CHAIRMAN'S STATEMENT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023

ECONOMIC OVERVIEW

billion (2022: ZWL2,686 billion) as the cost of sales

The last reporting period continued to be characterized by

increase due to higher costs of imported products. Total

numerous macro-economic challenges. During the financial year

operating expenses were maintained at prior levels

2022 - 2023, the industry faced persistent increases in prices of

(inflation adjusted) at ZWL2,170 billion (2022: ZWL2,181

goods and services as well as loss of value of the local currency as

billion) due to cost containment measures implemented

unsustainable interest rates continued to destroy value. At the

by your Management. The Company incurred a loss

customer and consumer end, disposable income was eroded by

(before tax) of ZWL427 million (inflation adjusted) from a

hyper- inflation and the exchange rate disparities, which affected

profit of ZWL1,187 billion in the previous year.

aggregate demand in the economy. The depressed electricity

DIVIDEND

generation capacity experienced during the year negatively affected

The Directors have considered it prudent not to declare a

service delivery and increased industry production costs. The

dividend in view of the need to restore working capital to

improvements in overall agricultural production in the last farming

adequate levels to support the business.

season, particularly for staple grains will preserve much needed

foreign currency and positively impact growth.

OUTLOOK

OPERATIONS REVIEW

The monetary measures being implemented by the

Government to stabilize the local currency are bearing fruit

The availability of Dunlop tyres was instrumental in us retaining our

given that the local currency is firming against the US

large corporate customer base during the year. As a result, premium

Dollar. Foreign currency exchange rates are stabilizing on

sales in units increased by 14% over prior year. National Tyre

parallel and auction markets. We are cautiously optimistic

Services ('NTS') remains viable as the competitive space continues

of continued stability in exchange rates, which will aid

to be crowded by new entrants across the country. The budget

planning and business growth. Industry is expecting that

brands segment was impacted by the restricted access to foreign

the current stability in power generation will continue to

currency which in turn affected product availability.

minimize production disruptions. We are projecting

Retreading performance declined during the year, as the Company

increased demand for tyres and related product & services

managed to maintain presence in key retreading fleets. NTS pick-up in the buildup to general elections and the capability and capacity for excellent products and service in upcoming agricultural season. To capitalize on the

retreading continues to be preferred by the market. Management

obtaining environment, NTS will continue to focus on cost

continued to review business operations throughout the year to

containment and enhanced market outreach programs to

enhance overall performance and strengthen NTS' competitive

increase the inventory turnover ratio and improved

advantage. NTS also widened the range of suppliers and revamped

profitability.

supply chain management to effectively manage costs and position

the business appropriately for the future.

FINANCIAL REVIEW

Sales revenue grew by 21% (inflation adjusted) to ZWL4,332 billion

R.J. Moyo

(2022: ZWL3,579 billion) due to the continued implementation of

Chairman

the turnaround strategy. Gross profit decreased by 8% to ZWL2,462

A. ABRIDGED STATEMENT OF PROFIT OR LOSS AND

OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2023

NOTE

EINFLATION ADJUSTED

HISTORICAL COST

AUDITED

AUDITED

AUDITED

AUDITED

31.03.2023

31.03.2022

31.03.2023

31.03.2022

ZWL

ZWL

ZWL

ZWL

Revenue

4

4,332,095,482

3,579,633,832

3,637,038,411

921,085,289

Gross Profit

2,462,028,285

2,686,484,020

2,061,364,806

600,701,825

Exchange (loss) / gain

(1,172,055,428)

-

(928,191,947)

-

Other income

115,733,727

54,203,802

102,094,751

14,357,124

Fair value adjustments on

investment property

1,076,223,951

692 962 926

1,644,298,575

139,266,675

Profit / (loss) from operations

311,661,915

1,458,121,919

1,146,184,535

233,458,736

Finance charges

(547,384,219)

(270 133 184)

(497,177,336)

(74,494,613)

Profit before tax and monetary gain

5

(235,722,304)

1,187,988,735

649,007,199

158,964,123

Monetary (loss)/ gain

(191,982,141)

(124,722)

