TRUWORTHS LIMITED AUDITED ABRIDGED GROUP RESULTS
FOR THE YEAR ENDED 10 JULY 2022
DIRECTORS' RESPONSIBILITY
The company's directors are responsible for the preparation and fair presentation of the Group's financial statements, of
which this press release represents an extract.
The audited annual financial statements have been prepared in accordance with International Financial Reporting Standards and in a manner required by the Companies and Other Business Entities Act (Chapter 24:31) (COBE) and the Zimbabwe Stock Exchange (ZSE) Listing Requirements except for the non-compliancestated in the paragraph below.
The principal accounting policies applied in the preparation of these audited annual financial statements are consistent with those applied in the previous annual financial
statements, except for non-compliance with (IAS) 21 (Effects of Changes in Foreign Exchange Rates), (IAS) 1 (Presentation of Financial Statements), IFRS 15 (Revenue from Contracts with Customers), (IAS) 2 (Inventories) and
valuation methodology on property, plant and equipment.
There is no significant impact arising from new and revised IFRS which became effective for reporting periods commencing on or after 1 January 2021.
CAUTIONARY STATEMENT - RELIANCE ON ALL FINANCIAL STATEMENTS PREPARED IN ZIMBABWE FOR 2021/2022
The directors would like to advise users to exercise caution in the use of these annual financial statements due to the
material and pervasive impact of the technicalities brought about by the change in the functional currency in Zimbabwe
in February 2019, its consequent impact on the usefulness of the financial statements for 2021/2022 financial
periods and the adoption of International Accounting Standard (IAS) 29 (Financial Reporting in Hyperinflationary Economies), effective 1 July 2019.
Whilst the Directors have exercised due care, and applied judgements that they felt were appropriate
in the preparation and presentation of these annual financial statements, certain distortions may arise due to various specific economic factors that may affect the
relevance and reliability of information that is presented in economies that are experiencing hyperinflation, as well as technicalities regarding the change in functional and reporting currency.
ADOPTION OF IAS 29 (FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES)
As previously reported, the Public Accountants and Auditors Board (PAAB) having assessed the impact of hyperinflation in the economy advised that the conditions for adopting IAS
29 were satisfied with effect from 1 July 2019.
IAS 29 requires that inflation-adjusted financial statements become the entity's primary financial statements. The
Group has complied with this requirement, and this report is therefore based on inflation-adjustedfinancial statements.
Financial statements prepared under the historical cost convention have been prepared as supplementary information.
EXTERNAL AUDITOR'S STATEMENT
These abridged Group annual financial statements should
be read in conjunction with the complete set of the Group annual financial statements for the year ended 10 July 2022. The Group's annual financial statements have been audited
by Grant Thornton Chartered Accountants (Zimbabwe), who have issued adverse audit opinion as a result of non- compliance with International Accounting Standard (IAS) 21 (Effects of Changes in Foreign Exchange Rates), (IAS) 2 (Inventories), (IAS) 1 (Presentation of Financial Statements),
and IFRS 15 (Revenue from Contracts with Customers) on the presentation of manufacturing profit and valuation
methodology on property, plant and equipment.
The Auditor's opinion on the Group's annual financial statements is available for inspection at the Company's
registered office. The Engagement Partner responsible
for the audit is Mr Trevor Mungwazi (PAAB practicing
certificate number 0622).
KEY FINANCIAL REPORTING MATTERS
Users are advised to exercise caution in the interpretation of these Group annual statements.
MERCHANDISE PERFORMANCE
High unemployment levels and low disposable incomes due to inflation had a negative impact on volumes sold, with customers resorting to buying product in the unregulated informal market at prices which the business could not compete against.
TRADING PERFORMANCE | ||
Trading volumes | ||
Full year to | ||
10 July 2022 | ||
Unit growth | +9.5% | |
Sales participation by enabler | ||
Full year to | Full year to | |
10 July 2022 | 11 July 2021 | |
Cash sales | 66% | 68% |
Credit sales | 34% | 32% |
Sales and profitability were adversely affected by the restrictive pricing laws which rendered products expensive in US Dollar terms and relatively cheap in Zimbabwe Dollar
terms. This was further exacerbated by the widening gap between the official exchange rate and the market
exchange rate.
CREDIT MANAGEMENT
The book grew by 207.1% and 90% of the customers were in good standing and able to purchase compared to 84.8% in the prior year. The allowance for credit losses as a percentage of gross debtors was 13.2% compared to 6.7% in the prior year.
