The trading environment became progressively more unstable towards the end of the six months to 30 September 2019. The country reintroduced the Zimbabwe Dollar (ZWL $) as the sole currency at the end of June 2019 and discontinued the use of multi-currencies in local transactions and settlement. The ZWL $ has depreciated markedly since its introduction and contributed significantly to price increases in the period under review.
The scarcity of foreign currency slowed down the importation of goods and this, combined with high prices of goods that were available, slowed down consumption particularly in the second half of the reporting period. Resultantly, volume sales declined by 23% compared to the same period last year.
In October 2019 the Public Accountants and Auditors Board pronounced that Zimbabwe is now in hyperinflation and all entities preparing and presenting financial statements for periods ended on or after 1 July 2019 were to adopt IAS 29, Financial Reporting in Hyperinflationary Economies. Accordingly, the interim results were inflation adjusted to reflect the impact of general change in the purchasing power of the reporting currency (ZWL $). Refer to note 7 for more details on hyperinflation.
GROUP PERFORMANCE (Commentary based on historical figures)
Revenue for the half year improved by 237.4% to close the reporting period at ZWL $1.1 billion, having increased from ZWL $330.1 million in the comparative period. Profit before tax of ZWL $185.0 million was 1,498.0% up on prior year’s ZWL $11.6 million, while profit after tax increased by 1,463.5% to ZWL $131.9 million from ZWL $8.4 million in prior year.
Overheads growth was restricted to 229.1% which is below the revenue growth of 237.4%. Overheads increases were attributable to, among others, fuel for generators and vehicle fleet, repairs and maintenance costs, staff costs, bank charges, contingent rentals and interest on lease liability arising from the adoption of International Financial Reporting Standard 16 (IFRS 16), Leases. The cost lines that increased most significantly were those corresponding directly with sales generated as well as those that have import components.
Capital expenditure for the period was ZWL $51.5 million, up from ZWL $7.5 million for the comparative period as the Group continued with its refurbishment programme.
The Directors declared an interim dividend of 4.00 ZWL cents per share that was paid to the shareholders on the 3rd of December 2019.
Despite the difficult conditions, the Group’s stores remain reasonably stocked for the festive season and beyond. While price increases have been frequent because of the instability in the market, the Group will continue in its efforts to deliver the best possible value to its stakeholders.
Mr. Freeman Terrence Kembo retired from the Board of Directors with effect from 27 July 2019 after having served the Group for seventeen years. The Board extends its gratitude to Freeman for his contribution to the Group. During the course of the period, the Board welcomed Mrs. Lyndsay Webster – Rozon as a non-executive Director with effect from 1 June 2019. The Board congratulates Lyndsay on her appointment.
OK.zw – HY2020 results.pdf