Cottco says the external audits have come to a standstill since the firm lacked a board of directors to approve the previously audited financial statements.
Since 2001, KPMG Zimbabwe has served as Cottco Holdings Limited’s external auditors.
The Board of Cottco decided to mutually terminate their agreement with KPMG on a no-fault basis beginning on January 23, 2023, in order to comply with the provisions of the Companies and Other Business Entities Act (Chapter 24:31) and the Zimbabwe Stock Exchange Listing Rules that forbid hiring an auditor for more than ten years.
With effect from August 2023, the Board subsequently named BDO Zimbabwe Chartered Accountants as the new external auditors.
“The new external auditors have been tasked with accelerating the completion of the outstanding financial audits from the financial year ended 31 March 2018 to date,” Eunice Mupanduki, Cottco, company secretary said.
“The company’s external audits had stalled during the period where the entity did not have a board of directors in place to approve the previously audited financial statements.”
The government has been on a spree to resuscitate some of its under-performing state firms as part of a comprehensive reform aimed at improving the performance of state-owned entities that have become a drain on the national fiscus.
At their peak in the 1990s, the entities used to contribute 40 percent to the country’s gross domestic product (GDP).
The number of farmers registered to grow cotton increased by 22.44% to 360,224 during the 2021/2022 season from 294,202 growers in the previous season.
The company administers the Presidential Free Inputs Scheme, a state funded programme meant to increase production.
Nearly 400,000 farmers get assistance under the programme.
The country’s largest cotton financier said it was not spared from the liquidity crunch.
“Local market liquidity was extremely tight during the period under review with Cottco initially struggling to access funding from approved facilities,” Mupanduki said.
“However, funding was unlocked as the season progressed and is expected to improve as revenues from the sale of product are received.”
The company’s cotton seed intake rose 48% to 69,146 metric tonnes in the current season from 46,748 metric tonnes in 2022 as the buying season draws to an end.
“Farmer morale improved following the 2021/2022 buying season where they were paid 75% in US dollars and interest to grow the crop was rekindled resulting in 360,224 farmers being registered as compared to 294,202 growers in the previous season,” she said.
“Cottco has paid USD15.9 million to farmers to date and the remaining 32% is expected to be cleared in the month of September 2023 as market liquidity improves.”
She said ginning has commenced at all ginning sites and product deliveries are underway.
“The company’s order book continues to surpass available supply,” she said.
“Cottco’s value addition initiative has seen the company converting over 800 tonnes of lint to yarn for the local market.”
After the intake season, the company is presently concentrating on crop establishment for the 2023/2024 Season.
“Suppliers for the Presidential Inputs for Cotton Program have commenced delivery of fertilisers for distribution to farmers which will be helpful in early crop establishment given the forecast of El Nino weather patterns for the forthcoming season,” Mupanduki said-HARARE