OK ventures into financial services


HARARE – OK Zimbabwe Limited (OK) has ventured into financial services following its acquisition of a money transfer licence.

The Zimbabwe Stock Exchange-listed supermarket chain — once involved in in-store banking — is making headway in broadening its revenue streams.

“Work in this area is expected to contribute to earnings in the last quarter of the financial year,” OK said in its financials for the half year to September 30, 2012.

The retailer intends to work with banks and use their point of sale in its stores.

This comes on the back of an influx of various money transfer platforms being launched mainly by mobile network companies such as Econet Zimbabwe’s EcoCash, NetOne’s One Wallet, as firms try to harness the unbanked money estimated at $2 billion.

Gideon Gono, Reserve Bank of Zimbabwe governor, has said the Zimbabwe’s level of financial inclusion — the proportion of the population using financial products and services, both formal and informal — is very low.

According to a survey last year, 40 percent of adults are financially excluded while only 24 percent are banked.

Thirty-eight percent of the adults are formally served through banks and other formal bank products and services.

Meanwhile, OK’s revenue grew by 24,6 percent to $231 million during the half year from $181 million posted same period prior year.

Profit before tax stood at $6,5 million up from $5,1 million while profit after tax grew by 25,8 percent to $4,86 million up from $3,86 million.

Total operating expenses went up 22,5 percent to $32,7 million from $26,7 million.

“The increase in overheads was partly caused by increases in employee benefits as more employees were engaged to man the two new stores opened in the latter part of the prior financial year as well as in the refurbished branches in order to provide adequate service in the increased facilities,” OK said.

Earnings per share increased by 21 percent to $0,46 from $0,38.

The group declared a $0,20 per share interim dividend.

However, sales growth was slightly slower than in the previous three years.

“The cost of borrowing increased to $400 000, up from a negligible amount in prior period, as the convertible loan from Investec and other bank facilities were accessed,” OK said.

Capital expenditure was $7,35 million compared to $6,96 million the prior year.

The group said imports continued to dominate products sold in their stores as local manufacturing remained depressed.

It said it expected the sluggish economic activity to continue to the end of the financial year. – Kudzai Chawafambira

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