Innscor losing lustre and value

The retail side was made up of Spar franchised outlets, Savemor stores, Spar corporate, fast foods which included in-store bakeries — Bakers Inn, Chicken Inn, Creamy Inn and Nando’s — and TV Sales and Home.

The export business then was made up of Nilotecus, which was discontinued pending the spin-off of what later came to be known as Padenga, a present day listed company involved in the ranching of crocodile and is one of the world’s leading producers of exotic skins.

Nilotecus had Kariba crocodile farm, Ume crocodile farm and Nyanyana crocodile farm. Bakaya Hardwoods and Shearwater, which was an associate, were also part of the export business. Regional fast-foods took similar brands with one associate Fontana adding to the list.

In 2010, Innscor subsequently spurn Nilotecus which was listed separately as Padenga on the 26th of November, debuting at a price of 4 cents — valuing the company at $21.66 million.

Padenga’s market capitalization almost six years on now stands at $67.68 million having last traded at a price of 10.65 cents. This is a growth of 166 percent. Padenga’s topline has grown at a constant average growth rate of 46.7 percent in the past 5 years.

Since the listing, the net asset value of the company has grown tremendously by 56% between 2010 and 2015 while the return on equity ratio has firmed from 0.12 to 0.15 over the same period. It is quite evident from the matrices above that Innscor without doubt succeeded in unlocking value through unbundling Padenga.

Innscor has sought to repeat the Padenga magic through the unbundling of 2 more businesses under its retail, manufacturing and distribution segments, with more said to be in the pipeline.

On November 6, 2015, Simbisa Brands — its quick service restaurants (QSR), including regional counters — separately listed on the ZSE.

Just over six months later, Axia — comprising Innscor’s former Specialty Retail and Distribution businesses together with other relevant subsidiaries — listed separately on May 17, 2016.

The differentiating factor between the 2010 and the latest unbundling lies in that Innscor then was on a sustainable profitability path. The latest unbundling moves were expedited when Innscor’s consolidated operations had begun showing signs of weakness from a profitability point.

A like for like comparison of the 2014 financial results shows that Innscor’s earnings (PBT) were lower than the previous year even as the topline was spurred by the consolidation of Natfoods and Irvines’ results, an accounting phenomena.

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