HomeBusiness DigestInnscor braces for further expansion

Innscor braces for further expansion

Ngoni Chanakira

INNSCOR Africa Ltd (Innscor) yesterday released a further cautionary statement informing shareholders that it was negotiating with certain partners to expand its business


Innscor was recently granted agency rights to distribute Colgate Palmolive products.

The move fits in with Innscor’s regional expansion programme which has also resulted in the firm splitting into franchising and operations as separate divisions.

In its audited financial results for the year ended June 30 Innscor’s turnover increased by 328% to stand at $78,6 billion.

Profit before tax increased by 732% to stand at $24 billion, while the company’s weighted earnings per share went up by 743% to $31,38%.

The board declared a final dividend of $4,20 a share, bringing the total dividend declared for the year to $5. Last year a dividend of 45 cents was declared.

Innscor said its distribution division had achieved outstanding results through the importation and distribution of many new leading brands, including Colgate Palmolive for which it had been granted agency rights.

“Aggressive expansion plans will see additional strong branded fast-moving consumer goods being added to the business,” the company said. “In addition the extension of the business to Zambia has secured a range of well-known brands for that country and there are plans afoot for expansion into other countries in Africa.”

The company said the Spar franchise had also been aggressively expanded with the number of stores serviced by the Spar Distribution Centre being increased from 39 to 45.

“The relaxation of price controls on most basic products has improved the service levels to Spar members, and the consumer is again enjoying the full range of products at competitive prices that were not seen during the price control period,” the company said.

“The ability of Spar to take advantage of the buying power of its counterpart in South Africa has meant that it has been able to offer its members a wide range of imported products at reasonably affordable prices.”

After expending a net $14,6 billion in increased working capital the Innscor group spent a further $10,4 billion in investments of which $6,3 billion was for expansion.

Notwithstanding such expenditure, cash resources for the group exceeded borrowings by $364 million resulting in negative gearing and a negligible interest change for the year.

Group assets continue to be valued conservatively.

Innscor said a significant development had been the acquisition in June this year of a 26% shareholding in National Foods Ltd (Natfoods) at a cost of $3,8 billion via an exchange of shares.

Alignment with a major producer of maize meal, flour, edible oils, rice, salts and stock feeds synergies well with the group’s food, manufacturing and distribution interests.

The group has an option to increase its stake in Natfoods by a further 10% prior to December 2004.

Innscor said the new shareholder had representation on the board and was making a valuable contribution to the group.

The company’s foods sector recorded real growth in both turnover and operating profit with a contribution to trading profit of $5,5 billion.

The non-foods sector also continues to produce outstanding results and contributed significantly to the group’s profitability this year by way of trading profits of $11,2 billion.

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