Edgars Stores : 2022 FY Results & Audit Report

May 10, 2023 at 12:36 am EDT

SHORT-FORMFINANCIAL ANNOUNCEMENT

Issued in terms of Practice Note 13 of the Zimbabwe Stock Exchange

This short form nancial announcement is the responsibility of the Directors' and is only a summary of the information contained in the full announcement and does not contain full or complete details. Any investment decisions by investors/shareholders should be based on consideration of the full announcement.

A copy of the full announcement has been shared with shareholders using the latest email addresses supplied by the shareholder, and is available upon request,and for inspection at the Company's registered oce or via email to corpserve@escrowgroup.org. The full announcement is also available on the Zimbabwe Stock Exchange website www.zse.co.zw and the Company website www.edgars.co.zw

Financial Highlights

		Ination adjusted			Historical
	52 weeks ended	52 weeks ended	% Change	52 weeks ended	52 weeks ended	% Change
	08 January 2023	09 January 2022	2023 vs 2022	08 January 2023	09 January 2022	2023 vs 2022
	Audited	Audited		Supplementary	Supplementary
Revenue	35,924,064,749	23,675,762,649	52%	24,046,227,856	5,731,273,425	320%
Operating prot	7,918,251,340	4,109,115,379	93%	7,511,324,197	1,159,100,064	548%
Prot for the period	194,448,269	1,921,115,050	-90%	3,341,377,203	710,851,412	370%
Total assets	20,914,412,209	19,331,090,419	8%	16,466,614,190	4,786,452,765	244%
Total equity	8,582,114,495	8,387,666,229	2%	5,137,409,427	1,796,032,224	186%
Basic earnings per share (ZWL $ cents)	33.92	335.12	-90%	582.87	25.87	2153%
Diluted earnings per share (ZWL $ cents)	33.74	333.35	-90%	579.80	25.73	2153%

Dividend

No dividend was declared for the full year to 08 January 2023. Directors will reassess this position in the current year.

Auditor's Statement

The short-form nancial announcement should be read in conjunction with the abridged set of the Audited Group ination-adjusted nancial statements for the year ended 08 January 2023.

The abridged Group ination-adjusted nancial statements for the year ended 08 January 2023 have been audited by the Group's external auditors, Deloitte &Touche, who have issued an adverse opinion. The audit opinion on the Group condensed ination adjusted nancial statements from which this short form nancial announcement is extracted is available for inspection at the Company's registered oce. The Engagement Partner responsible for the review was Mr Tapiwa Chizana (PAAB Practicing Certicate Number 0444).

FINANCIAL SERVICES

DIRECTORATE: Non-Executive Chairman: T.N SIBANDA, Group Chief Executive Ocer : T.NDLOVU*; Directors: C.F.DUBE, R.MLOTSHWA, M.HOSACK, C CLAASSEN, H.VUNDLA*, S.MUSHOSHO *Executive

Abridged Audited Results for the 52 weeks ended 08 January 2023

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the 52 weeks to 08 January 2023

				2023	2022	2023	2022
				ZW$	ZW$		ZW$	ZW$
				52 weeks to	53 weeks to		52 weeks to	53 weeks to
				08.01.2023	09.01.2022	08.01.2023	09.01.2022
			Notes	Ination adjusted		* Historical cost
Revenue	5	35,924,064,749	23,675,762,649	24,046,227,856	5,731,273,425
Sale of merchandise		26,163,668,276	19,121,594,110	17,739,993,527	4,647,929,630
Cost of sales		(13,884,135,489)	(9,169,397,908)	(6,406,338,726)	(2,209,600,469)

Gross prot		12,279,532,787	9,952,196,202	11,333,654,801	2,438,329,161
Revenue from Micro Finance and other		9,660,985,212	4,502,787,462	6,243,010,355	1,070,955,091
debtor accounts
Other Revenue		99,411,261	51,381,077	63,223,974	12,388,704
Other income		77,191,217	96,854,620	59,396,045	31,669,269
Other expenses		(4,713,360,050)	(3,768,100,381)	(468,805,094)	(925,408,814)
Movement in credit loss allowance		(562,012,624)	(81,253,601)	(441,263,186)	(33,440,422)
Selling expenses		(5,968,210,266)	(3,973,048,204)	(6,579,589,426)	(781,973,969)
Financial Services	expenses		(3,186,487,394)	(909,455,937)	(2,150,358,402)	(217,021,621)

Trading Prot				7,687,050,143	5,871,361,238	8,059,269,067	1,595,497,399
( Loss)/ Proﬁt from disposal of Property,		-	(6,160,005)	-	2,116,204
plant and equipment
Net foreign exchange gains/(losses)		231,201,197	(1,756,085,854)	(547,944,870)	(438,513,539)

Operating Prot		7,918,251,340	4,109,115,379	7,511,324,197	1,159,100,064
Finance income		-	67,356,352	-	5,119,103
Finance costs		(4,321,861,379)	(1,988,682,065)	(3,410,371,948)	(460,279,215)
Net Monetary loss		(1,683,399,464)	(159,359,819)	-	-

Prot before tax		1,912,990,497	2,028,429,847	4,100,952,249	703,939,952
Income tax (expense) / credit		(1,718,542,228)	(107,314,797)	(759,575,046)	6,911,460

Prot for the period			194,448,269	1,921,115,050	3,341,377,203	710,851,412
(Impairment) / Other	comprehensive income

Gain on revaluation of	property, plant and		-	(420,162,868)	-	223,218,023
equipment
Deferred tax liability	arising on revaluation		-	103,864,262	-	(55,178,970)

Other comprehensive (loss) / income for		-	(316,298,606)	-	168,039,053
the year (net of tax)

