HARARE- Wine and spirits maker African Distillers Ltd (Afdis), says the shortage of foreign currency has consequently impacted the timing of payment and remittances of foreign payables.
Foreign currency shortages continue to have a knock on the performance of most local businesses especially regards to the importation of raw materials and debt settlements, although overall positive performance have been reported.
In a statement accompanying the Group’s financial results for the year ended June 30, 2018, Afdis chairperson Pearson Gowero, highlighted that an interest expense of $0.56 million was incurred on overdue foreign payments.
The delays in the settlement of payments to foreign debtors and suppliers resulted in the inflation of the Company’s cash and near term assets which jumped by over $12 million.
“Net cash and investments are at $20.3 million were up by $12.8 million on prior year. the short term placements in money market amounting to $17.4 million were largely a result of the bottleneck. Instead of keeping the money as cash the company exploited short term gains from the money market as the money prepares to be remmited subject to the benevolence of the RBZ.
In a bid to cushion the operations from drastic supply shocks, Afdis has prudently increased its stock of raw materials which closed the period at $3.24 million which compares to a close of $2.79 million as at the end of 2017.
Despite the foreign currency challenges, Afdis’ revenue for the year to June 30, 2018, increased by 23 percent to $30.6 million from $24.9 million recorded the prior year, and operating income rose by 75 percent to $7.1 million.
“This performance is a result of volume growth, margin expansion, favourable mix and cost containment,” reads the chairman’s statement.
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