ok zimbabwe limited hy 2015 financial results presentation
DESCRIPTION
OK Zimbabwe Limited leading General Retailers listed on the Zimbabwe Stock Exchange recently released their half year results presentation. Check out insights into this company in their presentation which appears below Sign up to receive email alerts on company news and daily share price from their company investor relations http://bit.ly/1ygZmy8TRANSCRIPT
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Results for the Half year to 30 September 2014
Presentation to Analysts
& Asset Managers
13 November 2014
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Presentation Outline
Item Presenter
Welcome & Introduction V.W. Zireva
Macro Environment &
Group Performance Highlights V.W.Zireva
Operations Review A.R.KatsandeOperations Review A.R.Katsande
Financials A.E.Siyavora
Outlook V.W. Zireva
Questions & Discussions All
Refreshments All
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Overview:-
Size of operation
H1 F 15 H1 F 14
48 46
8 7
2 22 2
1 0
Total stores 59 55
Number of staff 4 080 3 920
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•GDP growth has been revised downwards continuously
•A reasonable 2013/14 agricultural season
•Company closures
•High & increased unemployment
•Tighter liquidity & limited demand
Overview:-
Environment
•Tighter liquidity & limited demand
•Deflationary cycle for retail trade has not let up since +/-July 2013
•Negative growth in sales recorded in most businesses
•Low manufacturing capacity utilisation
•Inadequate utilities increased operating costs, e.g. electricity load
shedding necessitates use of generators
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Review of performance (H1 F15) :-
shrinkage control
Revenue (US$ million) 232.1
EBITDA (US$ million) 9.5
Profit after tax (US$ million) 4.3
4.8%
10.9%
-
Earnings per share (cents) 0.37
Interim dividend (US cents) 0.19
Cash from operations (US$ million) 8.8
Total assets (US$ million) 123.7
30.1%
1.2%
14.0%
5.0%
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Review of operations
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Operations review:-
supply & price of goods
•Imports still dominate the supply space. South Africa remains the
major source
•Local industry supply continues to be hamstrung by lack & cost of
capital, antiquated equipment, poor economies of scale as well
state & cost of utilities, inter alia. Buy Zimbabwe
•Import quotas were imposed for certain products, but •Import quotas were imposed for certain products, but
permits were not difficult to secure.
•Own brands expansion continues. Constitute 64 SKU’s lines;
contribution still low as volume in a number of categories is
constrained by local industry manufacturing limitations
•Suppliers reducing prices to stimulate demand (into retail)
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Operations review:-Capacity enhancement H1 F15
shrinkage control
M2Trading
Refurbishments :-
OK Gweru 1 671
OK Mutare 1 614
Meat processing plant
New shops:-
Nil
Warehousing:-
Restored warehouse destroyed by fire 3 500
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Financial services
Operations review:-
Review of growth initiatives
Financial services
Generating commission income from:-
•Money transfers
•Banking and insurance
•Electricity re-charge cards
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Operations review:-
Review of growth initiatives
Kawena :-
•Project was slow to take off
•Lately numbers are increasing at a faster rate,
registrations to date are about 12 K
•Transactions in last two months meaningful
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•Activity is still low
Operations review:-
Review of growth initiatives
•Activity is still low
•Stocking & offering is improving
•Sales generation trends are encouraging
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Operations review:-
Growth initiatives
Instore Bakeries• Full Bakeries 23
• Bake Off 7
• Mini Bake Off 7• Mini Bake Off 7
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Operations review:-Our brands and our promotions
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HOUSE BRANDS
64 SKU’s Across Categories:
Perishables
Dry Groceries
Clothing & Textiles
Housewares
Top Notch
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HOUSE BRANDS
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SHOPPERS CHOICE
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Top Notch
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Winning the customers’ following with promotions that
change lives
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•OUR IN-HOUSE IT SYSTEMS CONTINUE TO PLAY A PIVOTAL ROLE
•CONTINUED DEVELOPMENT HAS INTEGRATED ALL OPERATIONS: –
Procurement & Supply Chain,
Finance,
Store Operations,
Distribution Centre & Logistics,
Operations review:-Technology
Distribution Centre & Logistics,
Inventory Management,
Financial Services
Webstores- OKmart, up and running
OK & Bon Marche in development
•ENERGY MANAGEMENT- Cost Reduction through accurate metering
- “ “ “ energy efficiency
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First Bon Marche
Power Walk
In Bulawayo
CORPORATE SOCIAL RESPONSIBILITY
•Quarterly health Power
Walks
•Quarterly Aerobathons
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Bon Marche
Power Walk
CORPORATE SOCIAL RESPONSIBILITY
•Quarterly health Power
Walks
•Quarterly Aerobathons
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CORPORATE SOCIAL RESPONSIBILITY