-

-

Income tax expense

(149,508,706)

(979 415 452)

(389,343,087)

(179,019,750)

Profit/(loss) for the period

(577,213,151)

208,448,560

259,664,112

(20,055,767)

Revaluation Gain through OCI

5,944,864,455

4,035,463,950

9,802,133,604

798,365,213

Fair value gain on investment

through OCI

679,673

364,627

2,044,215

124,577

Total comprehensive

income for the period

5,368,330,976

4,244,277,138

10,063,841,931

778,434,163

Number of shares in issue

(thousands)

253,872

253,872

253,872

253,872

Earnings per share (cents)

(227.36)

82.11

102

(8)

Diluted earnings per share (cents)

(227.36)

82.11

102

(8)

Headline earnings per share (cents)

(227.36)

82.11

102

(8)

B. ABRIDGED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2023

INFLATION ADJUSTED

HISTORICAL COST

AUDITED

AUDITED

AUDITED

AUDITED

31.03.2023

31.03.2022

31.03.2023

31.03.2022

ZWL

ZWL

ZWL

ZWL

ASSETS

Non current assets

13,143,429,634

6,100,250,620

12,532,246,020

963,838,984

Property, plant and equipment

6

10,987,345,618

5,075,637,994

10,688,500,884

818,375,360

Intangible assets

19,948,565

21,190,987

3,443,301

2,366,372

Investment property

1,784,402,741

708,178,790

1,784,402,741

140,104,166

Right of use assets

7

349,348,542

293,538,354

53,514,926

2,653,133

Fair value through other

comprehensive income investments

2,384,168

1,704,495

2,384,168

339,953

Current assets

8

1,392,229,995

1,385,931,945

1,380,641,359

352,927,441

Total assets

14,535,659,629

7,486,182,565

13,912,887,379

1,316,766,425

EQUITY AND LIABILITIES

Shareholders' equity and reserves

10,757,128,913

5,388,797,937

10,896,530,049

832,688,118

Deferred tax

1,308,071,527

1,168,845,018

545,898,141

166,837,251

Lease liability

7

180,916,785

33,554,686

180,916,785

11,464,157

Short term loan

9

1,018,719,049

431,935,836

1,018,719,049

147,573,436

Trade and other payables

10

1,270,823,355

463,049,088

1,270,823,355

158,203,463

Total equity and liabilities

14,535,659,629

7,486,182,565

13,912,887,379

1,316,766,425

C. ABRIDGED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2023

INFLATION ADJUSTED

HISTORICAL COST

AUDITED

AUDITED

AUDITED

AUDITED

31.03.2023

31.03.2022

31.03.2023

31.03.2022

ZWL

ZWL

ZWL

ZWL

Opening balance

5,388,797,938

1,144,520,800

832,688,118

54,253,955

Loss for the period

5,368,330,976

4,244,277,138

10,063,841,931

778,434,163

Closing balance

10,757,128,914

5,388,797,938

10,896,530,049

832,688,118

D. ABRIDGED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2023

INFLATION ADJUSTED

HISTORICAL COST

AUDITED

AUDITED

AUDITED

AUDITED

31.03.2023

31.03.2022

31.03.2023

31.03.2022

ZWL

ZWL

ZWL

ZWL

Cash flows from operating activities

before changes in working capital

(293,391,963)

926,265,313

(179,310,570)

117,305,119

Changes in working capital

799,301,397

(329,619,075)

107,337,598

(77,588,393)

Income tax paid

(15,821,965)

(34,241,166)

(12,976,132)

(8,926,170)

Net cash generated from operating activities

490,087,469

562,405,071

(84,949,104)

30,790,556

Net cash out flows utilized

in investing activities

(148,660,155)

(74,262,316)

(95,690,476)

(18,653,347)

Net cash out flows from financing activities

155,351,842

(80,127,998)

203,071,064

(5,723,317)

Net (decrease) / increase in cash

and cash equivalents

496,779,157

408,014,757

22,431,484

6,413,892

Effects of Inflation on opening

balances of monetary items

(498,953,976)

(402,765,400)

Cash and cash equivalents at

beginning of period

37,376,053

32,126,696

12,769,750

6,355,858

Cash and cash equivalents

at the end of the period

35,201,234

37,376,053

35,201,234

12,769,750

E. NOTES TO THE ABRIDGED FINANCIAL STATEMENTS FOR THE YEAR

ENDED 31 MARCH 2023

1. BASIS OF PREPARATION AND PRESENTATION

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and disclosure requirements of IAS 34 "Interim Financial Reporting". They are also prepared in accordance with the disclosure requirements of the Companies and Other Business Entities Act (Chapter 24:31).

