‘Zero’ 2007 Financial Results for Companies

MOST companies that are scheduled to release their financial results for the year ending December 31 2008 have said that they will 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. 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 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.

Powerspeed yesterday said figures in the local currency the previous year no longer made sense.

“During the year, the Zimbabwe dollar, the only legal tender, became increasingly valueless and measuring performance in this currency became progressively more meaningless. Accordingly the accounts presented must be considered in this light,” said the company in a statement.

Meanwhile, the industrial index traded mixed during the week as punters continued to purchase quality counters at prevailing bargains. Of the 70 counters that traded on Wednesday 14 gained while eight recoded losses, as five traded unchanged.

The bourse this week announced that it had reverted to its traditional seven-day settlement period following government’s decision two weeks ago allowing it to trade in US dollars.

The settlement period had been reduced to +/-three days as the stock market reacted to the effects of hyperinflation which had caused investments to lose value during the seven-day settlement window.

Shares with a value of US$161 826 traded compared to Tuesday’s US$63 998. On Monday values valued at US$36 166,30 changed hands.

Old Mutual was quoted US3c, 8% weaker at US34c on the local bourse compared to US53, 44c in Johannesburg and US53, 35c in London. Old Mutual released its interim financial results in London on Wednesday.

Old Mutual’s profit plunged by 55% to 441 million pounds. Other notable trades on the bourse included investment company TA Holdings down US35c (70%) to US 15c. TA is the major shareholder in Hotelier Cresta Hospitality. Cresta is widely expected to report room occupancies below 30% in its Zimbabwean hotels and lodges.

Shares to trade on the upward included African Sun which was quoted US2c, 67% firmer at US5c.

Management at the hospitality industry powerhouse will in two weeks be updating shareholders on progress registered thus far in renovating existing facilities in Zimbabwe and southern Africa ahead of the 2010 World Cup.

Shares expected to gain this in the short term are Econet which is expected to announce and ambitious plan to increase network coverage when it releases its financial results soon, although its network is said to have not improved despite dollarisation.

BY PAUL NYAKAZEYA

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