Fontana Limited saw improved revenues of JM$4.5 billion, a 21.8 per cent increase, for the year ended June 30, 2020
However, increased finance costs for its new Waterloo Store and adoption of IFRS 16 led to a dip in net profit for the period.
As a direct result, profit before tax declined by two per cent, moving from $270 million to $264 million.
Finance costs increased by $147 million over last year driven primarily by the addition of the Waterloo Square lease expenses, adoption of IFRS 16 in July 2019, and fair value losses in our Unit Trust investment of $23.1 million.
“…despite the impact of curfews, reduced operating hours and reduced consumer purchasing power, we were able to achieve solid growth in customers, revenues, and operating profits…”– Chief executive officer Anne Chang
The net impact of the IFRS 16 adoption was $83.8 million, which included a decline of $35 million in administrative expenses (rent and depreciation) offset by the increase in finance costs (lease interest expense and loss on foreign exchange movements) of $118.8 million.
At year end, gross profit increased to $1.7 billion or 28.3 per cent higher than the $1.3 billion recorded in the prior year.
Management said gross margin continues to show improvement moving to 37.7 per cent from 35.8 per cent last year.
Operating expenses increased by 23.4 per cent, directly attributable to the opening of Waterloo Square, which accounted for most of the increase in expenditures for the fiscal year.
Other income increased by 53.5 per cent year over year due primarily to growth in in-store revenues and rentals.
Net Assets increased by 65 per cent mainly due to the addition of the Right of Use Assets for leased properties in keeping with IFRS 16.
The growth in inventories, cash balances and fixed assets is directly attributed to the addition of Waterloo Square.
Shareholder equity grew by $226.5 million, an increase of 17.9 per cent.
Chief executive officer, Anne Chang commented, “Given the unprecedented impact of COVID-19 on the global and Jamaican economies during the April to June 2020 quarter, we are encouraged by these results.
“We are particularly pleased that, despite the impact of curfews, reduced operating hours and reduced consumer purchasing power, we were able to achieve solid growth in customers, revenues, and operating profits year over year.”
She stated, “We credit that success to the excellent service provided by our team members, our strong brand, and our nimbleness in responding to changing customer needs with respect to products, services and delivery options.”