DIRECTORATE
Bruce H. Henderson was appointed to the Board with effect from 1 December 2022. Bruce is a Chartered Accountant by profession with experience in diverse industries. He is also a non-executive director of Dairibord Holdings Limited and Turnall Holdings Limited.
DIVIDEND
The directors deemed it prudent not to declare a dividend.
OUTLOOK
The environment remains uncertain in particular the sustainability of the regulated rate of 200% and tight ZWL liquidity.
The business suspended ZWL credit sales from 1 July 2022 due to the high interest rates.
US Dollar credit is considered on a selective basis where there is assurance that the US Dollar earnings are GUARANTEED. With the suspension of ZWL credit and limited USD credit, volumes will inevitably come down and there will have to be focus on productive cost rationalisation and working capital management.
APPRECIATION
The Board would like to express their heartfelt thanks to
Management, Staff and all other stakeholders for their efforts and support in this difficult climate.
M.P. Mahlangu | B. Ndebele |
Chairman | Chief Executive Officer |
13 January 2023
Registered Office
Stand 808
Seke Road
Prospect Park
Harare
ABRIDGED GROUP STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
INFLATION ADJUSTED | HISTORICAL COST | |||||||||||
52 weeks to | 52 weeks to | 52 weeks to | 52 weeks to | |||||||||
10 July 2022 | 11 July 2021 | 10 July 2022 | 11 July 2021 | |||||||||
Note | ZWL$ | ZWL$ | ZWL$ | ZWL$ | ||||||||
Revenue | 1 122 857 979 | 836 542 536 | 573 697 653 | 242 183 186 | ||||||||
Revenue from contracts with customers | 943 980 373 | 717 495 033 | 475 697 735 | 206 578 334 | ||||||||
Cost of sales | (370 199 428) | (282 846 419) | (114 419 871) | (41 716 651) | ||||||||
Gross profit | 573 780 945 | 434 648 614 | 361 277 864 | 164 861 683 | ||||||||
Other operating income | (17 119 292) | 7 603 626 | 335 204 | 2 314 791 | ||||||||
Manufacturing profit / (loss) | 3 682 144 | (1 846 778) | 13 668 205 | (387 014) | ||||||||
Trading expenses | (873 514 468) | (676 426 776) | (482 400 539) | (194 429 406) | ||||||||
Trading loss | (313 170 671) | (236 021 314) | (107 119 266) | (27 639 946) | ||||||||
Finance income | 162 141 777 | 107 240 769 | 89 001 380 | 32 349 595 | ||||||||
Finance costs | (46 300 467) | (31 866 657) | (29 475 283) | (9 459 658) | ||||||||
Fair value adjustment | (3 670 605) | (45 834 983) | - | - | ||||||||
Monetary gain | 175 972 229 | 31 723 806 | - | - | ||||||||
Loss before tax | (25 027 737) | (174 758 379) | (47 593 169) | (4 750 009) | ||||||||
Tax (expense) / credit | (12 109 040) | 42 481 280 | 5 566 994 | 558 465 | ||||||||
Loss for the year | (37 136 777) | (132 277 099) | (42 026 175) | (4 191 544) | ||||||||
Other comprehensive income | ||||||||||||
Revaluation on property, plant and equipment net of tax | 3 331 155 | - | 94 285 565 | 23 108 190 | ||||||||
Total comprehensive (loss)/ income for the year | (33 805 622) | (132 277 099) | 52 259 390 | 18 916 646 | ||||||||
Earnings per share | ||||||||||||
Basic and diluted loss per share | (cents) | (9.75) | (34.73) | (11.03) | (1.10) | |||||||
Basic and diluted headline loss per share (cents) 6 | (10.11) | (35.45) | (11.13) | (1.33) |
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
INFLATION ADJUSTED | ||||||||||
Non- | ||||||||||
Share | Treasury distributable Revaluation | Retained | ||||||||
capital | shares | reserve | reserve | earnings | Total | |||||
ZWL$ | ZWL$ | ZWL$ | ZWL$ | ZWL$ | ZWL$ | |||||
Balance at July 12 2020 | 1 937 407 | (15 992) | 80 162 552 | - | 476 967 044 | 559 051 011 | ||||
Loss for the year | - | - | - | - | (132 277 099) (132 277 099) | |||||
Balance at July 11 2021 | 1 937 407 | (15 992) | 80 162 552 | - | 344 689 945 | 426 773 912 | ||||
Loss for the year | - | - | - | - | (37 136 777) | (37 136 777) | ||||
Revaluation on property, plant and equipment | - | - | - | 4 425 020 | (1 093 865) | 3 331 155 | ||||
