Business / Companies
Growth in number of debtors accounts propels Edgars
07 Sep 2011 at 04:38hrs | Views
The growth in the number of debtors accounts propelled Edgars' with attributable earnings improving to $495,827 from a loss position of $617,722 the prior period. Revenue grew 100% year on year driven by retail sales that grew by 94% to $19.6 million. However, the Express Chain achieved a modest growth of 26.2% on the back of stiff competition from both formal and informal traders. The group's trading profit improved $2.3 million from a loss of $250,000.
Productivity in the manufacturing unit, Carousel, increased 33.5% with measures being taken to bring it to profitability by year end.
Total assets grew by 156% to $26.6 million with the current ratio also improving to 0.88. The operating cash flow position improved to a negative $338 000 from a negative $3.2 million. This was largely due to the reduced borrowings, and an improved average cost of borrowing from 18.2% at year end to 14.6% in June. However, the group's closing cash position weakened by 43% to $473 000 largely because of large interest payments of $1.6 million.
Group unit sales went up 54% to 1.4 million compared to the same period last year. This was largely driven by the number of debtors accounts which increased by 113% to 133,598 from 111,199 at year end. This resulted in trade and other receivables going up 230% to $14 million.
Debt collection rate averaged 25% for the period and peaked at 29% in June. While management indicates that bad and doubtful debts are fully provided for, we are wary of the risk of non-performing debtors and the increased competition from financial institutions.
A new state of the art Edgars store was opened at Joina City, Harare with plans to open more stores during the year. On the outlook, inventory and cash management together with expense control will be key focus areas. For FY 2011, the group anticipates a 40% growth on the top line and a 140% increase in earnings.
Productivity in the manufacturing unit, Carousel, increased 33.5% with measures being taken to bring it to profitability by year end.
Total assets grew by 156% to $26.6 million with the current ratio also improving to 0.88. The operating cash flow position improved to a negative $338 000 from a negative $3.2 million. This was largely due to the reduced borrowings, and an improved average cost of borrowing from 18.2% at year end to 14.6% in June. However, the group's closing cash position weakened by 43% to $473 000 largely because of large interest payments of $1.6 million.
Debt collection rate averaged 25% for the period and peaked at 29% in June. While management indicates that bad and doubtful debts are fully provided for, we are wary of the risk of non-performing debtors and the increased competition from financial institutions.
A new state of the art Edgars store was opened at Joina City, Harare with plans to open more stores during the year. On the outlook, inventory and cash management together with expense control will be key focus areas. For FY 2011, the group anticipates a 40% growth on the top line and a 140% increase in earnings.
Source - Imara Stockbrokers
