ZIMBABWE LIMITED
(Incorporated in Zimbabwe in 1957, under Company Registration Number 602/57)
UNAUDITED PRELIMINARY GROUP RESULTS
FOR THE YEAR ENDED 09 JULY 2023
DIRECTORS' RESPONSIBILITY
The company's directors are responsible for the preparation and fair presentation of the Group's financial statements, of which this press release represents an extract.
The preliminary results have been prepared in accordance with International Financial Reporting Standards and in a manner required by the Companies and Other Business Entities Act (Chapter 24:31) (COBE) and the Zimbabwe Stock Exchange (ZSE) Listing Requirements except for the non-compliance stated in the paragraph below.
The principal accounting policies applied in the preparation of these preliminary results are consistent with those applied in the previous annual financial statements, except for non-compliance with International Accounting Standard (IAS) 8 (Accounting Policies, Changes in Accounting Estimates and Errors), (IAS) 21 (Effects of Changes in Foreign Exchange Rates), valuation methodology on Property, Plant and Equipment and the consequential impact on (IAS) 29 (Financial Reporting in Hyperinflationary Economies). There is no significant impact arising from new and revised IFRS which became effective for reporting periods commencing on or after 1 January 2023.
CAUTIONARY STATEMENT - RELIANCE ON ALL FINANCIAL STATEMENTS PREPARED IN ZIMBABWE FOR 2022/2023
The directors would like to advise users to exercise caution in the use of these annual financial statements due to the material and pervasive impact of the technicalities brought about by the change in the functional currency in Zimbabwe in February 2019, its consequent impact on the usefulness of the financial statements for 2022/2023 financial periods and the adoption of International Accounting Standard (IAS) 29 (Financial Reporting in Hyperinflationary Economies), effective 1 July 2019.
Whilst the Directors have exercised reasonable due care, and applied judgements that they felt were appropriate in the preparation and presentation of these annual financial statements, certain distortions may arise due to various specific economic factors that may affect the relevance and reliability of information that is presented in economies that are experiencing hyperinflation, as well as technicalities regarding the change in functional and reporting currency.
ADOPTION OF IAS 29 (FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES)
As previously reported, the Public Accountants and Auditors Board (PAAB) having assessed the impact of hyperinflation in the economy advised that the conditions for adopting IAS 29 were satisfied with effect from 1 July 2019.
IAS 29 requires that inflation-adjusted financial statements become the entity's primary financial statements. The Group has complied with this requirement, and this report is therefore based on inflation-adjusted financial statements. Financial statements prepared under the historical cost convention have been prepared as supplementary information.
KEY FINANCIAL REPORTING MATTERS
Users are advised to exercise caution in the interpretation of these financial statements.
We expect to publish the audited financial results on or about 29 February 2024 in line with the Zimbabwe Stock Exchange approval.
OPERATING ENVIRONMENT
High unemployment levels and low disposable incomes due to inflation had a negative impact on volumes sold, with customers resorting to buying product in the unregulated informal market at prices which the business could not compete against.
TRADING PERFORMANCE | ||
Trading volumes | Full year to | Full year to |
09 July 2023 | 10 July 2022 | |
Units | -33.8% | +9.5% |
Units sold declined by 33.8% due to the suspension of ZWL$ credit from 1st of July 2022.
USD Credit was introduced in February 2023.
Units sold were negatively affected by informalisation of the economy which has resulted in cheap and fake imports selling at below local and international manufacturing costs. The business could not viably compete against these imports.
Sales participation by enabler
Full year to | Full year to | |
09 July 2023 | 10 July 2022 | |
Cash sales | 82% | 66% |
Credit sales | 18% | 34% |
The ZWL$ cash sales value was negatively affected by the following:
- Price controls enforced by the FIU through the use of the official (exchange rate) in the sale of merchandise. The business maintained competitive US dollar pricing in order to be able to compete on a US dollar basis, translating the US dollar price to ZWL price at the Auction Rate resulted in the uneconomic ZWL prices and loss of value.
- Informalisation of the economy which has resulted in cheap and fake imports selling at below manufacturing costs which the business could not compete against.