Balance at July 10 2022 | 1 937 407 | (15 992) | 80 162 552 | 4 425 020 | 306 459 303 | 392 968 290 | ||||
HISTORICAL COST | ||||||||||
Non- | ||||||||||
Share | Treasury distributable Revaluation | Retained | ||||||||
capital | shares | reserve | reserve | earnings | Total | |||||
ZWL$ | ZWL$ | ZWL$ | ZWL$ | ZWL$ | ZWL$ | |||||
Balance at July 12 2020 | 38 407 | (317) | 6 765 441 | - | 11 817 256 | 18 620 787 | ||||
Loss for the year | - | - | - | - | (4 191 544) | (4 191 544) | ||||
Revaluation of property, plant and equipment | - | - | - | 30 696 320 | (7 588 130) | 23 108 190 | ||||
Balance at July 11 2021 | 38 407 | (317) | 6 765 441 | 30 696 320 | 37 582 37 537 433 | |||||
Loss for the year | - | - | - | - | (42 026 175) | (42 026 175) | ||||
Revaluation of property, plant and equipment | - | - | - | 114 928 136 | (20 642 571) | 94 285 565 | ||||
Balance at July 10 2022 | 38 407 | (317) | 6 765 441 | 145 624 456 | (62 631 164) | 89 796 823 | ||||
ABRIDGED GROUP STATEMENT OF CASH FLOWS
INFLATION ADJUSTED | HISTORICAL COST | |||||
52 weeks to | 52 weeks to | 52 weeks to | 52 weeks to | |||
10 July 2022 | 11 July 2021 | 10 July 2022 | 11 July 2021 | |||
ZWL$ | ZWL$ | ZWL$ | ZWL$ | |||
Net cash utilised in operations | (51 718 611) | (99 616 530) | (78 161 211) | (33 963 791) | ||
Net finance income | 115 841 310 | 75 374 112 | 59 526 097 | 22 889 937 |
ABRIDGED GROUP STATEMENT OF FINANCIAL POSITION
Tax paid | (1 613 648) | (329) | (679 886) | (12) |
Note
INFLATION ADJUSTED | HISTORICAL COST | ||
As at | As at | As at | As at |
10 July 2022 | 11 July 2021 | 10 July 2022 | 11 July 2021 |
ZWL$ | ZWL$ | ZWL$ | ZWL$ |
Net cash generated from / (utilised in) | |||
operating activities | 62 509 051 | (24 242 747) (19 315 000) | (11 073 866) |
ASSETS | ||
Non current assets | ||
Property, plant and equipment | ||
Intangible assets | ||
Right of use asset | ||
Current assets | ||
Inventories | 3 | |
Trade and other receivables | 4 | |
Cash and cash equivalents | ||
Total assets | ||
EQUITY AND LIABILITIES | ||
Capital and reserves | ||
Share capital | ||
Treasury shares | ||
Non-distributable reserves | ||
Revaluation reserve | ||
Retained earnings / (Accumulated loss) | ||
Non current liabilities | ||
Deferred tax | ||
Non current portion of lease liability | ||
Current liabilities | ||
Short-term borrowings | ||
Trade and other payables | 5 |
Current portion of lease liability
Current tax
Total liabilities
389 616 432
369 170 529
9 096 406
11 349 497
545 180 511
402 733 152
134 855 400
7 591 959
934 796 943
392 968 290
1 937 407
(15 992)
80 162 552
4 425 020
306 459 303
137 917 591
136 843 098
1 074 493
403 911 062
42 878 234
356 442 272
1 776 526
2 814 030
541 828 653
345 976 231
314 261 344
11 933 998
19 780 889
560 326 913
403 487 458
139 501 881
17 337 574
906 303 144
426 773 912
1 937 407
(15 992)
80 162 552
-
344 689 945
130 094 941
125 921 030
4 173 911
349 434 291
57 532 407
280 539 317
5 179 691
6 182 876
479 529 232
161 552 597
158 923 254
221 724
2 407 619
357 248 524
215 191 591
134 464 974
7 591 959
518 801 121
89 796 823
38 407
(317)
6 765 441
145 624 456
(62 631 164)
25 304 820
24 230 327
1 074 493
403 699 478
42 878 234
356 230 688
1 776 526
2 814 030
429 004 298
46 971 440
40 069 260
236 577
6 665 603
120 952 808
67 620 564
47 385 811
5 946 433
167 924 248
37 537 433
38 407
(317)
6 765 441
30 696 320
37 582
11 959 696
10 528 130
1 431 566
118 427 119
19 732 439
94 797 552
1 776 528
2 120 600
130 386 815
Cash utilised in investing activities | (680 677) | (3 634 275) | (408 744) | (1 399 614) | |||
Net cash generated from financing activities | 21 360 154 | 43 949 103 | 21 369 270 | 13 412 418 | |||
Monetary gain | (175 972 229) | (31 723 806) | - | - | |||
Net (decrease) / increase in cash and cash equivalents | (92 783 701) | (15 651 725) | 1 645 526 | 938 938 | |||
Cash and cash equivalents at beginning of year | 17 337 574 | 30 170 025 | 5 946 433 | 5 007 495 | |||
