Auditors raise going concern doubt over RioZim

By ETimes

HARARE – AUDITORS have warned that RioZim’s ability to keep operating depends on securing new funding, after the mining group’s liabilities outstripped its assets by ZWG1.56 billion at the end of 2025.

Forvis Mazars Zimbabwe, which audited the company’s consolidated and separate accounts for the year to December 31, 2025 indicated that its opinion was not modified, but flagged a material uncertainty over the group’s ability to continue as a going concern.

“Nevertheless, the financial statements of the group and of the company have been prepared on a going concern basis, the validity of which is highly dependent on the ability of the company to obtain sufficient funding to support its operations,” the independent auditor’s report, signed by engagement partner Lovemore Kamuzangaza, reads.

“Should the going concern basis for the preparation of the financial statement be no longer appropriate, adjustments would have to be made in the financial statements relating to the amounts and classification of the assets and liabilities.”

Accordingly, the auditors said no such adjustments had been made.

The report showed the group’s net loss widened to ZWG739 million from ZWG628 million in 2024, while current liabilities exceeded current assets by ZWG2.93 billion, up from ZWG2.49 billion.

Accumulated losses increased to ZWG1.67 billion from ZWG944 million.

At company level, the net loss narrowed to ZWG392 million from ZWG516 million, but current liabilities still exceeded current assets by ZWG2.81 billion and accumulated losses stood at ZWG1.52 billion.

Beyond going concern, the auditors identified five key audit matters, starting with the impairment of property, plant and equipment, which fell to ZWG1.28 billion from ZWG1.44 billion at group level.

“At the end of each reporting period, management exercises judgement in determining whether there is any indication of impairment of its cash-generating units (CGUs), which includes the group’s and company’s property, plant and equipment, as disclosed in note 13 to the financial statements,” the report said.

“As a result, we considered the impairment testing and the related disclosures to be a key audit matter.”

On legal exposure, the auditors flagged several disputes against the group.

“The Group is currently subject to litigation from multiple parties, which could materially affect its financial position and operational stability,” the report said.

“These legal proceedings are complex and uncertain; potentially resulting in financial liabilities, reputational harm, and regulatory consequences.”

The group also carried a net deferred tax asset of ZWG246 million, up from ZWG89 million, arising from tax losses.

“A deferred tax asset is recognized only to the extent that it is probable that future taxable profit will be available against which the unused tax losses or credits can be utilized,” the independent auditor’s report reads.

“When an entity has a history of recent losses, it can only recognize a deferred tax asset if there is convincing evidence that sufficient taxable profit will be available in the future.”

The most complex matter involved the Renco mine, where the group has a mining and extraction services agreement, a loan and security agreement and escrow arrangements over mining titles with a third party.

“The contractual terms indicate that economic rights to mineral output and associated cash flows may be substantially attributed to the third party, notwithstanding that legal title to the mining assets may remain with the Group,” the report said.

The auditors nonetheless concluded that management’s accounting treatment held up.

“Based on the procedures performed, we found management’s assessment of the accounting treatment and related disclosures to be supportable based on the evidence obtained, noting that the matter involves significant judgement due to the complexity of the contractual structure,” the report stated.