Audited Abridged Report To Shareholders For The Year Ended 30 September 2022
RETAIL | FARMING | MILLING | PROPERTIES | |||||||||||
DIVISION | DIVISION | DIVISION | DIVISION | |||||||||||
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 principal accounting policies applied in the preparation of these financial statements are consistent with those applied in the previous annual financial statements. No significant changes arise from new and revised IFRS which became effective for reporting periods commencing on or after 1 January 2022.
Cautionary Statement- Reliance on all Financial Statements prepared in Zimbabwe for 2019-2022
The Directors would like to advise users to exercise caution in their use of these financial statements due to the impact of the technicalities arising from functional currency changes in February 2019, and its consequent impact on the usefulness of the financial statements for 2019 - 2022 financial periods.
Whilst Directors have exercised due care and applied reasonable judgements they deem appropriate in the preparation and presentation of these financial statements, the Directors advise the need for interpretation caution and remind users that there are significant challenges in ascertaining the underlying business performance in an environment of hyperinflation, multiple exchange rates and rapid changes in economic policies.
Adoption of IAS 29 (Financial Reporting in Hyper-inflationary Economies) Effective July 2019, the Public Accountants and Auditors Board (PAAB) advised that conditions for adopting IAS 29 were satisfied. IAS 29 requires that inflation-adjusted financial statements become the entity's primary financial statements. Historical cost financial statements have been presented only as complementary financial information.
External Auditor's Audit Opinion
These abridged Group financial statements have been audited by the Group's external auditors, Baker Tilly Chartered Accountants (Zimbabwe), who have issued a qualified audit opinion. The auditor's report on the Group's financial statements, is available for inspection at the Company's registered office. The engagement partner on the audit is Mr. Courage Matsa (PAAB Number 607).
Economic Environment
The economy witnessed the resurgence of hyper-inflationary pressures on the back of sharp currency depreciation and the widening gap of up to 90% between the official and alternative markets exchange rates of the Zimbabwe dollar (ZWL) against major foreign currencies. Inflationary pressures were further exacerbated by the war in Ukraine interrupting global supply chains with an adverse effect on commodities markets. During the period, the local currency on the official market depreciated by 617.5% against the USD. The rate moved from ZWL86.67:USD1 on 1 October 2021 to ZWL621.89:USD1 as at 30 September 2022. The exchange rates disparities imposed significant performance translation challenges on both historical and inflation adjusted accounts, given the conflict between IFRS and statutes. The distortions largely affect recorded revenues and profit for the period.
Factors stemming from the global impact of the Ukraine crisis and local growing economic uncertainties in the second half of the year saw average month-on-month inflation increase to 18.1% against 3.3% for the comparable period and 6.1% in the first half of the year. Average annual year-on-year inflation in the second half doubled to 207% against last year's second half inflation of 103.5%. Inflationary pressures in the second half (H2) were spurred by rapid money supply growth on the back of aggressive forward pricing of products and services. In Q4, the Government implemented some decisive policy interventions, mainly anchored by an increase in the minimum lending rate from 80% to 200%. The Government also introduced gold coins which, together with other measures, resulted in some decline in inflation in the post year-end period.
The erratic rains received during the 2021/2022 agricultural season suppressed aggregate demand for agro-inputs. Over and above the erratic rains, the country experienced a mid- season drought resulting in a significant decline in local agricultural output. The Group is therefore expected to continue relying on imports of maize and soya for the next half-year of FY2023.
Financial Performance
Group inflation-adjusted revenues for the year increased by 39.4%, from ZWL 35.39 billion in the previous year, to ZWL 49.37 billion. The increase is mainly attributable to improved sales volumes from Victoria Foods underpinned by continued recapitalization. However, aggregate demand for Retail products decreased in comparison to FY2021 following a below normal 2021/22 agriculture season. Overall, Retail Operations contributed 80.0% (2021- 91.9%), milling operations (Victoria Foods) contributed 17.4% (2021 - 4.3%) and farming operations accounted for 2.6% (2021 - 3.6%) of the Group turnover.
The Group incurred unrealized exchange losses of ZWL 6.1 billion on its foreign currency denominated loans. As a result, the Group posted a loss before tax of ZWL2.59 billion against a loss of ZWL0.75 billion for prior year. The Group incurred a ZWL 0.77 billion inflation-adjusted operational loss (inclusive of monetary gains) before depreciation, impairment and financing costs compared to an operational profit of ZWL0.4 billion in prior year.
The Group invested ZWL548.19 million (2021 - ZWL540.6 million) in capital expenditure for the different Strategic Business Units (SBUs) mainly covering IT infrastructure for various Farm & City Centre and Agrifoods, poultry and irrigation infrastructure at Glenara Estates.
