Starwin (SPL) released its FY2016 earnings results today, which shows strong earnings recovery on the back of robust revenue growth and better operating efficiency.

Starwin FY2016: The raw numbers

Starwin: What happened in FY2016?

Starwin reported a strong revenue growth of 59.2%y/y (vs. decline of 17.1%y/y in FY2015) to GHS9.17 million in FY2016

In addition, there was significant improvement in operating efficiency as operating expenses fell by 26.4%y/y to GHS3.08 million in FY2016. Consequently, the operating expense ratio (operating expenses / revenue) dropped to 33.6% in FY2016 from 72.6% in FY2015.

The strong revenue growth plus the significant improvement in operating efficiency helped to boost margins significantly. Profit before tax (PBT) jumped to GHS4.48 million in FY2016 from a loss of GHS0.21 million in FY2015. PAT also jumped to GHS3.36 million in FY2016 from a loss of GHS0.12 million in FY2015.

Starwin: Looking ahead

It is likely that Dannex used the year 2016 to put Starwin in good shape ahead of the long anticipated merger of Dannex and Starwin to form a bigger company. The upcoming merger should enable the surviving entity to access the combined distribution network of the 2 companies to boost sales, reduce cost, and enhance margins.