OK Zimbabwe posted a steady topline performance to 1H22 amidst relaxation of Covid-19 induced lockdown restrictions. Revenue grew 163% to $22.93bn underpinned by resurgent volumes, at a 43% y/y recovery. However, costs continued to escalate relative to earnings. Intermediated money transfer tax (IMTT), staff costs, electricity charges, rentals, bank charges, cleaning expenses and security charges are the cost lines that contributed most significantly to overheads growth. Whilst the business implemented a raft of cost containment measures, the overhead increases were driven by exogenous factors such as NEC wage adjustment and expansion of IMTT thresholds which impacted the Group’s profitability. Other operating expenses grew 61% percent to $1.67bn from prior year. According to OK Zimbabwe, IMTT burden on the business grew significantly eroding the business’ gross margins. In addition, IMTT expense being non -tax deductible further compounded the tax burden on the business leading to an effective tax rate for the Group at 39.4% versus 27.2% recorded in 1H21. EBITDA for 1H22 improved 535% to $1.33bn vs $209.99mn in 1H22. The bottom line was however not spared from a rising cost base with PAT slumping 44%y/y consequently to $0.54mn down from $0.97mn, a significant movement in real terms. Capital expenditure activities remained a priority for OK Zimbabwe with $1bn being spent in the period for further shop refurbishments. Net cash generated from operating activities slowed down to $151.87mn at IH22 to $476.11mn in 1H21, yielding an OCF/EBITDA of 48%. Cash and cash equivalents remained ...