Operations Review
FARM & CITY ('FCC')
The year ended 30 September 2022 was challenging due to both high domestic and imported inflation, multiple exchanges rates and reduced agricultural output, which decreased key revenue driver volumes by 21% compared to prior year. Notwithstanding, FCC opened Builders City branch and refurbished the Sanyati and Chitungwiza branches to increase the trading space and bring convenience to customers.
GLENARA ESTATES
Maize and soya beans output was 13% down from the previous season as a result of reduced planting following late onset of rains. The potato harvest increased by 10%, whilst yields improved by 7% compared to prior year. The Estate invested in additional irrigation infrastructure in order to underpin horticultural production going into the future. In addition, cattle pen fattening and breeding operations were maintained with reasonable success.
PROPERTY DEVELOPMENT
SATURDAY RETREAT
Town planning permits secured in prior year and other development preliminaries pursued during the year will assist the Group in giving impetus to the development stage of the project.
SUNCREST PARK (FORMERLY MAITLANDS ZIMBABWE)
During the period, the Group progressed preparations of title surveys and completion of engineering drawings.
LANGFORD ESTATES
The legal proceedings remain pending before the relevant tribunals. The market will be updated with further progress in due course.
MILLING OPERATIONS
AGRIFOODS
Stockfeed sales registered a flat performance against prior year. Inconsistent raw material supplies limited the potential growth over prior year despite an otherwise vibrant market demand throughout the period. In addition, distortions on USD prices in part, contributed to constrained sales volume growth especially in H2. Notwithstanding the above challenges, Agrifoods continues to put efforts to reassert its presence in the market and demand for its products continues to firm. The focus going into the next year will be to secure adequate raw material supply lines as the entity claws back its market share.
VICTORIA FOODS
The entity's main business thrust in its first year after its exit from judicial management was ensuring the market is supplied with quality consumer household goods thereby enhancing VF's brand presence across various product categories the company is traditionally known for. Your Board is happy to report that VF's products have been warmly received in the market.
The flour mill operated at satisfactory capacity utilization levels for the year on the back of reasonable wheat availability from the 2021 winter season. Maize utilization however operated below expected capacity utilization levels given the poor cereal's output in the 2021/2022 agricultural season.
POULTRY DIVISION
Crest Poultry Group's other units, being Crest Breeders, Hubbard Zimbabwe and Suncrest Chickens, remained under care and maintenance during the period. Joint ventures leveraging the Group's poultry infrastructure and brands are still being pursued.
Sustainable Business Practices
Your Board continues to strive to ensure that its business strategies and its values are constantly aligned with sustainable business practices guided by the Global Reporting Initiatives (GRI's) Sustainability Reporting Guidelines.
Future Prospects
Notwithstanding the challenging economic conditions which prevailed during the period, the Group remains optimistic on the overall medium-term trajectory of the economy, as we anticipate continued growth driven largely by the mining, construction, agricultural sectors and increasing diaspora remittances. The Group will continue to invest in its milling operations in order to underpin its long-term competitiveness.
Priority will also be given to the development of low-cost housing delivery in Harare South in support of Government's Vision 2030 on housing. The scourge of land barons will need resolution to make way for progressive, orderly infrastructure deployment and service delivery to the various settlements.
Your Board will be focused on strengthening its human capital base, improving business models to be adaptive to the changing environment and strengthening its operational systems for the benefit of all stakeholders.
Acknowledgement and Appreciation
I wish to record my sincere appreciation to Management and Staff for their fortitude and resilience in serving our customers' various needs notwithstanding the challenges imposed by the COVID-19 pandemic. I also wish to thank our customers, suppliers and financiers for their enduring support to the Group which has made this turnaround and consolidation to date possible. Lastly, I would also like to record my gratitude and appreciation to my fellow Board members for their valuable contributions, guidance and stewardship.
Ms. I .V. Pasi
Chairperson
DIVIDEND DECLARATION
In view of the significant resources needed to further capitalize Agrifoods and Victoria Foods milling operations, your Board will not declare a dividend for the year ended 30 September 2022.
