Operating in tough economic conditions, the only Botswana Stock Exchange listed furnisher store, Furnmart says its profit after tax for the year ended 31 July 2015 might be materially lower than the corresponding period that ended 31 July 2014.
Available figures show that during the same period last year, Furnamrt revenue amounted to P1.15 billion, a 7 percent increase on the previous year’s P1.08 billion.
The company said at the time that difficult conditions continued to prevail in the market, adding that the group’s prudent view with regards to providing for doubtful debt, especially given the performance of its competitors in the region, led to higher impairments which resulted in only a marginal increase in core operating income.
It has since merged that the company’s Profit after tax for the year is will be materially lower than last year as a result of an increased exchange loss and higher tax expense.
Group Chairman John Mynhard said early this week that the exchange loss on net receivables is substantially higher at P20.0m as compared to then exchange loss of P10.6m reported in the prior year. The foreign exchange loss was the result of the continued strengthening of the Pula against the South African Rand, Namibian Dollar and Zambian Kwacha during the year.
“As the foreign operations become a bigger part of the business, foreign exchange fluctuations will have a larger potential impact on results,”Mynhardt stated.
FurnMart saw the income tax expense substantially higher at P36.9 million as compared to P18.9 million in the previous year. It is said to be mainly on account of the de-recognition of the deferred tax asset as the uncertain market conditions in RSA are likely to postpone the timeframe for recovery of the deferred tax asset and an increased tax charge in Namibia when compared to the previous year at the time.
“The group managed to open 2 Home Corp stores and 4 Furnmart stores during the period under review. Botswana, Zambia and Namibia stores have been converted to the new IT platform. The South African stores were converted early in 2015,”he said.
The sluggish economy and tough trading conditions have been also beginning to weigh heavily on the banking sector as seen by the revelation by all the of the oldest commercials banks in Botswana. All of the country’s top five banks released their financial results 2015 which lower than the corresponding year 2014.