Total comprehensive income for the period		194,448,269	1,604,816,444	3,341,377,203	878,890,465
Earnings per share (cents)

Basic	6	33.92	335.12	582.87	25.87
Diluted		33.74	333.35	579.80	25.73
Headline		33.92	336.19	582.87	123.63

*Historical cost amounts are shown as supplementary information. The information does not comply with IAS 29: Financial Reporting in hyperinﬂationary economies.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the 52 weeks ended 08 January 2023

	2023	2022	2023	2022
	ZW$	ZW$	ZW$	ZW$
	52 weeks to	53 weeks to	52 weeks to	53 weeks to
	08.01.2023	09.01.2022	08.01.2023	09.01.2022
Notes	Ination adjusted	Historical cost
Cash ows from operating activities
Proﬁt before tax	1,912,990,499	2,028,429,847	4,100,952,249	703,939,952
Finance income	(9,660,985,212)	(4,570,143,814)	(6,243,010,355)	(1,076,074,194)
Finance costs	4,321,861,379	1,988,682,065	3,410,371,948	460,279,215
Non cash items	(1,985,743,176)	764,484,288	5,107,006,932	12,336,621
Decrease/(Increase) in inventories	2,220,540,232	(3,363,094,976)	(1,283,356,805)	(885,848,652)
(Increase) in trade and other receivables	(2,147,146,454)	(4,187,358,009)	(6,799,519,375)	(1,456,437,759)

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 08 January 2023

		2023	2022	2023	2022
		ZW$	ZW$			ZW$	ZW$
		as at				as at	as at
		as at
		08.01.2023	09.01.2022	08.01.2023	09.01.2022
	Notes	Ination	adjusted			* Historical cost
Assets
Non-current assets
Property, plant and equipment	12	2,425,054,880	2,558,110,412	1,049,886,231	739,661,982
Intangible assets		234,658,642	247,382,774	1,731,080	1,732,648
Right of use asset		2,445,071,001	1,603,069,165	884,926,748	259,406,142
Deferred tax asset		52,166,418		276,935,761

Total non-current assets		5,156,950,941	4,408,562,351	2,213,479,820	1,000,800,772
Current assets
Inventories	11	4,059,566,816	6,280,107,048	2,555,239,917	1,271,883,112
Trade and other receivables		8,707,659,816	6,560,513,362	8,707,659,817	1,908,140,441
Income tax receivable		-	17,901,997	-	5,207,682
Loans and advances to customers		697,977,870	521,076,657	697,977,870	151,581,581
Bank and cash balances		2,292,256,766	1,542,929,004	2,292,256,766	448,839,177

Total current assets		15,757,461,268	14,922,528,068	14,253,134,370	3,785,651,993

Total assets		20,914,412,209	19,331,090,419	16,466,614,190	4,786,452,765
Equity and liabilities
Equity
Issued capital		911,408,184	911,408,184	73,411,672	73,411,672
Other reserves		927,215,758	927,215,758	551,200,508	551,200,508
Retained earnings		6,743,490,553	6,549,042,287	4,512,797,247	1,171,420,044

Total capital and reserves		8,582,114,495	8,387,666,229	5,137,409,427	1,796,032,224
Non-current liabilities
Deferred tax liability		822,757,822	934,885,409	-	90,685,040
Interest bearing loans and borrowings	10	68,550,893	-	68,550,893	-
Lease liabilities	9	-	604,692,795	-	175,905,576

Total non-current liabilities		891,308,715	1,539,578,204	68,550,893	266,590,616
Current liabilities
Trade and other payables		3,530,961,468	3,468,934,547	3,530,961,468	1,009,115,600
Dividend payable		2,044,759	2,044,759	370,059	370,059
Current tax payable		335,171,271	-	335,171,271	-
Contract liabilities		186,195,516	147,892,673	7,535,087	31,491,090
Interest bearing loans and borrowings	10	4,853,258,253	5,199,721,235	4,853,258,253	1,512,602,715
Lease liabilities	9	2,533,357,732	585,252,772	2,533,357,732	170,250,461

Total current liabilities		11,440,988,999	9,403,845,986	11,260,653,870	2,723,829,925

Total liabilities		12,332,297,714	10,943,424,190	11,329,204,763	2,990,420,541

Total equity and liabilities		20,914,412,209	19,331,090,419	16,466,614,190	4,786,452,765

*Historical cost amounts are shown as supplementary information. The information does not comply with IAS 29: Financial Reporting in hyperinﬂationary economies.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the 52 weeks to 08 January 2023

(Increase) in loans and advances to customers		(176,901,213)	(368,803,166)	(546,396,289)	(121,211,528)
Increase in trade and other payables		62,026,921	1,814,965,947	2,521,845,868	709,781,823
Increase/ ( decrease) in contract liabilities		38,302,843	119,291,738	(23,956,003)	28,844,146

Cash generated/(utilized) in operations		(5,415,054,181)	(5,773,546,080)	243,938,170	(1,624,390,376)
Finance costs paid		(3,663,151,604)	(1,102,013,833)	(3,333,312,091)	(228,949,604)
Lease interest paid		(701,500,610)	(473,967,858)	(596,051,381)	(111,274,770)
Finance income received		9,067,260,649	3,926,628,620	5,357,134,251	1,263,273,235
Taxation paid		(987,219,709)	(556,358,861)	(873,839,843)	(161,846,022)

Cash (outow) / inow from operating activities	(1,699,665,455)	(3,979,258,012)	797,869,106	(863,187,537)
Cash ows from investing activities

