The Group’s Historical ZWL YTD turnover to May 2021 increased by 450% compared to last year. Profit after tax as a percentage of turnover is down from 18.2% compared to May 2020 as affected by 7 weeks trading lost in January and February due to lockdowns. Despite the broad economic outlook being uncertain, we expect the recovery and growth to continue for the rest of the year closing stronger than prior year barring major disruptions from COVID 19 related lockdowns.
Retail
Unit sales - volumes recovered strongly from the January and February lockdown to close 1% behind last year at 757,539 units. May sales were 4% up on April to 200,932 units.
Gross margins - gross profit margin declined from 57.4% to 47.7% compared to same period last year due to rising input costs – particularly merchandise, transport and import duties.
New stores
The group remains committed to growing its footprint across the country. Jet chain opened a new store in Harare in April and is looking forward to opening a second store in Mutoko next month. There are plans to open sites in Matabeleland North and Midlands this year.
We are also due to revamp other branches.
Financial Services
Finance income - Interest income continued its strong performance from the end of last year driven by the debtors’ book growth to just over ZWL$580mln from ZWL$431mln in December.
37.3% of accounts were active (May 2020: 47.7%). Expected credit losses for the debtor book were 1.77% compared to 2.1% as at the end of December 2020 trading period.
Factory – Carousel Manufacturing, whilst profitable, experienced a unit decline of 41% to 68,482. There have been no export sales to date. Micro Finance – The Club Plus loan book is at ZWL89mln up from ZW6.7mln at close of May 2020. The loan arrears were at 11.6% of the total loan book compared to 30.5% as at the end of May 2020.
Borrowings
Borrowings increased from ZWL$244.7m in December to ZWL$573m in May. Over 95% of this is payable within 12 months. The company did not have any foreign denominated borrowings or payables at the end of May 2021.
Finance costs – finance costs are at 7.6% of revenue compared to 8.3% in May 2020.
Outlook
While improvement in exchange rate stability has been encouraging, policy changes, inflationary pressure on disposable income and the increasing threat of COVID 19 lockdown continue to dent business confidence in the medium term. We continue pursuing new product ranges and new trading sites.
Tjeludo Ndlovu
GROUP CHIEF EXECUTIVE OFFICER