Marche Power Walk CORPORATE SOCIAL RESPONSIBILITY •Quarterly health Power Walks •Quarterly Aerobathons
  15. 15. CORPORATE SOCIAL RESPONSIBILITY Community tree nurseries
  16. 16. Review of performance:- shrinkage control Revenue US$483.7 million up 0.9% EBITDA US$19.8 million down 11.8% Profit after tax US$9.7 million down 21.2% Earnings per share 0.85 cents down 28.6%Earnings per share 0.85 cents down 28.6% Final dividend 0.22 cents; full year 0.42 cents Capital expenditure US$ 12.4 million up 1% Total assets $117.0 million up 0.6%
  17. 17. •F 13 Results •Financial Review •Balance Sheet•Balance Sheet •Cash Flow
  18. 18. Statement of Comprehensive Income for the year 31 March $ millions 2014 2013 Change % Revenue 483.7 479.6 0.9 Net sales 482.8 478.9 0.8 Underlying operating profit 13.5 17.6 (23.3) Net finance charges (0.11) (0.74) 85.5Net finance charges (0.11) (0.74) 85.5 Tax charge (3.7) (4.5) 17.5 Attributable Income 9.7 12.4 (21.8) Other comprehensive income (net) 0.0 1.1 (0.2) Total comprehensive income for the year 9.7 13.5 (28.0) EBITDA 19.8 22.5 (12.0)
  19. 19. Ratios and metrics 2014 2013 Change % Net Sales 482.8 478.9 0.8 Gross margin 17.0% 17.2% Overheads % sales 14.3% 13.6% Underlying operating profit margin 2.8% 3.7%Underlying operating profit margin 2.8% 3.7% Net Income margin 2.0% 2.6% EBITDA margin 4.1% 4.7% Tax Rate 27.8% 26.8% ROCE 17.3% 25.3% Net sales m2 5 865 6 067
  20. 20. Share Performance 2014 2013 Change % # Ordinary shares in issue (millions) 1 136.0 1 036.7 1.1 Share performance (cents):- Attributable earnings 0.85 1.19 Headline earnings 0.85 1.19Headline earnings 0.85 1.19 Diluted earnings 0.82 1.06 Dividend per share 0.42 0.60 Net asset value per share 5.89 5.44
  21. 21. • Revenue growth of 0.9%; average official inflation 0.87%; internal inflation year on year - 5.5% and GDP of +/-3% :- defended market share by > leveraging our portfolio of store brands > the impact of our promotions > improved facilities and offering • Gross margin at 17.0% (2013 : 17.2%) - higher consumption of low margin basic items continues. Improvement from better mix. • Overheads up 6.3% which was higher than sales growth > advertising and promotional expenses to compete for retail $ Commentary > advertising and promotional expenses to compete for retail $ > more staff engaged to provide adequate service in improved facilities and broadened product offering. Benefits will be reaped in due course. > more use of the Distribution Centre to supply branches with imported product received centrally > High cost of utilities > Cost of security > depreciation of newer equipment • Stock turn improves to 9.2 up from 8.7 in prior year; i.e. 39 days against standard of 30 days) • Capital expenditure $12.4 million (2012: $12.1 million) • Cash position good – balance $13.1 million (2013 $15.6 million)
  22. 22. Review of performance:- shrinkage control Shrinkage % of sales Shrinkage $ millions 12 months to 31 March 2014 0.8 2.3 12 months to 31 March 2013 0.8 2.3 12 months to 31 March 2012 0.7 2.1 12 months to 31 March 2011 1.0 2.2 12 months to 31 March 2010 2.5 3.8
  23. 23. Financial review 257.40 412.60 479.60 483.70 300.00 400.00 500.00 600.00 Sales 187.50 257.40 - 100.00 200.00 2010 2011 2012 2013 2014 Year
  24. 24. Revenue growth% 37.3 60.3 40 50 60 70 37.3 16.2 0.8 0 10 20 30 40 2010 2011 2012 2013 2014 Growth % Year
  25. 25. Profitability review $ millions 15.5 17.7 13.6 19.2 22.5 19.7 12.4 15.0 20.0 25.0 Operating profit 2.6 5.4 4.9 8.9 1.2 4.3 10.3 9.7 - 5.0 10.0 F10 F11 F12 F13 F14 Year Operating profit EBITDA Profit after tax
  26. 26. Financial Review return on capital employed 13.0 24.8 25.3 17.2 15 20 25 30 ROCE 9.6 0 0 5 10 2010 2011 2012 2013 2014 Year
  27. 27. Summary Statement of Financial Position as at 31 March $ million 2014 2013 Change % Property, plant & equipment 52.9 46.0 15.0 Goodwill 0.4 0.4 0 Long-term investments 0.3 0.3 0 Long-term receivables 1.0 0 Inventories 43.0 49.2 (12.6)Inventories 43.0 49.2 (12.6) Trade & other receivables 6.2 4.9 26.5 Cash & cash equivalents 13.1 15.6 (16.0) Deferred tax (7.7) (6.4) (20.3) Debt (4.1) (7.0) 41.4 Trade and other payables & provisions (38.2) (46.5) 17.8 Net assets 66.9 56.4 18.6 Stock turn 9.2 8.7
  28. 28. Cash Flow at 31 March $ millions 2014 2013 Cash from operating activities 16.8 23.2 Finance costs (0.1) (0.7) Tax payment (3.0) (3.5) Dividend payment (6.8) (5.6) Net cash from operations 6.9 13.4 Net cash invested (13.4) (11.9) Net funding (2.5) 2.4 Cash brought forward 15.6 11.7 Cash balance at year end 13.1 15.6
  29. 29. Outlook
  30. 30. •Good OUTLOOK The Future
  31. 31. OUTLOOK •Subdued business activity expected to continue into a significant part of the next financial year •The market will remain very competitive. There is a new entrant; Choppies Operational •Focus will be on market share growth and efficient use of existing capacity 1. Target greater share of customer spend 2. Expand services by leveraging on good IT skills •Operating own bakeries. Gives flexibility as well as much better margins•Operating own bakeries. Gives flexibility as well as much better margins •Continue pushing growth in fruit & vegetables as well as butcheries •Emphasis on cost reduction & margin protection Expansion •Flexibility to enter locations where we are not represented as we identify locations. The resources are in place for this. •Follow through on the regional expansion initiative
  32. 32. Planned Store Refurbishments •Five full refurbishments : OK Gweru OK Mutare OK Mbuya Nehanda OUTLOOK OK Mbuya Nehanda OK Houghton Park Bon Marche’ Chisipite •Partial Refurbishment: OK Rusape
  33. 33. THANK YOU TATENDA SIYABONGA

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