By ETimes
HARARE – BUILDING materials manufacturer Turnall Holdings Limited has come under scrutiny after receiving a qualified audit opinion on its consolidated financial statements for the year ended 31 December 2024.
The opinion, issued by Grant Thornton Chartered Accountants, raised red flags over the company’s compliance with international accounting standards during its transition to a new functional currency.
In their report, the auditors flagged Turnall’s handling of the switch from the Zimbabwean Dollar (ZWL) to the United States Dollar (USD), citing non-compliance with International Accounting Standard 21 (IAS 21), the effects of changes in foreign exchange rates.
The auditors noted that Turnall’s method for translating prior-period financials to US dollar did not align with the standard’s requirements, particularly with regard to inflation-adjusted ZWL figures.
“The balances as at 31 December 2024 for property, plant, and equipment, investment property, inventories, cash and cash equivalents, loans and borrowings, deferred tax liabilities and trade payables contain material amounts carried forward from 31 December 2023,” the audit report reads.
“As a result, the balances may contain misstatements arising from the translation of ZWL balances as at 1 January 2024 to USD on change in the functional and presentation currency of the Group.”
The auditors further explained that this issue could affect several line items in the financial statements, including property, plant and equipment, inventories, and various liabilities, potentially distorting the Group’s financial position.
Despite this setback, the audit firm did not issue an adverse opinion and affirmed that, except for the currency translation concerns, the financial statements present a fair view of Turnall’s operations and results.
Source: Turnall Holdings
Turning to its financial results, Turnall posted a loss of US$2,92 million for 2024, a 94% increase from the US$1,5 million loss recorded the previous year.
The Group’s revenue also declined by 4% to US$12,04 million, driven by tight liquidity conditions and a slump in demand linked to the El Niño-induced drought.
Gross margins fell to 19% from 23% in 2023 as rising input costs and currency volatility eroded profitability. Administrative expenses were further inflated by a US$1,2 million provision for obsolete and slow-moving inventory, and a US$267 771 provision for expected credit losses.
“The margins were under pressure due to the rising cost of raw materials and exchange rate disparities whose negative impact on the cost of doing business could not always be sustainably recouped through selling price adjustments,” Turnall board chairperson Grenville Hampshire said in a statement accompanying the results.
Cash generated from operating activities reached US$1,5 million, reversing a negative US$6,4 million cash flow the previous year.
The Group also ramped up capital expenditure to US$3,2 million, mostly for the new fibre-cement plant expected to be commissioned in Q3 2025.
“The Group has secured adequate raw materials to meet production demand in the current financial year,” the group said in its going concern statement.
