SEVERAL companies listed on the Zimbabwe Stock Exchange (ZSE) face suspension from trading in the next five weeks if government fails to release official inflation figures that will permit them to publish their annual inflation-adjusted results.
The Central Statistical Office (CSO) last released inflation data in January.
However, businessdigest can reveal that the future of 10 quoted companies, with an estimated value of US$1,8 billion, now hangs in the balance on the local bourse if the CSO embargo continues.
ZSE chief executive Emmanuel Munyukwi confirmed that a potential crisis existed but would not confirm whether the companies would be suspended.
“We remain hopeful that the inflation figures will be released,” Munyukwi said. “We will see what action we will have to take when the time comes and the deadlines lapse.”
The affected companies include Econet Wireless Holdings, Seed Co, Delta Corporation, Dawn Properties, Cottco, Star Africa Holdings, Red Star Holdings, PG Industries, Pelhams Ltd and OK Zimbabwe.
Two of the companies â€” Econet and Seed Co whose combined market value stands at over US$400 million â€” are at the end of their tether with their audited, inflation-adjusted statements expected at the end of next week.
The two companies have their financial year endings on February 29.
The audited inflation-adjusted results for the rest of the companies, whose market value stands at US$1,3 billion, are expected at the end of June.
The ZSE regulations require listed companies to publish audited financial statements which should be adjusted for inflation in line with International Accounting Standard (IAS) 29 and released within three months of financial year endings.
IAS 29 deals with financial reporting in hyperinflationary economies.
Institute of Chartered Secretaries and Administrators (ICSA) Zimbabwe chief executive Farai Musamba said the delays in releasing official inflation figures posed a real challenge to listed companies.
“The greatest challenge is that companies can only comply with IAS 29 using government-released figures,” Musamba said. “Government has made it illegal to use any figures which are not CSO-generated.”
Listed companies have been lobbying government to allow them to publish their audited financial statements in US dollars by amending the Companies Act.
However, this option has suffered serious setbacks with the major one being the election stalemate that has rendered Parliament inert till a presidential runoff election is conducted on June 27.
“As long as there is no parliament, the Companies Act cannot be amended to allow for that provision,” the source said.
CSO acting director Moffat Nyoni told businessdigest last week that his office was yet to compute inflation figures for February, March and April owing to problems with the consumer basket. He would not comment on the implications for listed companies. Finance minister Samuel Mumbengegwi, whose ministry oversees the CSO, could not be reached at the time of going to press.
The ZSE has been unsuccessfully pushing for meetings on several occasions with the CSO and the Ministry of Finance to resolve the potential crisis and avert a scenario where it will be forced to suspend the affected companies.
Unreleased inflation data shows that the inflation rate for February stood at 165 000% while that for March stood at 355 000%.
Internal CSO projections, which were strongly disputed by Nyoni last week, show that inflation is likely to be in excess of 1 000 000 % in May.
IAS 29 recommends inflation-adjusted accounts for hyper-inflationary economies when a population prefers to keep its wealth in non-monetary assets or stable foreign currency and when amounts of local currency are only held for immediate usage.
By Kuda Chikwanda