Purchase of property, plant and equipment	7	(811,549,565)	(414,518,637)	(598,012,718)	(106,523,428)
Proceeds from disposal of property, plant and		-	5,533,080	-	1,606,900
equipment
Loans advanced to subsidiaries		-	-	-	-

Net cash used in investing activities		(811,549,565)	(408,985,557)	(598,012,718)	(104,916,528)
Cash ows from nancing activities

Proceeds from borrowings		19,205,171,306	11,986,407,386	10,574,981,198	3,486,854,686
Repayment of borrowings		(14,178,106,466)	(7,575,241,660)	(7,806,918,611)	(2,370,015,595)
Payments of principal portion of lease		(780,862,161)	(326,071,053)	(698,005,625)	(70,357,623)
liabilities

Net cash generated from nancing activities		4,246,202,679	4,085,094,673	2,070,056,962	1,046,481,468

Net increase / (decrease) in cash and		1,734,987,659	(303,148,896)	2,269,913,348	78,377,403
cash equivalents

INFLATION ADJUSTED

Balance at 10 January 2021

Proﬁt for the year

Other comprehensive loss

Total comprehensive income for the period

Transfer to credit reserve

Total contributions by and distributions to owners of company recognised directly in equity

IFRS 16 Adjustment

Balance at 9 January 2022

Total comprehensive income for the period

Proﬁt for the year

Other comprehensive income for the period

Transfer to credit reserve

Issued	Equity-settled	Revaluation	Credit	Total	Retained	Total
capital	employee	reserve	reserve	Reserves	earnings
	benets reserve
ZW$	ZW$	ZW$	ZW$		ZW$	ZW$
911,408,184	220,068,270	977,209,046	48,190,566	2,156,876,066	4,757,861,409		6,914,737,475
-	-	-	-	-	1,921,115,050		1,921,115,050
-	-	(316,298,606)	-	(316,298,606)	-		(316,298,606)

-	-	(316,298,606)	-	(316,298,606)	1,921,115,050		1,604,816,444
-	-	-	(1,953,518)	(1,953,518)	1,953,518		-

-	-	-	(1,953,518)	(1,953,518)	1,953,518		-
-	-	-	-	-	(131,887,693)		(131,887,693)

911,408,184	220,068,270	660,910,440	46,237,048	1,838,623,942	6,549,042,284		8,387,666,226


911,408,184	220,068,270	660,910,440	46,237,048	1,838,623,942	6,549,042,284		8,387,666,226
				-	194,448,269		194,448,269
-	-	-	-	-	194,448,269		194,448,269

-	-	-	-		-		-
-	-	-	-	-	-		-

Effect of exchange rate uctuations on	(1,067,639,607)	(61,438,740)	(1,067,639,605)	(61,438,740)
cash held
Cash and cash equivalents at the	754,373,495	1,118,964,131	219,447,802	202,509,139
beginning of the period
Cash and cash equivalents at the end of	1,421,721,547	754,376,495	1,421,721,547	219,447,802
the period
Being:

Cash and bank balances	2,292,256,766	1,542,929,004	2,292,256,766	448,839,177
Bank overdrafts	(870,535,219)	(788,555,509)	(870,535,219)	(229,391,375)

	1,421,721,547	754,373,495	1,421,721,547	219,447,802

Balance at 08 January 2023	911,408,184	220,068,270	660,910,440	46,237,048 1,838,623,942	6,743,490,553	8,582,114,495

Abridged Audited Results for the 52 weeks ended 08 January 2023 (continued)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the 52 weeks to 08 January 2023

Directors responsibility statement
The Board of Directors is responsible for the preparation of the Inﬂation Adjusted Condensed Consolidated Financial Statements for the 52 weeks ended 08 January 2023 of which these abridged results are an extract of. For the full Financial Statements the reader can refer to the Zimbabwe Stock Exchange (ZSE) website www.zse.co.zw or the Edgars Stores Limited website www.edgars.co.zw. The Directors would like to emphasise the cautionary use of the press release and ﬁnancial statements due to the continued level of inﬂation prevailing in the country.

Basis of preparation
The Inﬂation adjusted condensed consolidated ﬁnancial statements for the 52 weeks ended 08 January 2023 have been prepared in accordance with the requirements of the Zimbabwe Stock Exchange (ZSE). The principal accounting policies used in the preparation of the ﬁnancial statements are consistent with those used in prior years. No material new standards were applied in the current year.
The ﬁnancial statements do not comply with the International Financial Reporting Standards (IFRS) as detailed below:

9	Lease commitments	Ination adjusted		Historical cost
		2023	2022		2023	2022
		ZW$	ZW$		ZW$	ZW$
	Future minimum rentals under non-
	cancellable operating leases are as
	follows:
	Within one year	2,533,357,732	648,158,530		2,533,357,732	188,549,791
	After one year but not more than ﬁve years	-	1,845,565,230		-	536,876,277
	More than 5 years	-	23,046,735		-	6,704,312

		2,533,357,732	2,516,770,495		2,533,357,732	732,130,380
10	Borrowings
Ination adjusted		Historical cost
		2023	2022		2023	2022
		ZW$	ZW$		ZW$	ZW$

IFRS 13: Fair value	In the prior period, the method of determining the value of Property, Plant and Equipment was not an
measurement and IAS	accurate reﬂection of market dynamics and the risk associated with ZW$ transactions on a willing
29: Financial Reporting	buyer, willing seller basis. Furthermore, in the prior year, leasehold improvements were not stated at fair
in Hyperinﬂationary	value as required by IAS16. IAS 29 par 19 further requires non-monetary assets restated from the date
Economies	of revaluation (Property, plant and equipment), to thereafter be reduced to their recoverable amount.
	The ZW$ recoverable amount could not be accurately determined in the current year and prior periods.
IAS 21: The Effects of	The exchange rates used by the Group during the current and comparative period to translate
Changes in Foreign	transactions and balances do not meet the IAS 21 deﬁnition of a spot and closing exchange rate as
Exchange Rates	they were not available for immediate delivery and not always accessible.