CREDIT MANAGEMENT
The debtors book declined as ZWL$ credit sales were stopped in July 2022. This was due to the increase in the prime interest rate to 200% per annum which made credit sales unviable for the business. However, the business resumed credit sales in February 2023 but ONLY IN USD.
RIGHTS ISSUE
Pursuant to the need for Truworths to re-capitalize its operations, the directors proposed a renounceable rights offer of 384,067,512 or "Rights Offer" Ordinary Shares of a nominal value of ZWL$0.0001 each, at a price of ZWL$5.80 per Rights Offer Share, on the basis of one (1) Rights Offer Share for every one (1) ordinary share held at the 11 July 2023. The approval to raise capital by way of renounceable rights offer was granted at an Extra - Ordinary General Meeting of the Shareholders held on 4 July 2023, and the rights offer closed on 9 August 2023.
Of the ZWL$2,227,591,570 amount to be raised, ZWL$301,000,000 had been raised by the reporting date (09 July 2023). The resultant balance was settled post reporting date on 9 August 2023.
DIVIDEND
The directors deemed it prudent not to declare a dividend for the year.
OUTLOOK
The Economic Environment continues to be uncertain, unstable and complex.
To return to sustainable profitability, the business needs to offer credit in a stable currency and access long-term funding at affordable interest rates. Regrettably these conditions do not currently exist in the Zimbabwean Economy.
We remain hopeful that currency reforms will lead to stability and improved liquidity.
APPRECIATION
The Board would like to express their heartfelt thanks to Management, Staff and all other stakeholders for their efforts and support under difficult circumstances.
M.P. Mahlangu | B. Ndebele |
Chairman | Chief Executive Officer |
19 February 2024 |
Registered Office
4 Conald Road
Graniteside
Harare
ABRIDGED GROUP STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
INFLATION ADJUSTED | HISTORICAL COST | ||||||||
52 weeks to | 52 weeks to | 52 weeks to | 52 weeks to | ||||||
09 July 2023 | 10 July 2022 | 09 July 2023 | 10 July 2022 | ||||||
Note | ZWL$ | ZWL$ | ZWL$ | ZWL$ | |||||
Revenue | 2 596 719 409 | 750 710 666 | 1 927 710 158 | 573 697 653 | |||||
Revenue from contract with customers | 2 472 256 077 | 622 473 112 | 1 856 261 761 | 475 697 735 | |||||
Cost of sales | (517 581 952) | (149 723 843) | (475 054 837) | (114 419 871) | |||||
Gross profit | 1 954 674 125 | 472 749 269 | 1 381 206 924 | 361 277 864 | |||||
Other operating income | 6 956 678 | 4 586 718 | 5 978 589 | 3 505 198 | |||||
Manufacturing profit | 103 781 745 | 17 885 496 | 140 723 559 | 13 668 205 | |||||
Trading expenses | (3 030 896 955) | (631 244 049) | (2 780 996 203) | (482 400 539) | |||||
Trading loss | (965 484 407) | (136 022 566) | (1 253 087 131) | (103 949 272) | |||||
Finance income | 46 884 438 | 116 462 539 | 42 375 034 | 89 001 380 | |||||
Finance costs | (375 011 788) | (38 569 810) | (344 297 437) | (29 475 283) | |||||
Exchange gain / (loss) | 2 542 635 153 | (4 148 088) | 2 468 341 831 | (3 169 994) | |||||
Monetary (loss) / gain | (207 969 662) | 265 526 465 | - | - | |||||
Profit / (loss) before tax | 1 041 053 734 | 203 248 540 | 913 332 297 | (47 593 169) | |||||
Tax credit | 394 230 918 | 7 284 676 | 345 564 942 | 5 566 994 | |||||
Profit / (loss) for the year | 1 435 284 652 | 210 533 216 | 1 258 897 239 | (42 026 175) | |||||
Other comprehensive income | |||||||||
Revaluation of property, plant and | |||||||||
