OK Zimbabwe Limited
AGM 19 July 2013
The company achieved revenue of $123.1 million which was a growth of 5.1% over same quarter of F13. This was slightly below our rather aggressive budget which took into account anticipated national GDP growth of 5%. It is generally accepted that the country may actually have experienced zero growth or deflation during the period. OK Mart growth was slightly below the company average mainly affected by lower sales in liquor. Gross margin maintained at almost the same level as in the last financial year. Management continues in their efforts to improve the margin through better sourcing.
The focus on effective control over shrinkage continues as well as tightening the management of other overheads. Profit growth for the quarter is in line with sales growth but this should improve as we go forward with all the initiatives which are in place or being worked on.
We recently announced the arrangement with South African company, Kawena (Pty) Limited and this has very exciting opportunities. The objective is to tap into the diaspora Zimbabwean (including the unbanked) who have to support their relatives at home and this brings these remittances into the formal sector and helps in reducing the country’s Balance of Payments deficit as no forex goes out of Zimbabwe with product paid for in SA and received in Zimbabwe. In addition, we have gone into a distributorship arrangement with blanket manufacturer, Aranda from South Africa and this should add value to the company. The move into financial services is in full steam and more offerings will be made and these will enhance revenues.
The store refurbishment and other capital expenditure programmes continue with funding from cash generated from operations. The company has opened two new outlets in the first quarter, i.e. Wynne Street and Chitungwiza town centre but will be moving out of the small Rezende Street outlet end of July. Building work is in progress in Hwange with a target opening by end of September while work is in progress to move to bigger space in Eastlea. Refurbishments are planned for OK Waterfalls, OK Bindura and Houghton Park and partial refurbishment for OK Gweru and Mutare.