Innscor records slight profit increase

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INNSCOR Africa Limited recorded a slight increase in after-tax profit to $48,6 million for the year ended June 30 2013 attributed to a number of cost provisions and restructure charges emanating mainly from Colcom.

Report by Tarisai Tahungai

In the prior year, the company posted a $48,5 million profit.

Despite achieving growth in revenue, operating profit declined to $50 million from $56,9 million last year and fair value adjustments rose to $369 671 from$282 497.

In a statement accompanying the group financial results, Innscor chairperson David Morgan said management would continue to critically analyse various business models and processes in order to improve business performance.

“Consolidated operating profit was marginally lower than that recorded in the prior year and was affected by a combination of lower gross margins in certain businesses as well as a number of cost provisions and restructure charges emanating mainly from Colcom as advised in the interim report,” Morgan said.

The group’s revenue increased by 5% to $656 million for the year ended June 30 2013 as compared to $627 million recorded over the same period last year.

Morgan said the group continued to show strong cash generating ability, with cash generated from operating activities amounting to $54,16 million for the year under review after accounting for an increase of$3,924 million in installment debtor’s book at TV Sales and Home.

“This cash profit, together with the increased borrowing position, was utilised to fund the numerous capital expansion and maintenance projects undertaken across the group during the course of the year which totalled more than $50 million,” Morgan said.

In the period under review, bread volumes increased by 12% as compared to the prior year.

Morgan said during February 2013, two additional bread lines, each with a capacity of 80 000 loaves per day, were commissioned at the new state-of-the-art facility at Graniteside, Harare, and installed national capacity amounted to 450 000 loaves per day by June 2013.

He said a new bread roll line and a small confectionery line were also commissioned in Harare. A further two new breadlines, again each with the capacity of 80 000 loaves per day, were due to be installed towards the end of the first half of 2014 financial year at Graniteside while the Simon Mazorodze Road site will commission a new pie plant.

“In the Zimbabwe fast foods operations, revised products and pricing strategies implemented within Chicken Inn and Pizza Inn brands yielded improved customer counts of 31% and 13% respectively over the prior year,” he said.

Morgan said regionally, the fast foods operations recorded pleasing revenue growth of 10% over the prior year.

Distribution Group Africa operates in Zimbabwe, Zambia and Malawi.

In Zimbabwe, the business recorded a 17% growth in volumes.

Volumes in the distribution business operations in Zambia grew by 10% and in Malawi volumes declined by 7% over the prior year. One of the group’s operations, Colcom Holdings Limited, recorded a loss of $1,6 million for the year ended June 2013 from $4,8 million in 2012, mainly attributable to low margin product lines where thin margins were affected by raw material price increases not passed to the consumer.

“Colcom recorded a disappointing result for the year as advised in the interim report.

“A number of processes were embarked upon during the year in response to both a compromised control and governance environment as well as a number of equipment failures that occurred within the core pork operation,” Morgan said.