The Agra Group’s retail and wholesale division’s revenue increased by only 4.1%, from N$1.6 billion in the previous year to N$1.7 billion in 2019/2020. This resulted in the group’s gross profit increasing by 10% from N$264.6 million to N$290 million during the last financial year.
These latest figures emanate from Agra’s 2019/2020 financial report, which encompasses all Agra retail branches, Auas Wholesalers, Safari Den, Auas Vet Med, Ondangwa Service Station (Pty) Ltd, and A Rosenthal (Pty) Ltd, as well as a few smaller semi-dormant companies that form part of the group’s core business.
The report showed a notable reduction in low margin products that make up the sales mix. Good rains had a positive impact on grazing in many areas, reducing the need for producers to substitute with feeds and lick.
“Although the reduction of the low margin goods materially affected sales, this was overcome by venturing into alternative higher margin lines. Operational expenses remained constant at N$181.3 million, compared to N$181.2 million in 2018/19. This was largely due to cost control activities and the halting of non-essential expenses,” the report states.
As a result, the net operating profit before head office expenses increased by a remarkable 25.9%, from N$86.5 million in 2018/19 to N$108.9 million in 2019/20.
Furthermore, the auctions division gross turnover, which is the total turnover of auctions during the period on which commission is earned, decreased by 16.3% from N$1.1 billion in 2018/19 to N$955 million in 2019/20.
The commission received totaled N$55.8 million in 2019/20, compared to N$67.3 million received in the previous year. This is a 17.1% reduction, which correlates to the reduction in gross turnover. The net operating profit before head office expenses for Agra auctions declined by 17.4%, from N$23.1 million in 2018/19 to N$19.087 million in 2019/20.
Meanwhile, Agra’s properties division procured and developed a new property in Windhoek’s Lafrenz Industrial Area for Auas Wholesalers. This was completed in July 2020. Negotiations to refinance an existing facility resulted in repayments being less than lease payments at the previously rented facilities, resulting in future cost savings.
The annual report further stated that the total revenue for the property division decreased from N$22.9 million in 2018/19 to N$20 million for the year under review. Due to a strategic decision to relocate the Retail Corporate office to Auas Valley, external rental received was replaced by internal rental, which is consolidated in the annual financial statements.
It further reported rental reductions for tenants severely impacted by Covid-19 impacted rental income.