HARARE: Innscor Africa’s capital expenditure fell by 21 percent to $38 million this year, as the group scaled down due to difficult trading conditions. Chairman Mr Addington Chinake made the remarks in the conglomerate’s annual report for the financial year ended June 30, 2015.
“The group’s capital expenditure reduced from $48,9 million in 2014 to $38 million during the period, due to more critical review of capital allocation given the trading environment,” Mr Chinake said.
He said net loans for the period under review increased to $13 million to support capital expenditure programmes, purchase minorities in its subsidiaries and funding of capital needs in the group. According to the group’s financial statements, authorised and contracted capital expenditure fell to $5,3 million in 2015 from $11 million in 2014.
Authorised, but contracted capital increased from $32,5 million in the 2014 financial year to $46,3 million in the period to June 30 this year. “The capital expenditure will be financed from the Group’s own resources and existing borrowing facilities where necessary,” Innscor said.
Mr Chinake pointed out that while the diversified group expects the difficult macroeconomic environment to continue creating a difficult trading platform for the company, “we remain cautiously optimistic.”
The conglomerate said it has a focused strategy to achieve organic and acquisitive growth, improve margins and reduce costs towards achieving target return on equity and cash generation objectives.
Group will plans to continue exploring opportunities to create value by further optimising its portfolio, notwithstanding the tough trading environment. It “will continue to procure strategic acquisitions.”
The year produced a varied set of performance results by the group companies. A number of businesses produced good results whilst some of our key business generated poor results compared to prior year.
During the year under review, the group recorded revenue of $814,4 million on continuing operations, a 6,52 percent decrease on the comparative period (5,91 percent decrease including discontinuing operations), and a 7,80 percent fall in operating profit to $60,6 million (including discontinuing operations the decline is 3,72 percent).
The profit before tax of $41,9 million, is 7,45 percent below prior year (including discontinuing operations decrease was 3,33 percent), if fair value adjustments of $39 million are excluded in prior year numbers.
However, the prior year profit before tax includes a fair value adjustment of $39 million, arising from first time consolidation of National Foods Holdings Limited and Irvine’s Zimbabwe (Private) Limited. During the year, Innscor said much of the group’s focus was placed on effective margin management, cost reduction and business optimisation to minimise impact of declines in revenue and secondly to establish a new base and solid platform for the future.
“A number of businesses managed to reduce their cost of sales through more efficient buying, improved efficiencies and effective pricing management thus improving their margins,” said Mr Chinake.