P. Hare
COMPANY SECRETARY
BY ORDER OF THE BOARD
31 January 2023
ABRIDGED GROUP CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
INFLATION | ADJUSTED | HISTORICAL | |||||||
Year to | Year to | ||||||||
Notes | 30 Sept. 2022 | 30 Sept. 2021 | 30 Sept. 2022 | 30 Sept. 2021 | |||||
ZWL | ZWL | ZWL | ZWL | ||||||
Turnover | 49,263,290,566 | 35,278,030,332 | 25,057,878,841 | 7,797,485,774 | |||||
Change in fair value of biological assets | 106,229,376 | 108,984,678 | 234,494,249 | 36,528,365 | |||||
Revenue | 49,369,519,942 | 35,387,015,010 | 25,292,373,090 | 7,834,014,139 | |||||
Operating (loss) income before depreciation, | |||||||||
impairment and financing costs | (5,783,851,530) | 409,838,586 | (4,805,805,737) | 542,767,406 | |||||
Depreciation expense | (544,440,648) | (442,895,391) | (144,680,431) | (77,737,754) | |||||
Share of (losses) profits from joint ventures | (17,734,117) | 8,270,792 | (5,027,215) | 129,035 | |||||
Net finance costs | (1,257,872,468) | (757,864,790) | (863,655,727) | (158,217,308) | |||||
Monetary gain | 5,016,012,566 | 33,771,215 | - | - | |||||
(Loss) profit before tax | 4.1 | (2,587,886,197) | (748,879,588) | (5,819,169,110) | 306,941,379 | ||||
Income tax (expense) credit | 4.2 | (1,537,265,549) | (724,756,332) | 928,775,053 | (110,529,667) | ||||
(Loss) profit for the year | (4,125,151,746) | (1,473,635,920) | (4,890,394,057) | 196,411,712 | |||||
Other comprehensive income | |||||||||
Gain on property revaluation net of taxes | - | - | 6,331,395,622 | 732,402,503 | |||||
Gain on equity investment designated as at FVTOCI | - | - | 564,304,891 | 68,422,364 | |||||
Total other comprehensive income | - | - | 6,895,700,513 | 800,824,867 | |||||
Total comprehensive (loss) income | (4,125,151,746) | (1,473,635,920) | 2,005,306,456 | 997,236,579 | |||||
(Loss) profit attributable to: | |||||||||
Equity holders of the parent | (4,125,151,746) | (1,473,635,920) | (4,890,394,057) | 196,411,712 | |||||
Total comprehensive (loss) income attributable to: | |||||||||
Equity holders of the parent | (4,125,151,746) | (1,473,635,920) | 2,005,306,456 | 997,236,579 | |||||
Basic (losses) earnings per share (cents) | (3,861.75) | (1,379.54) | (4,578.13) | 183.87 | |||||
Diluted (losses) earnings per share (cents) | (3,861.75) | (1,379.54) | (4,578.13) | 183.87 | |||||
Headline (losses) earnings per share (cents) | (3,861.75) | (1,379.54) | (4,578.13) | 183.87 | |||||
Net asset value per share (cents) | 6,251.69 | 10,113.43 | 4,303.08 | 1,678.54 | |||||
Shares in issue | 106,820,875 | 106,820,875 | 106,820,875 | 106,820,875 |
ABRIDGED GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||||
INFLATION ADJUSTED | HISTORICAL | |||||||||
ASSETS | Notes | 30 Sept. 2022 | 30 Sept. 2021 | 30 Sept. 2022 | 30 Sept. 2021 | |||||
ZWL | ZWL | ZWL | ZWL | |||||||
Non-current assets | ||||||||||
Property, plant and equipment | 10,131,682,914 | 10,141,680,238 | 10,131,682,914 | 2,665,356,173 | ||||||
Investments (unlisted) | 805,771,692 | 805,771,692 | 805,771,692 | 211,766,542 | ||||||
Investments in joint ventures | (11,085,694) | 6,648,423 | (5,623,922) | (596,707) | ||||||
Deferred tax assets | - | - | 551,499,444 | - | ||||||
Total non-current assets | 10,926,368,912 | 10,954,100,353 | 11,483,330,128 | 2,876,526,008 | ||||||
Current assets | ||||||||||
Inventories and biological assets | 4.3 | 17,277,193,625 | 8,165,529,151 | 12,591,749,149 | 1,737,647,077 | |||||
Trade and other receivables | 2,347,772,501 | 1,211,108,350 | 2,347,772,501 | 318,293,916 | ||||||
Investments - listed shares | 31,317,099 | 87,485,732 | 31,317,099 | 22,992,308 | ||||||
Cash and bank balances | 561,246,599 | 888,461,344 | 561,246,599 | 233,498,382 | ||||||
Total current assets | 20,217,529,824 | 10,352,584,577 | 15,532,085,348 | 2,312,431,683 | ||||||
TOTAL ASSETS | ||||||||||
31,143,898,736 | 21,306,684,930 | 27,015,415,476 | 5,188,957,691 | |||||||
EQUITY AND LIABILITIES | ||||||||||
Equity attributable to owners of the parent | 6,678,107,328 | 10,803,259,075 | 4,596,593,035 | 2,591,286,578 | ||||||
