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.