CHAIRMAN'S STATEMENT
FINANCIAL OVERVIEW
Foreign currency shortages necessitated an import substitution program which, through the efforts of our sourcing teams, was largely successful. Despite these endeavours, local production was somewhat erratic due to the inability of our suppliers to source inputs. Imported product lines which could not be sourced locally such as cosmetics, shoes and lingerie, were more severely affected.
Despite the difficulties, trading conditions during the first 9 months of the year were good.
Markup action to protect stock-outs was necessitated in October when fears of a return to hyperinflation left customers frantically seeking value. Our prices did not go up by as much as some but still had the effect of dampening demand and reducing volumes.
Edgars and Jet chain unit sales for the last quarter declined by 37% and 33%, respectively. Being our strongest quarter, (including the festive season) this had a negative impact on annual volumes.
While we could have achieved a better top line with improved assortments of imported lines, this proved impossible due to the constraints mentioned above, and Group revenue grew by 22% on last year to $78.1m (2017: $64.1m). Group retail unit sales declined by 11,4% for the year.
Profit for the period of $8.5m was 114% higher than the prior year $3.98m, partly due to increased margins in the last quarter. Group margin improved to 46% (2017:43%).
In November our two Kadoma stores, which premises were under lease, were destroyed by fire. Efforts are underway to reinstate both operations.
Retail Operations
Edgars Chain
The chain recorded turnover of $45.7m (2017:$39.6m) out of 25 stores (2017:26) an increase of 16%. Units sold for the year were 1.6m (2017:1.9m), a decrease of 16%. The chain’s profit to sales ratio increased to 27% from 24% in 2017.
Jet Chain
Total Sales were $30.5m (2017:$24.1m) out of 24 stores (2017:25) an increase of 27%. Units sold for the year were 2.3m (2017:2.5m), a decrease of 8%. The Chain's profit to sales ratio increased to 23% (2017:21%).
Credit Management
Debtors were very well managed throughout the year and the various debtors books are all “clean”. They are also too clean, with too many paid-up accounts. Total active accounts at the end of December numbered 151 552, which was 9.5% down on 2017.
Edgars Chain debtors were $19.0m (2017 $18.1m) after an allowance for credit losses of $0.8m (2017:$0.9m). Net write offs for the period averaged 1.8% (2017: 6.9%) of lagged credit sales, and 0.3 % of lagged debtors (2017: 0.8%). Edgars chain active accounts at December 2018 were 100 159 (2017: 109 749).
Jet Chain debtors were at $5.7m (2017: $4.9m) after an allowance for credit losses of $0.6m (2017: $0.5m). Net write offs for the period equated to 1.4% (2017: 5.5%) of lagged credit sales, and 0.5% of lagged debtors (2017: 0.8%). Jet Chain active accounts at December 2018 were 51 393 (2017: 50 415).
Manufacturing
The factory made a small loss of $0.2m (2017:$0.6m loss - before the impairment of the inter-company payable) after retrenchment costs of $0.2m. Some export orders were successfully completed in the second half of the year and we will continue to focus on exports and in providing timeous, quality product to our retail chains in 2019.
Microfinance
Revenue from the micro-finance business increased from $0.1m (4 months trading) to $1.6m (full year trading). This segment reported a profit of $0.7m (2017: $0.1m loss). Loans to customers were at $4.0m (2017:$0.6m).
Financing and Cashflow
Gearing has remained healthy at 0.20 (2017:0.15). We managed to clear all our foreign liabilities during the second half of the year.
Outlook
In the short term, we look forward to customer incomes being assisted somewhat by salary increases. In the longer term we look forward to the promised fiscal discipline and reforms delivering foreign investment and job creation.
We will intensify our efforts in working with local suppliers to develop and improve the quality, fashionability and, importantly, on-time-delivery of wanted product.
Management will continue to deliver profit growth to all our stakeholders.
Dividend
The Board has declared a final dividend of 0.5 cents per share (RTGS) to shareholders reflected in the company’s register on the record date being 3 May 2019.
Shares will trade cum-div until 29 April 2019 and ex-div from 30 April 2019. The payment date is on or about 17 May 2019.
Shareholders will have an option to receive their dividend wholly in cash or take their dividend entitlement in the form of shares. The offer price to the shareholders has been determined by the share price on the date of this announcement.
Details of the maximum number of shares each shareholder is entitled to and the procedure to be used in electing to take up this scrip dividend offer are set out in the form of election which will be published in a separate announcement and posted to shareholders.
Appreciation
I am grateful to board colleagues, management and staff for their dedication. I am also grateful to our customers for their loyalty and our landlords, bankers and suppliers for their continued support.
TN Sibanda
Chairman
Related downloads
- FY2018 Financial results
- FY2018 Financial results presentation