Companies Discard 2007 Financial Results

MOST companies that are scheduled to release their financial results for the year ending December 31
2008 have said that they would not include figures for 2007 as they were reduced to “zero” after the last revaluation.

According to the Zimbabwe Stock Exchange, more than 80% of the listed counters are expected to announce their December 31 year end financial results between now and the end of April.

The Reserve Bank on February 2 revalued the currency removing 13 zeros.

This, according to economists, has resulted in companies only announcing figures for the period under review without comparing them to the previous year.

“Most companies will only give an overview of the financial results, outlook and notices to shareholders. Although Zimbabwe dollar figures do not reflect a reliable picture of a company’s performance, 2007 figures fell over after the revaluation,” said an official from the stock market.

The local currency has been revalued three times with a total of 25 zeroes removed inside two years.
Cafca yesterday became the first company to officially announce that it would not compare the December 2008 figures with prior year figures.

“Due to the current revaluation, comparative figures for 2007 were reduced to nil and therefore not disclosed,” said Cafca in a statement accompanying its financial results.

Cafca, however concentrated more on percentages revealing that its sales volumes declined by 54% against last year with domestic volumes declining 7% and export volumes declining by 78% due to reduction of export toll orders.

In real terms the company’s turnover declined by 25%.

“Operating expenses declined in real terms by 16% from last year due to cost cutting initiatives as the business rationalised activities in response to the harsh macro-economic environment,” said Cafca.

Most company directors are said to be of the view that due to the existence of multiple foreign exchange rates, translations from the local currency to the US dollar for financial results purposes should be based on exchange rates that are aligned to the market forces and fairly represent the value of transactions and balances when translated.

The translations are said to be a true reflection of companies’ operations. The requirements of the International Financial Standards cannot be considered in such translations.

BY PAUL NYAKAZEYA