Community tree nurseries
2 launched in the first half of the year
Muzogwi - Masvingo Province
Masasi - Manicaland “
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H1 F15 Results
Balance Sheet
Cash FlowCash Flow
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Statement of Comprehensive Income for the half year to 30 September 2014
$ millions H1 F15 H1 F14 Change %
Revenue 232.1 243.6 (4.8)
Net sales 231.1 243.2 (4.8)
Underlying operating profit 5.9 6.5 (10.0)
Net finance charges (0.06) 0.02 (351.6)Net finance charges (0.06) 0.02 (351.6)
Tax charge (1.5) (1.7) 12.1
Attributable Income 4.3 4.8 (10.9)
Total comprehensive income for the year 4.3 4.8 (10.8)
EBITDA 9.5 9.6 0.4
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Ratios and metrics
H1 F15 H1 F14 Change %
Net Sales 231.6 243.2 (4.8)
Gross margin 18.0% 16.8%
Overheads % sales 15.6% 14.3%
Underlying operating profit margin 2.5% 2.7%Underlying operating profit margin 2.5% 2.7%
Net Income margin 1.9% 2.0%
EBITDA margin 4.1% 3.9%
Tax Rate 25.8% 26.0%
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Share Performance
H1 F15 H1 F14 Change %
# Ordinary shares in issue (millions) 1 153.9 1 129.2 2.2
Share performance (cents):-
Attributable earnings 0.37 0.43
Headline earnings 0.37 0.43Headline earnings 0.37 0.43
Dividend per share 0.19 0.20
Net asset value per share 6.10 5.67
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• Negative revenue growth of 4.8%; average official inflation 0.09%; internal inflation year on year -5.6%
> less revenue for the same volume
• Gross margin at 18.03% (H1 F14 : 16.78%)
> efficient procurement
> product mix
• Overheads up 4.5% which was higher than sales growth
> rate of increase has slowed down significantly
> depreciation of newer equipment
Commentary
> depreciation of newer equipment
> advertising and promotional expenses to compete for retail $
> High cost of utilities
> Cost of security
> more use of the Distribution Centre to supply branches with imported
product received centrally
• Stock turn down to 9.2 against 9.6 in prior year; i.e. 39 days against standard of 30 days)
• Capital expenditure $5.5 million (H1 F14: $6.3 million)
• Cash position good – balance $14.6 million (H1 F14:- $15.9 million; March F 14:-$13.1million)
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Review of performance:-
shrinkage control Shrinkage % of sales
Shrinkage $ millions
6 months to 30 September 2014 0.83 1.5
6 months to 30 September 2013 0.82 1.66 months to 30 September 2013 0.82 1.6
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Summary Statement of Financial Position as at 30 September 2014
$ million H1 F15 H1 F14 Change %
Property, plant & equipment 55.1 49.6 11.1
Goodwill 0.4 0.4 0
Long-term investments 0.3 0.3 0
Long-term receivables 1.1 0
Inventories 46.9 47.8 (2.0)Inventories 46.9 47.8 (2.0)
Trade & other receivables 5.1 8.2 (37.3)
Cash & cash equivalents 14.6 15.9 (8.3)
Deferred tax (8.0) (6.8) (18.7)
Debt (3.6) (4.5) 20.2
Trade and other payables & provisions (41.6) (46.9) 11.2
Net assets 70.4 64.1 9.9
Stock turn 9.2 9.6
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Cash Flow at 30 September 2014
$ millions H1 F15 H1 F14
Cash from operating activities 8.8 6.8
Finance costs (0.1) 0.0
Tax payment (0.6) (1.1)
Dividend payment (2.5) (4.5)Dividend payment (2.5) (4.5)
Net cash invested (5.5) (6.2)
Net funding 1.5 0.3
Cash brought forward 13.1 15.6
Cash balance at year end 14.6 15.9
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Outlook
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•Good
OUTLOOKThe Future
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OUTLOOK
Overview
•Going forward further tariff and non tariff barriers came into law on 1st October.
•Subdued business activity expected to continue to the end of the financial year
•The market will remain very competitive. There are new entrants - Choppies &
Meikles Mega stores & expansion of wholesaling business by N Richards & Metro Peech
Operational•Focus on maintaining market position through the following initiatives:-
1. More efficient use of existing capacity
2. Continue expanding financial services offering by leveraging on good IT 2. Continue expanding financial services offering by leveraging on good IT
capabilities
3. Expand Farm it and Build it concept
4. Continue roll-out of own bakeries.
5. Continue pushing growth in fruit & vegetables as well as butcheries
•Emphasis on cost reduction & margin protection to be sustained
xpansion •Opportunities exist to enter new locations with different store formats.
•Follow through on the regional expansion initiative
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Outlook:-
Growth initiatives – new brand
This is a new department within some stores both City &
Country ( Stand alone in Marondera & Soon OKmart Harare)
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Outlook:-
Growth initiatives – new brand
This is a new department within some stores both City &
Country ( Stand alone in Marondera & Soon OKmart Harare)
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Planned Store Refurbishments
•Refurbishments :Meat Processing CentreOK RusapeOK Mbuya NehandaOK Houghton ParkBon Marche’ Chisipite
OUTLOOK
• New Stores :Bon Marche Borrowdale BrookeOK Zvishavane
• Extended Services: Farm it Build it – OKmart Harare
- OK GwandaFresh Mart – OKmart Harare
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THANK YOU
TATENDA
SIYABONGA