Non current interest bearing loans and borrowings	68,550,893	-	68,550,893	-
Current interest bearing loans and borrowings	4,853,258,253	5,199,721,235	4,853,258,253	1,512,602,715

	4,921,809,146	5,199,721,235	4,921,809,146	1,512,602,715

Borrowings increased as a result of increased working capital investment. This with a view to growing revenue accordingly.

Terms and security

Secured with a Notarial General Covering Bond over moveable assets, cession of ﬁre policies, debtors book, an unlimited guarantee from shareholders and Edgars Industrial Park deeds.

Application of IAS 29: Financial Reporting in Hyperinationary Economies
The Group continued to apply IAS 29 during the 52 weeks to 08 January 2023 based on the guidance issued by the PAAB in August 2019. The ﬁnancial statements have been prepared in accordance with IAS 29 and IFRIC 7 (Applying the Restatement Approach under IAS 29) as if the economy had been hyperinﬂationary since 1 July 2018. In applying the standard the Group has used the Consumer Price Index (CPI) as issued by the Zimbabwe National Statistic Agency and published by the Reserve Bank of Zimbabwe (RBZ). The following table summarises the inﬂation adjusted indices used:

The weighted average effective interest rate on all the borrowings is 105.85% (2022: 41.28%) per annum.
Tenures range between 90 days and 3 years.

11 Inventories	Ination adjusted		Historical cost
	2023	2022	2023	2022

Month	CPI
December 2022	13,673
June 2022	8,707
Average 2022	9,199
December 2021	3,977
June 2021	2,986
Average 2021	3,135

Conversion Factor	Merchandise

1.00 Raw material, work in progress and consumables

1.57

1.82 Inventory obsolescence

3.44

4.58

4.44 The amount of write-down on inventories recognised in cost of sales is:

18,031,801,324 5,775,146,734

1,363,385,492 625,256,212

19,395,186,816 6,400,402,946

(15,335,620,001) (120,295,899)

4,059,566,816 6,280,107,048

(15,335,620,001) (120,295,899)

2,443,585,814 1,234,505,865

253,793,060 64,632,036

2,697,378,874 1,299,137,901

(142,138,957) (27,254,789)

2,555,239,917 1,271,883,112

(142,138,957) (654,732)

Auditor's Statement
- These inﬂation adjusted condensed consolidated ﬁnancial results for the 52 weeks ended 08 January 2023 have been audited by Deloitte & Touche and an adverse opinion issued there-on. The adverse opinion is with respect to:
- Non-compliancewith International Financial Reporting Standard 13 "Fair Value Measurements" (IFRS 13) and International Accounting Standard 29 "Financial Reporting in Hyperinﬂationary Economies" (IAS 29) in the determination of the value of Property, Plant and Equipment. The method of determining the fair value of Property, Plant and Equipment as at 9 January 2022 was not an accurate reﬂection of market dynamics and the risk associated with ZW$ transactions on a willing buyer, willing seller basis. IAS 29 par 19 further requires non-monetary assets restated from the date of revaluation (Property, plant and equipment), to thereafter be reduced to their recoverable amount. The ZW$ recoverable amount could not be accurately determined in the current and prior years.
- Non-compliancewith International Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates" on prior year comparatives, and inability to determine the appropriate spot exchange rates to apply to the foreign currency transactions and balances, in the prior and current period.

The ﬁnancial statements of the Group for the ﬁfty-two weeks ended 08 January 2023 were audited by Deloitte & Touche who expressed an adverse opinion on those statements on 08 May 2023.

The audit opinion has been made available to management and those charged with the governance of Edgars Stores Limited, and is available for inspection at their registered ofﬁces. The engagement partner responsible for this audit was Tapiwa Chizana. (PAAB Practicing Certiﬁcate Number 0444).

Amount of reversal of inventory to net	(11,177,689,827)	(170,785)	(137,435,870)	(49,681)
realisable value (NRV) is:
Amount of stock losses recognised in cost	(136,633,204)	(45,097,323)	(75,234,609)	(13,118,844)
of sales is:

Revaluation of property, plant and equipment
The Group did not revalue property, plant and equipment as at 08 January 2023. The last valuation was carried out at 09 January 2022 through a directors valuation involving certain inputs provided by external and independent professional valuers.
Going concern
Merchandise assortments and our credit book remain healthy despite the challenging environment. Management looks forward to better trading conditions in the year ahead despite a looming presidential and paliarmentary election.
The ability of the group to continue as a going concern is subject to continued generation of positive cashﬂows. To evaluate the health of the cashﬂows, management has prepared cashﬂow forecasts for the next twelve months and reviewed signiﬁcant inputs such as proﬁtability, cash generation capacity and the ability to obtain ﬁnancing. Forecasting is now updated regularly in response to ongoing uncertainty.

Revenue

Ination adjusted

Historical cost

Sale of merchandise

Retail sales

Manufacturing sales to third parties - local sales

Manufacturing sales to third parties- export sales

Other revenue

Revenue from Micro Finance and other

debtor accounts

Commission

Edgars Club subscriptions

20232022

ZW$ZW$

24,800,939,753 18,987,252,616

1,362,728,523 114,737,910

19,603,584

26,163,668,276 19,121,594,110

9,660,985,212 4,502,787,462

56,659,031 33,148,741

42,752,230 18,232,336

20232022

ZW$ZW$

17,539,193,643 4,617,104,875

200,799,884 25,726,476

5,098,279

17,739,993,527 4,647,929,630

6,243,010,355 1,070,955,091

40,375,829 7,856,282

22,848,144 4,532,422

The directors have assessed that key to continued proﬁtability and positive cashﬂows is stability of exchange rates, availability of foreign currency from trading and minimal disruptions from Covid-19 related lockdowns.