Total equity | 6,678,107,328 | 10,803,259,075 | 4,596,593,035 | 2,591,286,578 | ||||||
Non-current liabilities | ||||||||||
Deferred tax liabilities | 2,046,968,967 | 2,062,105,637 | - | 379,190,109 | ||||||
Accruals and other payables | 5,501,854 | 14,696,219 | 5,501,854 | 3,862,344 | ||||||
Long term borrowings | 4.4 | 9,739,395,382 | 2,478,770,553 | 9,739,395,382 | 651,450,868 | |||||
Total non-current liabilities | 11,791,866,203 | 4,555,572,409 | 9,744,897,236 | 1,034,503,321 | ||||||
Current liabilities | ||||||||||
Trade payables | 8,409,684,616 | 4,264,134,858 | 8,409,684,616 | 1,120,666,192 | ||||||
Accruals and other payables | 1,371,903,836 | 707,633,829 | 1,371,903,836 | 185,974,725 | ||||||
Short term borrowings | 4.4 | 1,377,627,554 | 351,241,513 | 1,377,627,554 | 92,310,516 | |||||
Bank overdraft | 870,831,943 | 67,783,149 | 870,831,943 | 17,814,231 | ||||||
Current tax liabilities | 643,877,256 | 557,060,097 | 643,877,256 | 146,402,128 | ||||||
Total current liabilities | 12,673,925,205 | 5,947,853,446 | 12,673,925,205 | 1,563,167,792 | ||||||
TOTAL EQUITY AND LIABILITIES | ||||||||||
31,143,898,736 | 21,306,684,930 | 27,015,415,476 | 5,188,957,691 |
Directors: I. V. Pasi (Group Chairman), S.D. Zinyemba (Deputy Group Chairman), S. N. Chibanguza (Acting Group Chief Executive Officer)*, C. Mutevhe (Acting Financial Director)*, A. Denenga, A. S. Hamilton (Alternate: R. L. Hamilton), Ms. P. Muzani * - Executive Director
1 Wynne Street, Harare. Tel: +263 (242) 791260/703160
Audited Abridged Report To Shareholders For The Year Ended 30 September 2022
ABRIDGED GROUP CONSOLIDATED STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
CASH (OUT)INFLOWS BEFORE WORKING CAPITAL CHANGES Cash (utilised through) generated from working capital changes
CASH UTILISED IN OPERATIONS
Net interest paid
Income taxes paid
NET (CASH UTILISED) GENERATED FROM OPERATING ACTIVITIE
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
NET CASH OUTFLOWS TO INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of control of subsidiaries previously under judicial management Long term loans raised
Proceeds from disposal of listed investments Decrease/(increase) in listed investments Net short term loans raised (repaid)
NET CASH INFLOWS FROM FINANCING ACTIVITIES
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR
Cash and bank balances
Bank overdraft
INFLATION ADJUSTED
Year to
30 Sept. 2022 | 30 Sept. 2021 | |
ZWL | ZWL | |
(874,068,340) | 334,625,122 | |
(5,349,590,058) | 1,687,081,467 | |
(6,223,658,398) | 2,021,706,589 | |
(1,257,872,468) | (757,864,790) | |
(1,443,724,578) | (947,764,677) | |
(8,925,255,444) | 316,077,122 | |
(548,187,598) | (540,599,009) | |
(548,187,598) | (540,599,009) |
- 3,090,858
7,260,624,829 2,478,770,556
-
18,188,010
56,168,633 (53,967,194)
1,026,386,041 (1,341,482,471)
8,343,179,503 1,104,599,759
(1,130,263,539) 880,077,872
820,678,195 (59,399,676)
(309,585,344) 820,678,196
561,246,599 888,461,345
(870,831,943) (67,783,149)
HISTORICAL
Year to
30 Sept. 2022 | 30 Sept. 2021 |
ZWL | ZWL |
(5,046,374,145) | 506,239,041 |
(4,172,500,442) | (280,562,177) |
(9,218,874,587) | 225,676,864 |
(409,940,727) | (171,161,496) |
(863,655,727) | (158,217,308) |
(10,492,471,041) | (103,701,940) |
(406,262,601) | (107,019,874) |
(397,735,215) | (107,019,874) |
- 536,040
9,087,944,514 651,450,868
-
3,947,501
(8,324,791) (17,972,470)
1,285,317,038 (201,254,435)
10,364,936,761 436,707,504
(525,269,495) 225,985,690
215,684,151 (10,301,539)
(309,585,344) 215,684,151
561,246,599 233,498,382
(870,831,943) (17,814,231)
4.0 | Supplementary information | INFLATION | ADJUSTED | HISTORICAL | ||
Year | to | Year to | ||||
30 Sept. 2022 | 30 Sept. 2021 | 30 Sept. 2022 | 30 Sept. 2021 | |||
ZWL | ZWL | ZWL | ZWL |
4.1 (Loss) profit before tax
(Loss) profit before tax is shown after charging the following items:
Exchange losses | 7,442,920,422 | 91,913,203 | 10,276,028,223 | 23,122,768 | |||||
Net leasing expenses | 295,328,549 | 199,708,625 | 174,895,297 | 45,524,030 | |||||
