Simbisa’s profits surge 139% in FY2018

Addington Chinake

SIMBISA Brands Limited (Simbisa), a public-listed company that owns, operates, and franchises quick service restaurants in Africa, has reported a more than double growth in net income in the full-year period to June 30, 2018, driven by “higher revenue streams and improved operating efficiencies”.

BY FIDELITY MHLANGA

Addington Chinake

In Zimbabwe, where it is listed, the company operates quick service restaurant brands such as Chicken Inn, Bakers Inn, Pizza Inn, Nandos, Steers and Creamy Inn. The company has postponed its secondary listing on the London Stock Exchange’s Alternative Investment Market.

In a financial report for the period, Simbisa reported that net profit surged 139,33% to $13,83 million from $5,78 million in the comparable period in 2017, despite a challenging trading environment, undermined by persistent liquidity pressures. However, as a consumer-facing business, Simbisa benefited from greater financial inclusion through increased adoption of plastic money, which helped ease transaction pressures and sustain demand.

The increased profit saw basic earnings per share rose by over 100% to 2,55 cents from 1,18 cents in FY2017.

Simbisa non-executive chairman Addington Chinake also reported that the group served over 56 million customers, a record high in its 31 years of business, compared to 52 million in 2017.

Consolidated group revenue increased 33% to $204,7 million from $154,1 million, driven mainly by organic growth in Kenya and Zimbabwe.

“During the financial period under review, Simbisa continued to achieve sustained organic growth across our portfolio of brands whilst simultaneously reassessing underperforming counters and brands in order to focus efforts on markets and counters which will deliver the highest return on investment to shareholders,” Chinake said.

During the period under review, the fastfood giant opened 13 new counters in prime sites and closed 29 counters to end the period with 413 counters.

The company spent $11,1 million on investment activities, marginally above 2017’s investment outlay of $10,4 million.

Over the 12 months to June 20, 2018, the company added several appealing new casual dining brands to its portfolio, including RocoMamas and Ocean Basket in Zimbabwe and Mug and Bean in Zambia.

“Simbisa will focus on the roll-out of casual dining brands in our existing markets as well as new markets in the short to medium-term and we are continuously exploring opportunities to develop and acquire new brands and value propositions, which are aligned with our strategy,” Chinake said.

However, Simbisa disposed of its interest in the Democratic Republic of Congo due to financial and operational risk in that country.

Cash generated from operations after changes in working capital increased to $28,3 million from $21,1 million.

Total assets grew to $84,8 million from $73,4 million while total liabilities also increased from $44,5 million to $46,7 million.

In the outlook, the company seeks to grow quick service restaurants in existing and new African markets, to develop and acquire brands in the quick service and casual dining segments.

Simbisa is optimistic about the prospects of improved socio-political environment in Kenya and Zimbabwe in the period after elections, which would pave way for continued growth and open new opportunities for market share growth.

“Simbisa has managed to defend its market share against intensified competition in the industry from new entrants in our major markets. Simbisa remains a significant player in both Zimbabwe and Kenya with a growing presence in our other markets,” said Chinake.

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