Simbisa makes it rain for investors

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Simbisa Brands Ltd made it rain for shareholders with a handsome cash payout of US$4 million in the full year to June 2018 (FY18).

By Chris Muronzi

The US$4 million dividend payout is up almost 100% from the FY17 figure of US$2,3 million distributed to shareholders as cash dividends, making the group one of the top dividend yielding companies on the ZSE.

As at August 31, Simbisa was ranked position 20 among companies with the highest dividend yields on the ZSE with a yield of 1,42%. The highest dividend yield in the same period was CBZ’s 6,67%.

A dividend yield is seen as a return on investment by some investors.

Simbisa reported net earnings attributable to shareholders growth of 107% to US$14,2 nillion in FY18 from US$6,8 million in FY17. Basic earnings per share rose 107% at 2,55 US cents from 1,23 US cents in FY17 in tandem with earnings growth.

The group’s top line earnings increased 33% to US$204,7 million from US$154,1 million in FY17 driven mainly by organic growth in Zimbabwe and Kenya.

Operating profit was up 60% to US$28 million from US$17,5 million in FY17.

Profit before tax increased by 113% to US$20,1 million from US$9,5 million in FY17, Accordingly, profit attributable to the owners of Simbisa increased by 107% to US$14,2 million from US$6,8 million in FY17,

Basic earnings per share were up by 107% at 2,55 US cents from 1,23 US cents in FY17,

Cash generated from operations after changes in working capital increased to US$28,3 million from US$21,1 million in FY17.

Total cash utilised in investing activities amounted to US$11,1 million from US$10,4 million in FY17 spent on expansion initiatives in Kenya and Zimbabwe,

The group’s gearing declined by US$1,5 million during the period to close the year with a balance of US$16,8 million.

Simbisa chairman Addington Chinake said his company had continued to achieve sustained organic growth across its portfolio of brands whilst simultaneously re-assessing underperforming counters to focus on markets that will deliver the highest return on investment for shareholders.

Simbisa opened 13 new counters in prime site locations and closed 29 others, to end the period with 413 counters, he said.

“As reported at half year, due to continued macro-economic challenges and the rising financial and operational risk of operating in the DRC, the Group disposed of its interest in the business and the former partner now operates the brands under a franchise arrangement in this market. The comparative figures have accordingly been restated to reflect this disposal,” he said.

“The group achieved double digit growth in revenue for the year ended 30 June 2018, driven by increased customer counts across all markets and improved average spend largely due to a stabilisation in currency exchange rates against the US Dollar in the regional markets. Simbisa served over 56 million customers in FY2018 (FY2017: 52,5 million), a record high in our 31- year-trading history. Thus, the average customers per counter increased from 122,448 in FY2017 to 135,737 in FY2018, a 10,9% increase year on year,” he said.

Chinake said the FY18 had marked a significant increase in profitability with net income for the group.

He attributed the strong earnings to higher revenue streams and improved operating efficiencies.

“All of our markets grew their contribution to Group EBITDA when compared to the prior year,” Chinake said.

He added that Simbisa is aiming to be the leading quick service restaraunt and casual dining operator in Sub-Sahara Africa with profitable and sustainable food businesses in all of the markets the group operated.

“Our key strategic objectives are to continue to grow the core QSR business in existing and new African markets, to develop and acquire brands in the QSR and casual dining segment and to enhance our service offering through technology development and by leveraging established infrastructure and supply chain investment,” he said.

Chinake said the expansion into the casual dining food segment will appeal to a higher income demographic whilst improving margins.

Simbisa added what it described as appealing new casual dining brands to its portfolio such as Roco Mamas and Ocean Basket in Zimbabwe and Mugg & Bean in Zambia.

Chinake added Simbisa will focus on the roll-out of casual dining brands in the group’s existing markets as well as new ones in the short to medium term.

“We are continuously exploring opportunities to develop and acquire new brands and value propositions which are aligned with our strategy. I am optimistic that a stabilisation in the socio-political environment and the impending economic reform in the wake of elections in Kenya and Zimbabwe, will pave the way for continued growth and new opportunities in these two markets, where we are most developed, and that Simbisa will continue to make strides in growing its market share in the other regional markets,” added.

Simbisa is one the most sought after counters on the ZSE with premium valuation metrics.

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