Depreciation expense | 544,440,648 | 442,895,391 | 144,680,431 | 77,737,754 | |||||
Compensation of directors and key management | |||||||||
- for services as directors | 7,457,497 | 4,453,973 | 4,095,589 | 984,235 | |||||
- for management services | 237,024,292 | 190,558,867 | 129,377,658 | 40,747,216 | |||||
4.2 | Income tax expense (credit) | ||||||||
Current tax | 558,885,184 | 536,047,418 | 560,702,577 | 140,855,826 | |||||
Withholding tax | (14,583) | 219,815 | 54,495 | 49,488 | |||||
Intermediate transactions tax | 834,541,130 | 480,194,063 | 346,658,784 | 91,962,629 | |||||
Deferred tax charge (credit) relating to current temporary differences | 143,853,818 | (291,704,964) | (1,836,190,909) | (122,338,276) | |||||
1,537,265,549 | 724,756,332 | (928,775,053) | 110,529,667 | ||||||
INFLATION | ADJUSTED | HISTORICAL | |||||||
30 Sept. 2022 | 30 Sept. 2021 | 30 Sept. 2022 | 30 Sept. 2021 | ||||||
4.3 | Inventories | ZWL | ZWL | ZWL | ZWL | ||||
Finished goods | 11,041,669,664 | 6,399,338,673 | 7,659,753,881 | 1,436,491,547 | |||||
Raw materials and consumables | 4,928,053,921 | 761,436,742 | 4,443,468,914 | 199,811,536 | |||||
Biological assets and agricultural produce on hand | 583,443,580 | 280,727,276 | 471,991,945 | 84,809,585 | |||||
Land in development | 724,026,460 | 724,026,460 | 16,534,409 | 16,534,409 |
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT - INFLATION ADJUSTED
CAPITAL | |
RESERVES | |
ZWL$ | |
Balance at 30 September 2020 | 18,610,756,587 |
Acquisition of control in subsidiaries previously under judicial management | 1,001,171,312 |
Elimination of revaluation reserves - IAS29 | (7,185,298,953) |
Loss for the year | - |
Balance at 30 September 2021 | 12,426,628,946 |
Loss for the year | - |
Balance at 30 September 2022 | 12,426,628,946 |
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO EQUITYHOLDERS OF THE PARENT - HISTORICAL | |
CAPITAL | |
RESERVES | |
ZWL$ | |
Balance at 30 September 2020 | 1,332,864,914 |
Acquisition of control in subsidiaries previously under judicial management | 238,005,184 |
Other comprehensive income for the year | 800,824,868 |
Profit for the year | - |
Balance at 30 September 2021 | 2,371,694,966 |
Profit for the year | - |
Other comprehensive income for the year | 6,895,700,514 |
Balance at 30 September 2022 | 9,267,395,480 |
NOTES TO THE ABRIDGED GROUP FINANCIAL STATEMENTS
RETAINED
EARNINGS (LOSSES) | TOTAL | |
ZWL$ | ZWL$ | |
(6,675,444,409) | 11,935,312,178 | |
(659,588,494) | 341,582,818 | |
7,185,298,953 | - | |
(1,473,635,921) | (1,473,635,921) | |
(1,623,369,871) | 10,803,259,075 | |
(4,125,151,747) | (4,125,151,747) | |
(5,748,521,618) | 6,678,107,328 | |
RETAINED | ||
EARNINGS (LOSSES) | TOTAL | |
ZWL$ | ZWL$ | |
204,777,075 | 1,537,641,989 | |
(181,597,174) | 56,408,010 |
- 800,824,868
196,411,712 196,411,712
219,591,613 2,591,286,579
(4,890,394,058) (4,890,394,058)
-
6,895,700,514
(4,670,802,445) 4,596,593,035
17,277,193,625 | 8,165,529,151 | 12,591,749,149 | 1,737,647,077 |
4.4 Borrowings
The table below summarizes the movements in the Group's third party borrowings during the period:
Balance at the beginning of the year | 2,829,861,336 | 1,692,723,981 | 743,761,384 | 293,604,564 | |||
Loans raised during the year | 12,752,412,592 | 4,303,638,958 | 11,478,063,745 | 890,163,549 | |||
Loans repaid during the year | (4,465,250,992) | (3,166,501,603) | (1,104,802,193) | (440,006,729) | |||
Balance at the end of the year | 11,117,022,936 | 2,829,861,336 | 11,117,022,936 | 743,761,384 | |||
Short-term borrowings | 1,377,627,554 | 351,241,513 | 1,377,627,554 | 92,310,516 | |||
Long-term borrowings | 9,739,395,382 | 2,478,770,553 | 9,739,395,382 | 651,450,868 | |||
Total borrowings | |||||||
11,117,022,936 | 2,830,012,066 | 11,117,022,936 | 743,761,384 | ||||
All the loans were raised to fund the Group's working capital requirements. Except for the long-term borrowings, which are unsecured, all short-term loans are secured against Group properties.