2. INDEPENDENT EXTERNAL AUDITORS' STATEMENT

These abridged financial results derived from the audited inflation adjusted financial statements of National Tyre Services Limited for the financial year ended 31 March 2023, should be read together with the complete set of audited inflation adjusted financial statements of the Company, for the year ended 31 March 2023, which have been audited by Grant Thornton Chartered Accountants (Zimbabwe) and the auditor's report signed by Farai Chibisa, Registered Public Auditor 0547.

A qualified opinion has been issued on the audited inflation adjusted financial statements of the Company, for the year then ended. The qualified opinion was issued regarding non-compliance with International Accounting Standard (IAS) 21- The Effects of Changes in Foreign Exchange Rates in the prior and current financial year, International Accounting Standard (IAS) 8

  • Accounting Policies, Changes in Accounting Estimates and Errors and International Financial Reporting Standard (IFRS) 13 - Fair Value Measurement with respect to fair valuation disclosures for Investment Property and Owner-Occupied property for the current year.

The auditor's report includes a section on key audit matters outlining matters that, in the auditor's professional judgement, were of most significance in the audit of the inflation adjusted financial statements. The key audit matter was with respect to revenue recognition. The auditor's opinion is not modified in respect of this matter.

The auditor's report on the inflation adjusted financial statements and the full set of the audited inflation adjusted financial statements, are available for inspection at the company's registered office and the auditor's report has been lodged with the Zimbabwe Stock Exchange.

3. DIRECTORS' RESPONSIBILITY STATEMENT IN RESPECT OF

THE RESULTS FOR THE TWELVE MONTHS ENDED 31 MARCH 2023

Accounting policies and methods are consistent in all material respects with those used in the prior year and with the requirements of International Financial Reporting Standards ("IFRS") applicable for the year ended 31 March 2023.

INFLATION ADJUSTED

HISTORICAL COST

4. REVENUE

AUDITED

AUDITED

AUDITED

AUDITED

31.03.2023

31.03.2022

31.03.2023

31.03.2022

ZWL

ZWL

ZWL

ZWL

Revenue from sale of goods

4,054,061,695

3,366,304,727

3,403,471,466

865,934,269

Revenue from rendering of services

278,033,787

213,329,105

233,566,945

55,151,020

4,332,095,481

3,579,633,832

3,637,038,411

921,085,289

5. PROFIT BEFORE TAX AND MONETARY GAIN

Profit for the period has been arrived at after charging / (crediting):

Transport charges

32,583,372

62,334,392

29,158,535

12,527,515

Technical fees

80,017,999

91,742,531

71,433,017

18,437,750

Electricity and lighting

14,793,381

22,615,422

13,862,746

4,545,084

Rental income from

investment property

(92,168,920)

(43,173,676)

(80,981,075)

(10,715,867)

Staff remuneration

1,014,102,661

796,761,648

876,716,506

160,127,391

Remuneration of directors

- fees for services as directors

21,214,165

16,190,160

18,164,917

4,227,459

INFLATION ADJUSTED

HISTORICAL COST

AUDITED

AUDITED

AUDITED

AUDITED

31.03.2023

31.03.2022

31.03.2023

31.03.2022

3. REVENUE

ZWL

ZWL

ZWL

ZWL

6. PROPERTY, PLANT

AND EQUIPMENT

Carrying amount at

beginning of period

5,075,637,995

823,086,706

818,375,360

23,210,734

Revaluation

5,944,864,455

4,241,493,872

9,802,133,604

792 574 537

Additions

150,167,800

66,605,215

96,586,794

16,589,025

Disposals

(6,020,742)