Foreign exchange differences | 83 038 086 | 2 819 274 | - | - | |||
Cash and cash equivalents at end of year | 7 591 959 | 17 337 574 | 7 591 959 | 5 946 433 |
SUPPLEMENTARY INFORMATION
1. | CORPORATE INFORMATION |
The Group is incorporated and domiciled in Zimbabwe and its shares are publicly traded on the Zimbabwe Stock | |
Exchange. It is engaged in the manufacture and retailing of fashion apparel and related merchandise. | |
2. | BASIS OF PREPARATION |
The Group's financial statements for the year ended 10 July 2022 have been prepared in accordance with | |
the requirements of the Zimbabwe Stock Exchange Listing Requirements and in a manner required by the | |
Zimbabwe Companies and Other Business Entities Act (Chapter 24:31) (COBE) except for the non-compliance | |
with International Financial Reporting Standards explained below. The Group's financial statements have been | |
prepared based on the statutory records that are maintained under the historical cost basis and are presented in | |
Zimbabwe Dollars (ZWL) and all values have been rounded to the nearest dollar, except where otherwise indicated. | |
The principal accounting policies applied in the preparation of the Group's inflation adjusted financial statements | |
are in terms of IFRS except for the non-compliance with (IAS) 8 (Accounting Polcicies, Changes in Accounting | |
Estimates an Errors), (IAS) 21 (The Effects of Changes in Foreign Exchange Rates), (IAS) 2 (Inventories), (IAS) 1 | |
(Presentation of Financial Statements) and IFRS 15 (Revenue from Contracts with Customers) on presentation |
Total equity and liabilities
Number of shares in issue (net of treasury shares) Net asset value per share (cents)
934 796 943
380 901 152
103.17
906 303 144 | 518 801 121 | |
380 901 152 | 380 901 152 |
112.0423.57
167 924 248
380 901 152
9.85
of manufacturing profit, valuation methodology of property, plant and equipment and the consequential impact |
on the inflation adjusted amounts determined in terms of (IAS) 29 (Financial Reporting in Hyperinflationary |
Economies) and have been applied consistently in all material respects with those of the previous consolidated |
annual financial statements. |
PAGE
1 | Directors: M. P. Mahlangu (Chairman), B. Ndebele (C.E.O), B. H. Henderson, F.K. Khan, L. Mabhiza, W. Matsaira, A. B. Miek, S. M. Takaendisa |
AUDITED ABRIDGED GROUP RESULTS
FOR THE YEAR ENDED 10 JULY 2022
SUPPLEMENTARY INFORMATION (continued)
-
IAS 21 (The Effects of Changes in Foreign Exchange Rates)
As noted in the Group's 2019 financial statements, the Government of Zimbabwe promulgated Statutory
Instrument 33 (S.I. 33) on 22 February 2019, giving legal effect to the reintroduction of the Zimbabwe Dollar (ZWL$) as legal tender and prescribed that for accounting and other purposes, certain assets and liabilities on the effective date would be deemed to be Zimbabwe Dollars at the rate which was at par with the United States Dollar (USD). Guidance issued by the Public Accountants and Auditors Board (PAAB), noted that the requirements of
SI33 were contrary to the provisions of IAS 21. The Directors have always ensured compliance with IFRS but were unable to do so in respect of the comparative financial information due to the conflict between IAS 21 and local statutory requirements. Due to the material and pervasive impact of these technicalities in the previous periods
and the carrying over effects of these misstatements on the current period consolidated inflation-adjusted financial statements, the Directors would like to advise users to exercise caution in their use of these inflation- adjusted financial statements. - Adoption of IAS 29 (Financial Reporting in Hyperinflationary Economies)
In October 2019, the PAAB issued a pronouncement prescribing that the application of financial reporting in
hyperinflationary economies had become effective in Zimbabwe, for reporting periods on or after 01 July 2019.