4.5 Contingent liabilities at reporting date in respect of;
Guarantees given to trade creditors | 100,000,000 | 380,500,000 | 100,000,000 | 100,000,000 | ||||
Langford Estates (envisaged reversal of land for debt swap) | 32,000,000 | 121,760,000 | 32,000,000 | 32,000,000 | ||||
City of Harare rates | 51,564,545 | 124,188,663 | 51,564,545 | 32,638,282 | ||||
Staff related provisions | 1,271,276 | 4,837,204 | 1,271,276 | 1,271,276 | ||||
184,835,821 | 631,285,867 | 184,835,821 | 165,909,558 | |||||
4.6 | Capital commitments | |||||||
Authorised but not yet contracted | 2,301,340,100 | 1,841,072,080 | 2,301,340,100 | 483,856,000 | ||||
The capital expenditure will be financed from the Company's own resources and existing borrowing facilities. | ||||||||
INFLATION | ADJUSTED | HISTORICAL | ||||||
30 Sept. 2022 | 30 Sept. 2021 | 30 Sept. 2022 | 30 Sept. 2021 | |||||
ZWL | ZWL | ZWL | ZWL |
1.0 General information
The principal activities of the Company, its subsidiaries and joint ventures (the Group) is the holding of investments, the letting of properties, the wholesaling and retailing of agro-inputs and general hardware commodities, the manufacture of stock feeds, the provision of animal health requisites, the operation of maize and wheat mills, crops and livestock farming, the development and management of real estate.
-
Basis of preparation
The consolidated financial statements for the year ended 30 September 2022 have been prepared in accordance with the requirements of the Zimbabwe Stock Exchange Listing Requirements and in the manner required by the Zimbabwe Companies and Other Business Entities Act (Chapter 24:31) (COBE). The Listing Requirements require financial statements to be prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The Group's consolidated inflation adjusted financial statements have been prepared based on the statutory records that are maintained under the historical cost basis and are presented in ZWL.
The principal accounting policies applied in the preparation of the Group consolidated financial statements are in terms of IFRS except for the non-compliance with IAS 21 (The Effects of Change in Foreign Exchange Rates), and its 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 Change in Foreign Exchange Rates)
As reported in the Group's prior year financial statements, Government promulgated Statutory Instrument ("SI") 33 on 22 February 2019, giving legal effect to the reintroduction of the 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 ZWL at the rate which was at par with the United States Dollar (USD). CFI Holdings Limited elected to comply with the requirements of Statutory Instrument 33 of 2019 (SI 33/19) which was issued on 20 February 2019. The 1:1 exchange rate between ZWL and USD prescribed by Statutory Instrument 33 of 2019 (SI 33/19) is not in accordance with the requirements of IAS 21. The entity was guided by Statutory Instrument 41 of 2019 (SI 41/19) which stated that in the case of inconsistency between local pronouncement and any international standard, the local pronouncement shall take precedence. Due to the impact of these technicalities, the Directors advise users to exercise caution in their use of these inflation adjusted Group financial statements.
In light of this failure to fully comply with the requirements of IAS 21, the Group's Independent Auditors, Messrs Baker Tilly Chartered Accountants (Zimbabwe) issued a qualified opinion on the financial statements for the year ended 30 September 2022. - Application of IAS 29 (Financial Reporting in Hyperinflationary economies)
These financial statements have been prepared in accordance with IAS 29 together with International Financial Reporting Interpretations Committee (IFRIC) 7 (Applying the Restatement Approach under IAS 29), as if the economy had been hyperinflationary from 1 October 2018. As noted in the audited financial statements for the years ended 30 September 2019, 2020 and 2021, the Group adopted the Zimbabwe Consumer Price Index ("CPI") as the general price index to restate transactions and balances. Appropriate adjustments and reclassifications, including restatements for changes in the general purchasing power of the Zimbabwe dollar and for the purposes of fair presentation in accordance with IAS 29 have been made in these financial statements to the historical cost financial information. Comparative amounts in the Group financial results have been restated to reflect the change in the general price index from 1 October 2018 to the end of the reporting period.
Indices | Conversion factor | |
CPI as at 30 September 2022 | 12,716.28 | 1.0000 |
CPI as at 30 September 2021 | 3,341.99 | 3.8050 |
CPI as at 30 September 2020 | 2,205.32 | 5.7662 |
3.0 External Auditors' Opinion- for the year ended 30 September 2022
These abridged Group financial statements have been audited by the Group's external auditors, Baker Tilly Chartered Accountants (Zimbabwe), who have issued a Qualified Opinion. The qualification was a result of residual effects of non-compliance with IAS 21- The Effects of Changes in Foreign Exchange Rates. The auditor's report on the Group's financial statements, is available for inspection at the Company's registered office.