Based on the assessment undertaken the directors consider it appropriate to adopt the going concern basis for these ﬁnancial results.

14 Segment reporting

Edgars Stores	Jet Stores	Manufacturing	Micro Finance	Corporate Head	Financial	Segment	Adjustments	Consolidated
Retail	Retail	Carousel	Club Plus	Oce	services	Totals	Eliminations	Total
ZW$	ZW$	ZW$	ZW$	ZW$	ZW$	ZW$	ZW$	ZW$
Ination adjusted
52 weeks to 08 January 2023
Revenue

Total Revenue

Headline earnings per share Earnings attributable to shareholders Adjusted for non-recurringitems:
Loss / (Proﬁt) on disposal of property, plant and equipment
Headline earnings

Issued ordinary shares at the beginning of the period

Effect of treasury shares

Weighted average number of ordinary shares used in calculating earnings per share

9,760,396,473	4,554,168,539	6,306,234,329	1,083,343,795

35,924,064,749	23,675,762,649	24,046,227,856	5,731,273,425

194,448,269	1,921,115,050	3,341,377,203	710,851,412
-	6,160,005	-	(2,116,204)

194,448,269	1,927,275,055	3,341,377,203	708,735,208

000's	000's		000's	000's
573,267	573,267	573,267	573,267
-	-	-	-

573,267	573,267	573,266	573,276

External customers	14,603,778,831	11,688,929,071	-	-	-	-	26,292,707,902	(1,491,768,149)
									24,800,939,753
Manufacturing	-	-	1,362,728,523	-	-	-	1,362,728,523	-	1,362,728,523
sales to 3rd parties-
local sales
Manufacturing	-	-	-	-	-	-	-	-	-
sales to 3rd parties-
export sales
Other revenue-	-	-	-	-	-	56,659,031	56,659,031	-	56,659,031
Hospital cash plan
and insurance
Other revenue-	-	-	-	-	-	42,752,230	42,752,230	-	42,752,230
Commission Club
Subscriptions
Inter-segments	-	-	1,073,045,140	-	-	-	1,073,045,140	(1,073,045,140)	-
Revenue from	-	-	-	2,197,593,574	-	7,463,391,638	9,660,985,212	-	9,660,985,212
Micro Finance and
debtor accounts

Total revenue	14,603,778,831	11,688,929,071	2,435,773,663	2,197,593,574	-	7,562,802,899	38,488,878,038	(2,564,813,289)
									35,924,064,749

							-
Segment proﬁt / (loss)	3,944,088,975	2,919,977,482	407,053,212	1,162,099,785	79,055,884	5,822,791,808	14,335,067,146	(6,416,815,806)	7,918,251,340

Total assets	9,905,775,740	7,941,887,921	756,355,626	1,029,679,748	212,627,240	13,132,421,041	32,978,747,315	(12,064,335,106)	20,914,412,209

Headline earnings consist of basic earnings attributable to shareholders of the Group adjusted for proﬁts, losses, and items of a capital nature that do not form part of the ordinary activities of the Group, net of their related tax effects.

7	Capital expenditure	Ination adjusted		Historical cost
		2023	2022	2023	2022
		ZW$	ZW$		ZW$	ZW$
	Computer equipment	79,561,679	121,307,611	50,831,623	29,149,206
	Furniture, ﬁttings and leasehold	731,987,886	293,211,025	547,181,095	77,374,222
	improvements

	Total	811,549,565	414,518,637	598,012,718	106,523,428

Capital expenditure during the full year was channelled towards new stores, namely Jet - (Gutu , Avondale, First Street, Norton, and Madokero) and the revamp of the Edgars Masvingo store.

8	Future Capital Expenditure	Ination adjusted		Historical cost
		2023	2022	2023	2022
		ZW$	ZW$		ZW$	ZW$
	Authorised but not yet contracted for	5,671,555,106	2,007,698,143	5,671,555,106	584,040,860

All expenditure is to be ﬁnanced from existing cash resources and utilisation of authorised borrowing facilities.

52 weeks to 09 January 2022
Revenue
External customers	10,358,322,705	8,628,929,911	-	-	-	-	18,987,252,616		-	18,987,252,616

Manufacturing	-	-	114,737,910	-	-	-	114,737,910			-		114,737,910
sales to 3rd parties-
local sales
Manufacturing	-	-	19,603,585	-	-	-	19,603,585			-		19,603,585
sales to 3rd parties-
export sales
Other revenue-	-	-	-	-	-		18,232,336	18,232,336			-		18,232,336
Hospital cash plan
and insurance
Other revenue-	-	-	-	-	-	33,148,741	33,148,741	-	33,148,741
Commission Club
Subscriptions
Inter-segments	-	-	1,069,434,362	-	2,166,120,532	-	3,235,554,894	(3,235,554,894)	-
Revenue from	53,269,288	130,723,174	-	786,479,223	31,495,885	3,500,819,891	4,502,787,461	-	4,502,787,461
Micro Finance and
debtor accounts

Total revenue	10,411,591,993	8,759,653,085	1,203,775,857	786,479,223	2,197,616,417	3,552,200,968	26,911,317,543	(3,235,554,894)	23,675,762,649

								-
Segment proﬁt	685,709,855	520,137,089	132,939,205	189,168,864	8,087,199	1,591,372,638	3,127,414,850	981,700,529	4,109,115,379

