QUICK service restaurant operator Simbisa Brands’ pretax profit for the half-year to December 31, 2017 jumped 70 percent to $11, 1 million from $6, 6 million in the prior year.
This was on the back of a 30 percent rise in total revenues, from $76, 5 million in the prior comparable period to $99, 3 million. Management attributed the revenue growth to “organic growth in Zimbabwe and Kenya”.
Group operating profit was up 47 percent to $15, 1 million, from $10, 3 million same period in 2016.
In line with the growth in pretax profit, the group’s profit attributable to the owners of Simbisa increased by 71 percent to $8,1 million from $4, 8 million in 2016, while basic earnings per share was up by $78 percent at 1, 46 cents. Cash generated from operations after changes in working capital increased to $16, 3 million.
“In line with the group’s capital allocation strategy, which focuses on investments with a high return $3, 2 million of the cash generated from operations was invested in expansion activities mainly in Kenya and Zimbabwe,” said chairman Mr Addington Chinake in a statement accompanying the results. Simbisa said net cash outflow from financing activities was $1, 4 million for the half-year. Its total borrowings were down by a marginal amount of $0, 3 million during the period and as at December 31, 2017 stood at a balance of $17, 9 million.
In respect of operations, the group said the Zimbabwe operations overcame significant liquidity challenges to post a positive performance due to “alternative methods of payment” and a “sound pricing policy.”
“Revenue (for the Zimbabwe operation) increased by 39 percent to $67, 8 million (2016: $48, 9 million) and operating profit before depreciation and amortisation is at $11, 9 million, which represents an increase of 43 percent when compared with the same period last year.
“This is reflective of our strategy to ensure that the menu offering and pricing remains attractive to our customers and has successfully translated to an increase in foot traffic to our stores,” said the chairman. Since mid-last year, Simbisa opened three counters in strategic locations and shutdown another three underperforming sites. The group currently has 194 stores in the country.
The regional operations (in Kenya, Zambia, Ghana, Namibia and Mauritius) contributed $31, 4 million to the group’s revenue, up from $27, 6 million. Meanwhile, the group’s board has since approved
its proposed listing to the London Stock Exchange’s Alternative Investment Market and acquisition of Dubai-based Foodfund.
This week, Simbisa announced that it has revised the terms and conditions for the Foodfund acquisition, that is, instead of acquiring 100 percent of Foodfund’s issued share capital, the group will now only acquire 50 percent with the existing shareholders retaining a 50 percent shareholding.
For the half-year just ended, the Simbisa board declared an interim dividend of 0, 45 cents per share.