The engagement partner on the audit is Mr. Courage Matsa (PAAB Number 607).
Revenue | ||||||||
Retail | 39,461,934,800 | 32,548,276,759 | 19,167,784,752 | 7,156,801,093 | ||||
Farming | 1,292,842,367 | 1,288,772,386 | 993,101,953 | 286,057,214 | ||||
Milling | 8,560,548,176 | 1,509,048,305 | 5,081,855,574 | 383,611,411 | ||||
Head Office & Properties | 54,194,599 | 40,917,560 | 49,630,811 | 7,544,421 | ||||
49,369,519,942 | 35,387,015,010 | 25,292,373,090 | 7,834,014,139 | |||||
EBITDA | ||||||||
Retail | (2,017,485,596) | (784,325,586) | (5,553,176,233) | 462,339,766 | ||||
Farming | 232,763,941 | (143,883,244) | 134,963,706 | (54,706,326) | ||||
Milling | 1,696,504,368 | 562,948,777 | 724,215,285 | 64,880,580 | ||||
Head Office & Properties | (697,355,793) | 792,489,245 | (116,835,710) | 70,382,422 | ||||
(785,573,081) | 427,229,192 | (4,810,832,952) | 542,896,441 | |||||
INFLATION | ADJUSTED | HISTORICAL | ||||||
30 Sept. 2022 | 30 Sept. 2021 | 30 Sept. 2022 | 30 Sept. 2021 | |||||
Segment assets | ZWL | ZWL | ZWL | ZWL | ||||
Retail | 18,382,882,797 | 15,503,197,028 | 17,686,047,530 | 3,829,089,892 | ||||
Farming | 1,896,916,219 | 1,074,225,851 | 1,953,762,347 | 293,350,602 | ||||
Milling | 4,565,851,168 | 2,790,230,542 | 4,081,062,552 | 731,916,704 | ||||
Properties & Head Office | 6,298,248,552 | 1,939,031,509 | 3,294,543,047 | 334,600,494 | ||||
31,143,898,736 | 21,306,684,930 | 27,015,415,476 | 5,188,957,691 | |||||
Segment liabilities | ||||||||
Retail | 18,828,949,190 | 4,813,881,452 | 17,500,325,585 | 1,361,679,668 | ||||
Farming | 1,586,884,727 | 1,934,452,775 | 1,525,136,384 | 415,060,502 | ||||
Milling | 2,570,547,103 | 1,603,212,687 | 2,709,662,292 | 455,179,452 | ||||
Properties & Head Office | 1,479,410,388 | 2,151,878,942 | 683,698,179 | 365,751,492 | ||||
24,465,791,408 | 10,503,425,855 | 22,418,822,441 | 2,597,671,113 | |||||
4.8 Impact of Covid-19 pandemic
In March 2020, the World Health Organisation (WHO) declared COVID-19 a global pandemic. The pandemic has significantly impacted global, domestic, and human economic activity as governments implement measures to mitigate the transmission of the virus. The full impact remains uncertain. The Board and management continue to closely monitor the situation and proffer appropriate measures in response. In particular, the Group keeps prioritizing the safety of its employees, consumers and products in the face of the ongoing pandemic.
4.9 Events after the reporting period
There were no significant adjusting or non-adjusting events after the reporting date at the time of issuing this press release.
Directors: I. V. Pasi (Group Chairman), S.D. Zinyemba (Deputy Group Chairman), S. N. Chibanguza (Acting Group Chief Executive Officer)*, C. Mutevhe (Acting Financial Director)*, A. Denenga, A. S. Hamilton (Alternate: R. L. Hamilton), Ms. P. Muzani * - Executive Director
Chartered Accountants
Celestial Office Park, Unit D
& H Block 1, Borrowdale
Road, Borrowdale, Harare
Zimbabwe
T: +263 242 369 730, 369 737, 301 598, 301 537
enquiries@bakertilly.co.zw
www.bakertilly.co.zw
Independent Auditor's Report
To the members of CFI Holdings Limited
Report on the Audit of the Inflation Adjusted Consolidated Financial Statements Qualified Opinion
We have audited the inflation adjusted consolidated financial statements of CFI Holdings Limited which comprise the consolidated statement of financial position as at 30 September 2022, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the Group financial statements, including a summary of significant accounting policies and other explanatory notes.
In our opinion, except for the matters described in the Basis for Qualified Opinion section of our report, the inflation adjusted consolidated financial statements present fairly, the financial position of CFI Holdings Limited as at 30 September 2022, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies and Other Business Entities Act (Chapter 24:31).