Total assets

7,186,564,195

4,843,124,079

904,089,838

783,203,907

4,098,599,480

1,824,461,306

19,640,042,805

(308,952,386)

19,331,090,419

Abridged Audited Results for the 52 weeks ended 08 January 2023 (continued)

	Edgars Stores	Jet Stores	Manufacturing	Micro Finance	Corporate	Financial services	Segment	Adjustments	Consolidated
	Retail	Retail	Carousel	Club Plus	Head Oce		Totals	Eliminations	Total
	ZW$	ZW$	ZW$	ZW$	ZW$	ZW$	ZW$	ZW$	ZW$
Historical
52 weeks to 08 January 2023
Revenue
External customers	10,092,910,002	8,450,168,604	-	-	-	-	18,543,078,606	(1,003,884,963)	17,539,193,643
Manufacturing	-	-	200,799,884	-	-	-	200,799,884	-	200,799,884
sales to 3rd parties-
local sales
Manufacturing	-	-	-	-	-	-	-	-	-
sales to 3rd parties-
export sales
Other revenue-	-	-	-	-	-	40,375,829	40,375,829	-	40,375,829
Hospital cash plan
and insurance
Other revenue-	-	-	-	-	-	22,848,144	22,848,144	-	22,848,144
Commission Club
Subscriptions
Inter-segments	-	-	-	-	-	-	-	-	-
Revenue from	-	-	-	949,960,733	-	5,293,049,622	6,243,010,355	-	6,243,010,355
Micro Finance and
debtor accounts

Total revenue	10,092,910,002	8,450,168,604	200,799,884	949,960,733	-	5,356,273,596	25,050,112,818	(1,003,884,963)
									24,046,227,856

Segment proﬁt / (loss)	2,673,831,858	2,029,554,263	256,722,632	309,511,701	50,721,843	3,308,359,183	8,628,701,481	(1,117,377,283)	7,511,324,198

Total assets	7,799,147,580	6,252,913,207	595,504,007	802,399,892	167,408,517	10,339,593,028	25,956,966,230	(9,490,352,041)	16,466,614,190

52 weeks to 09 January 2022
Revenue
External customers	2,518,819,507	2 ,098,285,368	-	-	-	-	4,617,104,875	-	4,617,104,875
Manufacturing	-	-	25,726,476	-	-	-	25,726,476	-	25,726,476
sales to 3rd parties-
local sales
Manufacturing	-	-	5,098,279	-	-	-	5,098,279	-	5,098,279
sales to 3rd parties-
export sales
Other revenue-	-	-	-	-	-	7,856,282	7,856,282	-	7,856,282
Hospital cash plan
and insurance
Other revenue-	-	-	-	-	-	4,532,422	4,532,422	-	4,532,422
Commission Club
Subscriptions
Inter-segments	-	-	241,087,445	-	-	-	241,087,445	(241,087,445)	-
Revenue from	-	-	-	1,070,955,091	-	-	1,070,955,091	-	1,070,955,091
Micro Finance and
debtor accounts

Total revenue	2,518,819,507	2,098,285,368	271,912,200	1,070,955,091	-	12,388,704	5,972,360,870	(241,087,445)	5,731,273,425

Segment proﬁt	805,574,538	617,475,024	64,199,306	69,789,772	48,127,778	622,479,379	2,227,645,797	(415,126,777)	1,812,519,020

Total assets	1,735,400,573	1,266,956,050	283,923,212	227,834,590	1,090,693,514	530,737,130	5,135,545,069	(349,092,304)	4,786,452,765