equipment (net of tax) | 1 150 378 235 | 123 377 146 | 1 212 379 782 | 94 285 565 | |||||
Total comprehensive income for the year | 2 585 662 887 | 333 910 362 | 2 471 277 021 | 52 259 390 | |||||
Earnings / (loss) per share | |||||||||
Basic and diluted earnings / (loss) | |||||||||
per share (cents) | 376.81 | 55.27 | 330.50 | (11.03) | |||||
Basic and diluted headline | |||||||||
earnings / (loss) per share (cents) | 6 | 376.81 | 55.27 | 330.50 | (11.03) | ||||
Key ratios | |||||||||
Gross margin | 79.06 | 75.95 | 74.41 | 75.95 | |||||
Trading expenses to retail merchandise sales | 122.60 | 100.88 | 149.82 | 100.88 | |||||
Trading margin | (39.05) | (22.52) | (67.51) | (22.52) | |||||
Operating margin | (37.16) | (3.81) | (65.22) | (3.81) | |||||
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
INFLATION ADJUSTED | |||||||
Non- | |||||||
Share | Treasury | Distributable | Revaluation | Retained | |||
Capital | Shares | Reserve | Reserve | Earnings | Total | ||
ZWL$ | ZWL$ | ZWL$ | ZWL$ | ZWL$ | ZWL$ | ||
Balance at 09 July 2021 | 50 258 | (415) | 8 852 901 | 40 167 595 | 123 426 324 | 172 496 663 | |
Profit for the year | - | - | - | - | 210 533 216 | 210 533 216 | |
Revaluation of property, | |||||||
plant and equipment | - | - | - | 163 891 002 | (40 513 856) | 123 377 146 | |
Balance at 10 July 2022 | 50 258 | (415) | 8 852 901 | 204 058 597 | 293 445 684 | 506 407 025 | |
Profit for the year | - | - | - | - | 1 435 284 652 | 1 435 284 652 | |
Revaluation of property, | |||||||
plant and equipment | - | - | - | 1 528 132 618 | (377 754 383) | 1 150 378 235 | |
Proceeds from Rights Issue | 5 190 | - | 300 994 810 | - | - | 301 000 000 | |
Balance at 09 July 2023 | 55 448 | (415) | 309 847 711 | 1 732 191 215 | 1 350 975 953 | 3 393 069 912 | |
HISTORICAL COST | |||||||
Non- | |||||||
Share | Treasury | Distributable | Revaluation | Retained | |||
Capital | Shares | Reserve | Reserve | Earnings | Total | ||
ZWL$ | ZWL$ | ZWL$ | ZWL$ | ZWL$ | ZWL$ | ||
Balance at July 11 2021 | 38 407 | (317) | 6 765 441 | 30 696 320 | 37 582 | 37 537 433 | |
Loss for the year | - | - | - | - | (42 026 175) | (42 026 175) | |
Revaluation of property, |
ABRIDGED GROUP STATEMENT OF FINANCIAL POSITION
INFLATION ADJUSTED | HISTORICAL COST | |||||||
As at | As at | As at | As at | |||||
09 July 2023 | 10 July 2022 | 09 July 2023 | 10 July 2022 | |||||
ASSETS | Note | ZWL$ | ZWL$ | ZWL$ | ZWL$ | |||
Non-current assets | 2 179 450 340 | 509 831 633 | 2 080 123 857 | 161 552 597 | ||||
Property, plant and equipment | 1 736 618 375 | 483 077 196 | 1 687 482 279 | 158 923 254 | ||||
Intangible assets | 281 099 | 11 903 080 | 214 818 | 221 724 | ||||
Right of use asset | 2 347 944 | 14 851 357 | 1 605 079 | 2 407 619 | ||||
Deferred tax asset | 440 202 922 | - | 390 821 681 | - | ||||
Current assets | 4 020 256 241 | 705 583 955 | 3 569 870 960 | 357 248 524 | ||||
Inventories | 3 | 3 524 069 891 | 526 995 485 | 3 073 684 610 | 215 191 591 | |||
Receivables - trade | 4 | 400 844 736 | 125 123 208 | 400 844 736 | 115 232 688 | |||
- other | 32 894 174 | 43 530 823 | 32 894 174 | 19 232 286 | ||||
Cash and cash equivalents | 62 447 440 | 9 934 439 | 62 447 440 | 7 591 959 | ||||
Total Assets | 6 199 706 581 | 1 215 415 588 | 5 649 994 817 | 518 801 121 | ||||
EQUITY & LIABILITIES | ||||||||
Equity | 3 393 069 912 | 506 407 025 | 2 862 073 844 | 89 796 823 | ||||
Non-current liabilities | 406 542 029 | 180 471 727 | 387 826 333 | 25 304 820 | ||||
Deferred tax liability | 405 077 113 | 179 065 702 | 386 361 417 | 24 230 327 | ||||