Basis for Qualified Opinion
Impact of prior year Non-Compliance with International Accounting Standard (IAS) 21- The Effects of Changes in Foreign Exchange Rates and International Accounting Standard (IAS) 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The basis for qualification is due to misstatements contained in the opening balances from prior years. The misstatements were due to non-compliance with IAS 21- The effects of changes in Foreign exchange rates. CFI Holdings Limited elected to comply with the requirements of Statutory Instrument 33 of 2019 (SI 33/19) which was issued on 20 February 2019. The 1:1 exchange rate between ZWL and USD prescribed by Statutory Instrument 33 of 2019 (SI 33/19) is not in accordance with the
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requirements of IAS 21. The entity was guided by Statutory Instrument 41 of 2019 (SI 41/19) which stated that in the case of inconsistency between local pronouncement and any international standard, the local pronouncement shall take precedence.
The effects of misstatements due to non-compliance with IAS 21 on the prior year financial statements and opening balances have not been quantified.
As the prior year financial statements have not been restated in accordance with International accounting standards 8 "Accounting Policies, Changes in Accounting Estimates and Errors" (IAS 8), the misstatements on the prior years' income statement is still carried forward in the current retained
earnings balance.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit
of financial statements section of our report. We are independent of CFI Holdings Limited in accordance with International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B) (IESBA Code) and other independent requirements applicable to performing audits of financial statements in Zimbabwe. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the inflation adjusted consolidated financial statements of the current year. Key audit matters are selected from the matters communicated with those charged with governance, but are not intended to represent all matters that were discussed with them. In addition to the matters described in the Basis for Qualified Opinion section of our report, we have determined the matters described below to be the key audit matters. These matters were addressed in the context of our audit of the financial statements as a whole. Our opinion on the consolidated inflation adjusted financial statements is not modified with respect to any of the key audit matters described below, and we do not provide a separate opinion on these matters.
Key Audit Matter | How our audit addressed the key audit | |||||
matter | ||||||
1. | Hyperinflation Accounting (High risk area | |||||
and significant judgement) | ||||||
Following the Public Accountants and Auditors | We obtained an understanding of the CFI | |||||
Board (PAAB) designation of Zimbabwe as | Holdings Limited process for identifying | |||||
hyperinflationary economy, management also | hyperinflationary economies and evaluated | |||||
evaluated and determined the economy of | the policy in relation to hyperinflation | |||||
Zimbabwe to be hyperinflationary. CFI Holdings | accounting. Our audit procedures included, | |||||
Limited applied the requirements of IAS 29 - | among others: | |||||
Financial reporting in Hyperinflationary | ● We assessed and tested the indicators | |||||
Economies. | ||||||
of hyperinflation | on the | Zimbabwean | ||||
Hyperinflationary accounting was determined to | economy | by corroborating these | with | |||
be a matter of most significance to the audit due | ||||||
industry | report | and | our | own | ||
to high risk and the significance of the balances | ||||||
understanding of the economy; | ||||||
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and transactions, and the complexity | and | ● | We recomputed and tested the | |||||||||||
subjectivity relating to the application of the | hyperinflation | workings prepared | by | |||||||||||
Standard. | management | by | evaluating | the | ||||||||||
IAS 29 requires significant | judgments to | be | rationale | for | the economic | indicators | ||||||||
included | (such | as | the inflation | rate, | ||||||||||
made by management | considering | the | ||||||||||||
cumulative | inflation | rate, | consumer | |||||||||||
guidelines provided in IAS 29 are limited. | price indices from various sources). | |||||||||||||
The adoption of the Standard makes this a high | ● | We | tested | the | source data | used | by | |||||||
agreeing it to supporting schedules. | ||||||||||||||
risk area, the accounting is prone to errors in | ||||||||||||||
● We assessed the reasonability of the | ||||||||||||||
calculations and application of the Standard. | ||||||||||||||
assumptions used by comparing these | ||||||||||||||
to | externally | available | industry, | |||||||||||
financial and economic data; and; | ||||||||||||||
● | We tested restatement of statement | |||||||||||||
financial position and income statement | ||||||||||||||
items for compliance to the | ||||||||||||||
requirements of IAS 29. | ||||||||||||||
● | We assessed whether disclosures in | |||||||||||||
the | financial | statements appropriately | ||||||||||||
reflected the effects of the adoption of | ||||||||||||||
IAS 29. | ||||||||||||||
We found that the inflation adjusted | ||||||||||||||
consolidated | financial | statements | have | |||||||||||
been properly restated in terms of IAS 29. | ||||||||||||||
Other Information
The directors are responsible for the other information. The other information comprises the Directors
Report. Other information does not include the inflation adjusted financial statements and our auditor's report thereon.
Our opinion on the inflation adjusted consolidated financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the inflation adjusted consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the inflation adjusted financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement on this other information, we are required to report that fact. We have nothing to report in this regard.
Auditor's Responsibilities for the Audit of the Financial Statements
The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
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CFI Holdings Ltd. published this content on 03 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 February 2023 06:57:06 UTC.