Dividend
No dividend was declared for the full year to 08 January 2023.
Chairman's report
Directors responsibility for the Integrated Annual Report
The Directors of Edgars Stores Limited are responsible for the preparation and fair presentation of the Group's consolidated ﬁnancial statements. The audited ﬁnancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), in the manner required by the Companies and Other Business Entities Act (Chapter 24:31) and the Zimbabwe Stock Exchange listing requirements.
The principal accounting policies of the Group are consistent with those applied in the previous annual ﬁnancial statements.
Cautionary - reliance on these hyperination adjusted nancial statements
The Directors would like to advise users to exercise caution on their use of these ﬁnancial statements due to the material and pervasive impact of the technicalities brought about by the change in functional currency in Zimbabwe at the beginning of 2019 and its consequent impact on the usefulness of the ﬁnancial statements for subsequent reporting periods. This was further compounded by the adoption of International Accounting Standard (IAS) 29 'Financial Reporting in Hyperinﬂationary Economies'.
Whilst the Directors have exercised reasonable due care in applying judgements that were deemed to be appropriate in the preparation of these ﬁnancial statements, certain distortions may arise due to the various economic factors that may affect the relevance and reliability of the ﬁnancial information presented in economies such as Zimbabwe, that are experiencing hyperinﬂation.
Operating environment and overview
Throughout the ﬁnancial reporting period ending 08 January 2023, the operating environment has remained volatile in comparison to the prior year. Despite the relaxation of COVID-19 restrictions, the impact of the lockdowns experienced in the prior period continued to affect the business operations. Arising out of the Covid lockdowns in 2021, the business lost 7 trading weeks, this included the winter season. As a result, there was a build - up of aged merchandise, which due to lack of desirability had slower than planned stock turn levels. The Board took a conscious decision to markdown inventory to its most realistic realisable value. This markdown has been recognised in the proﬁt and loss and resultantly both retail chains have not been proﬁtable. The markdown was implemented mostly during November 'Black Friday' trading and into December high season. Prior to this, forward weeks cover stood at: Edgars (16.4 weeks) and Jet (19.3 weeks). At the end of the reporting period the chains closed at 11.0 weeks and 13.7 weeks respectively.
The ﬁrst half of the year saw a marked volatility in the availability of the foreign currency on the ofﬁcial platforms resulting in a widening gap between the ofﬁcial rate and the alternative market. A series of policy interventions was instituted in May 2022 and July 2022, with the effect of slowing down the rate of inﬂation and reduction of the gap between the ofﬁcial rate and alternative market. Whilst the interventions, particularly in respect of money supply and ZWL$ interest rates, achieved their desired objectives, they also brought an increased cost of borrowing for the business. This saw the ﬁnance costs rising threefold against a drop in credit sales ﬂowing from reduced consumer demand.
The Russia-Ukraine war as well as the Suez Canal blockage resulted in disruption of global supply chains and increase in energy costs.
The business has beneﬁted from the convenience of the multi-currency trading environment with roll out of the USD credit to mitigate value erosion.
Operating costs grew 65% over prior year, with occupancy, employment, intermediated transaction tax and fuel costs being the lines that contributed most signiﬁcantly to the increased overhead. Management remains focused on recalibrating the business models in response to these price corrections to preserve value and build a strong balance sheet for the business.
Financial performance (based on ination-adjusted results)
Notwithstanding the challenges in the operating environment, the Group managed to close the period with an improved performance over the year. The Group reported Revenue of ZWL35.9billion which is 51.7% up from that achieved in 2022 of ZWL23.7billion. The growth in real terms is attributed to volume recovery, replacement cost-based pricing, ongoing cost management as well as initiatives implemented by Management to ensure fresher stock availability in our stores, regardless of the supply chain challenges. Proﬁt before tax of ZWL1.9billion was a decline of 5.7% from the prior period of ZWL2.0billion. Proﬁt for the year was weighed down by higher ﬁnance costs emanating from the revision of the minimum lending rates to 200% as promulgated by the Reserve Bank of Zimbabwe. The result was the ﬁnance costs of ZWL$4.3billion, a growth of 117% on prior year of ZWL$1.9billion. The business was not able to recover these costs from our customers. Unlike FMCG, with speciality retail that Edgars is in, merchandise has to be ordered and paid for 6 months before it is received. Further to that, merchandise is then sold on a 6 month basis and clearly interest rates as alluded to above are not suitable for this type of business. The Group achieved basic earnings per share of 13.2 cents (2022: 335.12 cents).

Total Group units sold increased by 13.1% from 2.4million to 2.7million compared to the same period last year.

Trading in foreign currency since April 2020 has allowed our retail chains to improve stock assortments, which in turn has increased trafﬁc in our stores. While a sizable portion of our cash sales are in foreign currency, we believe that this proportion can be increased through favourable and consistent application of regulatory policies around trading in foreign currency.

Gearing reduced to 0.58 in the current year from a prior year of 0.62. Funding was channelled towards growing the debtors' book as well as store expansion initiatives. At the end of the reporting period, the company had USD134k foreign liabilities which it will be able to service from existing resources.

Retail performance

Total retail merchandise revenue amounted to ZWL26.2billion representing a 36.8% increase from prior year. The split between credit and cash sales for the ZWL was 48.8% (2022: 61.2 %) and 51.2% (2022: 38.8 %) while the USD sales had credit sales contribution of 71% and cash sales of 29.0%.

The Edgars chain recorded turnover of ZWL14.6billion up 41.6% from prior year of ZW10.3billion, and the 1.16m units sold were up 21.1% from 956k in the comparative period. The split between credit and cash sales for ZWL was 54.5% (2022: 69.1 %) and 45.5% (2022: 31.2%) while the USD sales had credit sales of 71.6% and cash sales of 28.4%. We revamped our Masvingo store in November 2022. Stock covers closed at 11 weeks (2022:20.5weeks).

Total sales for the Jet chain were ZWL11.7billion up 35.58% from ZWL8.6billion achieved in the comparative period. The split between credit and cash sales for ZWL was 43.1% (2022: 45.5 %) and 56.9% (2022: 54.5 %) while the USD sales had credit sales of 70.3% and cash sales of 29.7%. Total units sold for the period were up 7.9% from 1.44m to 1.56m. The Chain increased its store count to 36 stores from 31 stores in the comparative period. Stock covers closed at 13.7 weeks (2022:16.2 weeks).

Jet achieved the second spot on the Marketers Association of Zimbabwe's Superbrand awards thanks to our aggressive digital marketing campaigns. The focus of the entire year's communications was to boost awareness of our fresh merchandise, engage customers, and cultivate a base of loyal customers.

Financial services

The gross retail debtors' book closed the period at ZWL8.2billion up 24.0% from ZWL6.56billion in the comparative period with the USD debtors book ending the year at USD6.6million while the ZWL book closed the year at ZWL2.5billion. Active account growth for the USD book grew to 64k accounts attributed to various account drive initiatives. The asset quality as at 08 January 2023 was 90.4% for the USD book and at 61.5% for the ZWL book (2022: 84.6%) in current status. Expected credit losses (ECLs) as at 08 January 2023 were 4.0% of the book compared to 1.9% as at 09 January 2022, although this reﬂects Management's prudent application of the related credit loss accounting standards, the 'deterioration' was fuelled by the increase in ZWL interest rates in July 2022 in line with Reserve Bank of Zimbabwe Government directives.

Club Plus Micronance

The loan book closed at ZWL698million (2022: ZWL521m) representing a 34% increase from prior year. Asset quality remains positive with over 82% of the USD book being in current while the ZWL book was 54.5% in current with effect of the 200% interest rate adjustment still being felt. Improved efﬁciencies in loan approval and disbursement processes have resulted in increased turnaround. We have seen an increase on the uptake of loan applications through our digital platforms, which has provided our customers with added convenience .

