• Sun. May 26th, 2024

Zimplow shares close flat after receiving adverse audit opinion


Apr 29, 2024 #Zimplow

By Stephen Chandisareva

HARARE – Zimplows’ financial results for the year ended 31 December 2023 has received an adverse opinion from its external auditor, Grant Thornton, for failing to present a fair reflection of the entity’s financial position.

In accounting, an adverse opinion is given when an entity’s financial statements are misrepresented, misstated and do not accurately reflect its financial performance and health.

“In our opinion, because of the significance of the matters described in the Basis for Adverse Opinion section of our report, the consolidated financial statements do not present fairly, in all material respects, the financial position of Zimplow Holdings Limited and its subsidiaries as at 31 December 2023, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs),” reads the independent’s auditor’s report.

The auditor stated that the exchange rates applied to translate foreign currency transactions and balances were non-compliant with International Accounting Standard (IAS).

“During the period 1 January 2023 to 30 June 2023, the Group’s foreign currency transactions and balances were translated into functional and presentation currency using different internally generated exchange rates, which were not considered appropriate spot exchange rates for translations as required by (IAS) 21 – The Effect of Changes in Foreign Exchange Rates.

“The impact of this non-compliance on the related exchange gains or losses, assets, liabilities, revenue, expenses, and equity could not be determined,” Grant Thornton stated.

In July 2023, the Victoria Falls Stock Exchange (VFEX)-listed diversified manufacturer switched its functional currency from ZWL to US dollar.

According to IAS 21, the previously reported comparative consolidated inflation adjusted financial statements and the ZWL inflation adjusted amounts for the period before the functional currency change (1 January 2023 to 30 June 2023) must be converted to USD using the closing rate on the day of the functional currency change.

“In preparing the USD consolidated financial statements, management translated ZWL transactions and balances, including comparatives to USD by separating USD and ZWL components of the transactions and balances.

“The USD components of the transactions and balances, including comparatives, were then maintained as if the USD had always been the functional currency of the group. The ZWL components of the transactions and balances were translated to USD using translation methods disclosed in note 2 to these financial statements.

“The accounting treatment adopted in the translation of ZWL amounts, including comparatives, constitutes a departure from the requirements of IAS 21,” further reads the report.

As for financials, the group’s profit went down by 39 percent to US$559 871 in 2023 from US$918 837 in 2022.

The group’s revenue declined 28 percent to US$32,07 million in 2023 compared to US$44,24 million in 2022.

“The late onset of summer rainfall in the 2023/4 cropping season dampened demand in the agricultural cluster, and the impact of the economic headwinds resulted in a contraction in customer spending across the group,” acting group chief executive, Willem Swan said in a statement accompanying the financials.

Resultantly, profit before tax fell 74 percent from US$2,62 million in 2022 to US$680 146 in 2023.

Finance costs rose 47,46 percent to US$204 220 in 2023 from US$138 487 in 2022.

The group did not declare a dividend in order to “utilise all available cash resources to develop the new business initiatives it has embarked upon across all three clusters.”.

Zimplow’s share price was flat at US$0.0200 at the end of Monday’s session.

By ETimes

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