Non current portion of lease liability | 1 464 916 | 1 406 025 | 1 464 916 | 1 074 493 | ||||
Current liabilities | 2 400 094 640 | 528 536 836 | 2 400 094 640 | 403 699 478 | ||||
Payables - trade | 5 | 1 207 345 150 | 448 790 660 | 1 207 345 150 | 177 874 376 | |||
- other | 1 122 377 561 | 17 631 006 | 1 122 377 561 | 178 356 312 | ||||
Short term borrowings | 36 493 799 | 56 108 209 | 36 493 799 | 42 878 234 | ||||
Current portion of lease liability | 821 678 | 2 324 669 | 821 678 | 1 776 526 | ||||
Current tax | 33 056 452 | 3 682 292 | 33 056 452 | 2 814 030 | ||||
Total Equity & Liabilities | 6 199 706 581 | 1 215 415 588 | 5 649 994 817 | 518 801 121 | ||||
Number of shares in issue (net of treasury shares) | 380 901 152 | 380 901 152 | 380 901 152 | 380 901 152 | ||||
Net asset value per share (cents) | 890.80 | 132.95 | 751.40 | 23.57 |
plant and equipment | - | - | - | 114 928 136 | (20 642 571) | 94 285 565 |
Balance at 10 July 2022 | 38 407 | (317) | 6 765 441 | 145 624 456 | (62 631 164) | 89 796 823 |
Profit for the year | - | - | - | - | 1 258 897 239 | 1 258 897 239 |
Revaluation of property, | ||||||
plant and equipment | - | - | - | 1 610 493 866 | (398 114 084) | 1 212 379 782 |
Proceeds from Rights Issue | 5 190 | - | 300 994 810 | - | - | 301 000 000 |
Balance at 09 July 2023 | 43 597 | (317) | 307 760 251 | 1 756 118 322 | 798 151 991 | 2 862 073 844 |
ABRIDGED GROUP STATEMENT OF CASHFLOWS
INFLATION ADJUSTED | HISTORICAL COST | ||||||||
52 weeks to | 52 weeks to | 52 weeks to | 52 weeks to | ||||||
09 July 2023 | 10 July 2022 | 09 July 2023 | 10 July 2022 | ||||||
ZWL$ | ZWL$ | ZWL$ | ZWL$ | ||||||
Net cash generated / (utilised) in operations | 81 650 446 | (102 277 662) | 57 407 500 | (78 161 211) | |||||
Net finance income | (328 127 350) | 77 892 729 | (301 922 403) | 59 526 097 | |||||
Tax paid | - | (889 663) | - | (679 886) | |||||
Net cash (utilised in) / generated | |||||||||
from operating activities | (246 476 904) | (25 274 596) | (244 514 903) | (19 315 000) | |||||
Cash utilised in investing activities | (2 068 989) | (534 861) | (2 020 039) | (408 744) | |||||
Net cash generated from financing activities | 301 058 894 | 27 962 706 | 301 390 423 | 21 369 270 | |||||
Net increase in cash and cash equivalents | 52 513 001 | 2 153 249 | 54 855 481 | 1 645 526 | |||||
Cash and cash equivalents at beginning of year | 9 934 439 | 7 781 190 | 7 591 959 | 5 946 433 | |||||
Cash and cash equivalents at end of year | 62 447 440 | 9 934 439 | 62 447 440 | 7 591 959 |
PAGE | |
1 | Directors: M.P Mahlangu (Chairman), B. Ndebele (C.E.O), B. H. Henderson, F.K. Khan, L. Mabhiza, W. Matsaira, A. B. Miek, S. M. Takaendisa |
ZIMBABWE LIMITED
(Incorporated in Zimbabwe in 1957, under Company Registration Number 602/57)
UNAUDITED PRELIMINARY GROUP RESULTS
FOR THE YEAR ENDED 09 JULY 2023
SUPPLEMENTARY INFORMATION
-
CORPORATE INFORMATION
The Group is incorporated and domiciled in Zimbabwe and its shares are publicly traded on the Zimbabwe Stock Exchange . It is engaged in the manufacture and retailing of fashion apparel and related merchandise. - BASIS OF PREPARATION
The Group's financial statements for the year ended 09 July 2023 have been prepared in accordance with the requirements of the Zimbabwe Stock Exchange Listing Requirements and in a manner required by the Zimbabwe Companies and Other Business Entities Act (Chapter 24:31) (COBE) except for the non-compliancewith