(332,466)

(87,220)

(113,589)

Depreciation

(177,303,890)

(55,215,332)

(28,507,654)

(13,885,347)

Carrying amount

at the end

of the period

10,987,345,618

5,075,637,995

10,688,500,884

818,375,360

7. LEASES

National Tyre Services leases 3 properties with an average lease period of 3 years. In the twelve months ending 31 March 2023 , National Tyre Services has applied IFRS 16 Leases (as issued by the IASB in January 2016) which is effective on or after 01 January 2019. National Tyre Services has applied IFRS 16 using the modified retrospective approach, with restatement of comparative information.

Assets

Right of use assets

349,348,542

293,538,354

53,514,926

2,653,133

Equity and liabilities

Lease liability

180,916,785

33,554,686

180,916,785

11,464,157

8. CURRENT ASSETS

Inventories

1,113,074,379

1,302,818,523

1,102,859,142

324,979,396

Trade and other receivables

243,954,382

45,737,369

242,580,983

15,178,295

Bank and cash balances

35,201,234

37,376,053

35,201,234

12,769,750

1,392,229,995

1,385,931,945

1,380,641,359

352,927,441

9. BORROWINGS

Short term loan

1,018,719,049

431,935,836

1,018,719,049

147,573,436

The loans from local financial institutions outstanding at reporting date attract interest of 13% per annum.

10. TRADE AND OTHER PAYABLES

Trade

289,796,641

215,944,479

289,796,641

73,778,710

Bank Overdraft

374,202,598

-

374,202,598

-

Other payables

606,824,117

247,104,609

606,824,117

84,424,753

1,270,823,355

463,049,088

1,270,823,355

158,203,463

11. RELATED PARTY TRANSACTIONS AND BALANCES Expenses

Simply Africa (Private) Limited

- technical fees

71,433,017

53,965,846

71,433,017

18,437,751

Radun Investments Loan

371,944,720

-

371,944,720

-

Balances

Payables:

Simply Africa (Private) Limited

- technical fees

71,433,017

18,092,580

71,433,017

6,181,437

12. CAPITAL EXPENDITURE COMMITMENTS

Capital commitments authorised

but not contracted for

1,407,392,266

493,869,298

1,407,392,266

168,733,370

13. HYPERINFLATION

The Public Accountants and Auditors Board through its pronouncement provided guidance to all entities that report in accordance with International Financial Reporting Standards (IFRS) on the application of IAS 29 - Financial Reporting in Hyperinflationary Economies. The pronouncement requires that Companies that prepare and present financial statements for financial periods ended on or after 1 July 2019 should apply the requirements of IAS 29 - Financial Reporting in Hyper-inflationary Economies.

SOURCE OF INDICES

The source of the price indices used is the Reserve Bank of Zimbabwe website. Below are the indices and adjusting factors used up to 31 December 2022. In the absence of ZWL inflation indices for the period January 2023 to March 2023, an estimation was made based on the Total Consumation Proverty Line ( TCPL) statistics published by ZimSat.

MONTH

INDICES

ADJUSTING FACTOR

CPI as at 31 March 2022

4,766.10

2.93

CPI as at 31 March 2022

4,766.10

2.93

CPI as at April 2022

5,507.11

2.53

CPI as at May 2022

6,662.17

2.09

CPI at at June 2022

8,707.35

1.60

CPI as at July 2022

10,932.83

1.28

CPI as at August 2022

12,286.26

1.14

CPI as at September 2022

12,713.12

1.10

CPI as at October 2022

13,113.95

1.06

CPI as at November 2022

13,349.42

1.04

CPI as at December 2022

13,672.91

1.02

CPI as at January 2023

13,819.67

1.01

CPI as at February 2023

13,849.21

1.01

CPI as at March 2023

13,949.99

1.00

14. GOING CONCERN

The Directors have assessed the Company's ability to continue operating as a going concern for the forseeable future and believe that the preparation of the financial statements on a going concern basis is appropriate.

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National Tyre Services Ltd. published this content on 07 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 August 2023 08:14:08 UTC.