Carousel Manufacturing

The Manufacturing Division recorded a turnover of ZWL2.4billion up 102% over prior year. Total units sold were down 12.66% to

141k (2022:161k). Revenue was adversely affected by depressed sales in the retail space. Management pursued alternative markets mostly in the local corporate wear sector and beyond our borders. This initiative resulted in an increase in sales contribution from the open market which accounted for 39% of total sales.

Effect of COVID-19

The Group will continue to implement best practice protocols to ensure the safety of its employees, customers, suppliers and all other stakeholders. Covid -19 brought about signiﬁcant disruptions to international supply chains resulting in longer lead times and delays in shipping of imported merchandise, and challenges such as shortages of shipping containers and port space. There was also an impact on production and delivery of local merchandise due to delays in receiving imported fabrics and trims.

The effect of Covid-19 brought about new ways of doing business which has become the 'new norm'. This is characterised by improved engagement with customers across social media platforms, including the setting up of online stores and convenient payment platforms.

Board membership

On 01 March and 16 June 2022 respectively, the Group welcomed Mr Christo Claassen, CA (SA), a seasoned retail specialist, who joined as a Non-Executive Director and Mr Sevious Mushosho, CA (Z), seconded by Sub-Sahara Capital Group.

The Group bade farewell to its longest serving stalwart, Mr Raymond Mlotshwa, who retired from the Board with effect from 01 December 2022. On behalf of management, staff and the Board of Directors, I wish to convey the Group's appreciation for the years of dedicated service to the Group.

Outlook

Management continues to remodel the business to capitalise on opportunities that arise in the very uncertain operating environment. Cost containment remains a focus area so as to ensure long term viability of the business.

The Group seeks to expand its geographic footprint through the opening of new stores in strategic locations. Smart merchandise procurement and optimal inventory planning remain key focus areas to ensure that target margins are achieved without compromising the merchandise quality. We will continue to transform our customer experience through updating our stores to world class standards, offering widened merchandise ranges at affordable prices and ﬂexible credit terms.

The recovery of the business is premised on the back of improved access to foreign currency through domestic sales to cover import requirements, a stable exchange rate and slower inﬂation.

On the currency front, the environment has remained turbid marked by the sharp depreciation of the local currency. Some measure of macro-economic instability has been noticed with increase in cost of basic commodities. The authorities need to step in and implement various measures to help stabilise the foreign exchange market and tame inﬂation.

Dividend

Regrettably, the Company will not declare a dividend for the 52 weeks to 08 January 2023. The position will be reviewed having assessed performance in the current year.

Appreciation

I wish to record my appreciation to Management and staff for their great effort in sustaining the business in a difﬁcult operating environment. I also thank my fellow directors for their wise counsel and our customers, suppliers, and stakeholders for their ongoing support.

T N SIBANDA CHAIRMAN 08 May 2023

FINANCIAL SERVICES

DIRECTORATE: Non-Executive Chairman: T.N SIBANDA, Group Chief Executive Ocer : T.NDLOVU*; Directors: C.F.DUBE, R.MLOTSHWA, M.HOSACK, C CLAASSEN, H.VUNDLA*, S.MUSHOSHO *Executive

INDEPENDENT AUDITOR'S REPORT ON THE AUDIT OF INFLATION ADJUSTED CONSOLIDATE FINANCIAL STATEMENTS. TO THE SHAREHOLDERS OF EDGARS STORES LIMITED

Report on the Audit of the Financial Statements

Adverse Opinion

We have audited the accompanying inflation adjusted consolidated and separate financial statements of Edgars Stores

Limited (The "Company") and its subsidiaries (the "Group"), which comprise the inflation adjusted consolidated and separate statement of financial position for the 52 weeks ending 08 January 2023, the inflation adjusted consolidated and separate statement of comprehensive income, the inflation adjusted consolidated and separate statement of changes in equity and inflation adjusted consolidated and separate statement of cash flows for the year then ended, and notes to the inflation adjusted consolidated and separate financial statements, including a summary of significant accounting policies.

In our opinion, because of the significance of the matters discussed in the Basis for Adverse Opinion section of our report, the inflation adjusted consolidated and separate financial statements do not present fairly, the financial position of the

Group for the 52 weeks ending 8 January 2023, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act and

Other Business Entities Act of Zimbabwe (Chapter 24:31).

Basis for Adverse Opinion

Non-compliance with International Financial Reporting Standard 13 "Fair Value Measurements" (IFRS 13) and International Accounting Standard 29 "Financial Reporting in Hyperinflationary Economies" (IAS 29) in the

determination of the value of Property, Plant and Equipment.

The method of determining the fair value of Property, Plant and Equipment as at 9 January 2022 was not an accurate reflection of market dynamics and the risk associated with ZW$ transactions on a willing buyer, willing seller basis. As detailed in note 1.5 and 2, in the prior year the Group engaged professional valuers to determine fair values in USDs, and management subsequently determined the ZW$ equivalent fair values by translating those USD valuations using an estimated exchange rate.

IFRS 13 defines fair value as the price that would be received to sell an asset in an orderly transaction between market participants at a measurement date. In the prior year, we found the assumptions and methods used by the professional valuers to determine the USD valuations reasonable. However, we were unable to obtain sufficient appropriate evidence to support the appropriateness of the application of the ZW$/USD blended exchange rate in the determination of the final ZW$ fair valuations presented for the prior year. The Group did not disclose the unobservable significant inputs applied in the determination of fair value as is required by IFRS 13.

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Edgars Stores Ltd. published this content on 09 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 May 2023 04:35:10 UTC.

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