International Financial Reporting Standards explained below. The Group's inflation adjusted financial statements have been prepared based on the statutory records that are maintained under the historical cost basis and are presented in Zimbabwe Dollars (ZWL) and all values have been rounded to the nearest dollar, except where otherwise indicated.
The principal accounting policies applied in the preparation of the Group's inflation adjusted financail statements are in terms of IFRS except for the non-compliance with IAS 8 (Accounting Polcicies, Changes in Accounting Estimates an Errors), IAS 21 (The Effects of Changes in Foreign Exchange Rates), IAS 1 (Presentation of Financial
Statements) and IFRS 15 (Revenue from Contracts with Customers) on presentation of manufacturing profit, valuation methodology of property, plant and equipment and the consequential impact on the inflation adjusted amounts determined in terms of IAS 29 (Financial Reporting in Hyperinflationary Economies) and have been applied consistently in all material respects with those of the previous consolidated annual financial statements.
- IAS 21 (The Effects of Changes in Foreign Exchange Rates)
As noted in the Group's 2019 financial statements, the Government of Zimbabwe promulgamated Statutory
Instrument 33 (S.I. 33) on 22 February 2019, giving legal effect to the reintroduction of the Zimbabwe Dollar (ZWL$) as legal tender and prescribed that for accounting and other purposes, certain assets and liabilities on the effective date would be deemed to be Zimbabwe Dollars at the rate which was at par with the United States Dollar (USD). Guidance issued by the Public Accountants and Auditors Board (PAAB), noted that the requirements of SI33 were contrary to the provisions of IAS 21. The Directors have always ensured compliance with IFRS but were unable to do so in respect of the comparative financial information due to the confluct between IAS 21 and local statutory requirements. Due to the material and pervasive impact of these technicalities in the previous periods and the carrying over effects of these misstatements on the current period consolidated inflation-adjusted financial statements, the Directors would like to advise users to exercies caution in their use of these inflation- adjusted financial statements. - Adoption of IAS 29 (Financial Reporting in Hyperinflationary Economies)
In October 2019, the PAAB issued a pronouncement prescribing that the application of financial reporting in hyperinflationary economies had become effective in Zimbabwe, for reporting periods on or after 01 July 2019.
These financial statements have been prepared in accordance with IAS 29. The Group adopted the Zimbabwe
Consumer Price Index ('CPI") as the general price index to restate transactions and balances. Monetary assets and liabilities and non-monetary assets and liabilities carried at fair value have been restated as the are presented at the measuring unit current at the end of the reporting period. Items recognised in the income statement have been restated by applying the change in general price index from the dates when initially recorded in the Group's financial records (transaction date). A net monetary adjustment was recognised in the statement of profit or loss for the year ended 09 July 2023. Comparative amounts in the Group financial results have been restated to reflect the change in the general price index from 22 February 2019 to the end of the reporting period. All items in the statement of cashflows are expressed based on the restated financial information for the period.
As mentioned above, the Group adopted the Zimbabwe Consumer Price Index ("CPI") as the general price index and used the monthly indices to inflation adjust the historical figures. The indices and conversion factors used to restate the accompanying financial statements are as follow:
Indices | Conversion factor | |
CPI on 30 June 2023 | 100.33 | 1.000 |
CPI on 30 June 2022 | 76.67 | 1.309 |
CPI on 30 June 2021 | 53..07 | 1.890 |
CPI on 30 June 2020 | 43.75 | 2.293 |
Average CPI - 12 months to 30 June 2023 | 1.15 | |
Average CPI - 12 months to 30 June 2022 | 1.60 |
INFLATION ADJUSTED | HISTORICAL | ||||||||
2023 | 2022 | 2023 | 2022 | ||||||
ZWL$ | ZWL$ | ZWL$ | ZWL$ | ||||||
3. INVENTORIES | |||||||||
Finished goods | 3 472 451 736 | 466 736 045 | 3 024 418 369 | 190 585 451 | |||||
Raw materials | 49 315 481 | 58 850 945 | 47 620 772 | 24 031 000 | |||||
Work in progress | 2 302 674 | 1 408 495 | 1 645 469 | 575 140 | |||||
3 524 069 891 | 526 995 485 | 3 073 684 610 | 215 191 591 | ||||||
4. TRADE AND OTHER RECEIVABLES | |||||||||
Trade receivables | 400 844 736 | 125 123 208 | 400 844 736 | 115 232 688 | |||||
Prepayments | 17 592 148 | 7 355 669 | 17 592 148 | 5 779 706 | |||||
Other receivables | 31 438 966 | 56 044 717 | 31 438 966 | 29 027 447 | |||||
Deduct: allowances for credit losses | (16 136 940) | (19 869 563) | (16 136 940) | (15 184 441) | |||||
433 738 910 | 168 654 031 | 433 738 910 | 134 464 974 |
5. TRADE AND OTHER PAYABLES
Trade payables | 1 207 345 150 | 448 790 660 | 1 207 345 150 | 177 874 376 | ||||
Other payables and accruals | 1 122 377 561 | 17 631 006 | 1 122 377 561 | 178 356 312 | ||||
2 329 722 711 | 466 421 666 | 2 329 722 711 | 356 230 688 | |||||
6. | HEADLINE EARNINGS / (LOSS) PER SHARE | |||||||
Earnings / (loss) attributable to shareholders | 1 435 284 652 | 210 533 216 | 1 258 897 239 | (42 026 175) | ||||
Adjusted for non-recurring items:- | ||||||||
Profit on disposal of property, | ||||||||
plant and equipment | - | - | - | - | ||||
Headline earnings / (loss) | 1 435 284 652 | 210 533 216 | 1 258 897 239 | (42 026 175) | ||||
Headline earnings / (loss) per share (cents) | 376.81 | 55.27 | 330.50 | (11.03) | ||||
Weighted average number of ordinary shares | ||||||||
used in calculating earning / (loss) per share | 380 901 152 | 380 901 152 | 380 901 152 | 380 901 152 | ||||
7. | CONTINGENT LIABILITIES | |||||||
There are no contingent liabilities. | ||||||||
8. CAPITAL EXPENDITURE FOR THE YEAR | 2 068 989 | 1 660 137 | 2 020 039 | 1 268 687 |
- GOING CONCERN
The Directors have assessed the ability to continue as a going concern for the foreseeable future and believe that the preparation of the financial statements on a going concern basis is appropriate. - EVENTS AFTER THE REPORTING PERIOD
There have not been any events after reporting date that have had an impact on the financial statements. The Rights offer was closed on 9 August 2023 after the reporting period and this had no impact on the financial statements being presented.
Top Quality Clothing That Lasts
PAGE | |
2 | Directors: M.P Mahlangu (Chairman), B. Ndebele (C.E.O), B. H. Henderson, F.K. Khan, L. Mabhiza, W. Matsaira, A. B. Miek, S. M. Takaendisa |
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Truworths Ltd. published this content on 01 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2024 12:50:11 UTC.