These financial statements have been prepared in accordance with IAS 29. The Group adopted the Zimbabwe
Consumer Price Index ('CPI") as the general price index to restate transactions and balances. Monetary assets and liabilities and non-monetary assets and liabilities carried at fair value have been restated as the are presented at the measuring unit current at the end of the reporting period. Items recognised in the income statement have
been restated by applying the change in general price index from the dates when initially recorded in the Group's financial records (transaction date). A net monetary adjustment was recognised in the statement of profit or loss for the year ended 10 July 2022. Comparative amounts in the Group financial results have been restated to reflect
the change in the general price index from 22 February 2019 to the end of the reporting period. All items in the statement of cashflows are expressed based on the restated financial information for the period.
As mentioned above, the Group adopted the Zimbabwe Consumer Price Index ("CPI") as the general price index and used the monthly indices to inflation adjust the historical figures. The indices and conversion factors used to restate the accompanying financial statements are as follows:
Indices | Conversion factor | |
CPI on 30 June 2022 | 8 707.35 | 1.000 |
CPI on 30 June 2021 | 2 986.44 | 2.916 |
CPI on 30 June 2020 | 1 445.21 | 6.025 |
CPI on 30 June 2019 | 172.60 | 50.448 |
Average CPI - 12 months to 30 June 2022 | 2.07 | |
Average CPI - 12 months to 30 June 2021 | 1.21 |
INFLATION ADJUSTED | HISTORICAL COST | ||||||||
2022 | 2021 | 2022 | 2021 | ||||||
ZWL$ | ZWL$ | ZWL$ | ZWL$ | ||||||
3. INVENTORIES | |||||||||
Finished goods | 351 746 421 | 355 609 055 | 190 585 451 | 61 753 810 | |||||
Raw materials | 49 794 976 | 45 570 789 | 24 031 000 | 5 075 290 | |||||
Work in progress | 1 191 755 | 2 307 614 | 575 140 | 791 464 | |||||
402 733 152 | 403 487 458 | 215 191 591 | 67 620 564 |
4. TRADE AND OTHER RECEIVABLES
Trade receivables | 115 232 689 | 109 374 301 | 115 232 689 | 37 513 147 | |||
Prepayments | 5 779 706 | 19 033 696 | 5 621 247 | 6 127 799 | |||
Other receivables | 29 027 446 | 18 400 651 | 28 795 479 | 6 250 937 | |||
Allowances for credit losses | (15 184 441) | (7 306 767) | (15 184 441) | (2 506 072) | |||
134 855 400 | 139 501 881 | 134 464 974 | 47 385 811 | ||||
INFLATION ADJUSTED | HISTORICAL COST | ||||||||
2022 | 2021 | 2022 | 2021 | ||||||
ZWL$ | ZWL$ | ZWL$ | ZWL$ | ||||||
5. | TRADE AND OTHER PAYABLES | ||||||||
Trade payables | 177 874 376 | 182 928 587 | 177 874 376 | 62 740 760 | |||||
Other payables and accruals | 178 567 896 | 97 610 730 | 178 356 312 | 32 056 792 | |||||
356 442 272 | 280 539 317 | 356 230 688 | 94 797 552 | ||||||
6. | HEADLINE LOSS PER SHARE | ||||||||
Loss attributable to shareholders | (37 136 777) | (132 277 099) | (42 026 175) | (4 191 544) | |||||
Adjusted for non-recurring items:- | |||||||||
Profit on disposal of property, plant | |||||||||
and equipment | (1 370 427) | (2 753 121) | (367 795) | (870 673) | |||||
Headline loss | (38 507 204) | (135 030 220) | (42 393 970) | (5 062 217) | |||||
Headline loss per share (cents) | (10.11) | (35.45) | (11.13) | (1.33) | |||||
Weighted average number of ordinary shares | |||||||||
used in calculating earning loss per share | 380 901 152 | 380 901 152 | 380 901 152 | 380 901 152 | |||||
7. | CONTINGENT LIABILITIES | ||||||||
There are no contingent liabilities. | |||||||||
8. | CAPITAL EXPENDITURE FOR THE YEAR | 2 651 111 | 7 305 809 | 1 268 687 | 2 365 583 | ||||
- GOING CONCERN
The Directors have assessed the ability to continue as a going concern for the foreseeable future and believe that the preparation of the financial statements on a going concern basis is appropriate. - EVENTS AFTER THE END OF REPORTING PERIOD
There have not been any events after reporting date that have had an impact on the financial statements. The group continues to rationalise operations though maintaining profitable sites, as such 4 Stores were closed after the reporting period and this had no impact on the financial statements being presented.
Top Quality Clothing That Lasts
PAGE
2 | Directors: M. P. Mahlangu (Chairman), B. Ndebele (C.E.O), B. H. Henderson, F.K. Khan, L. Mabhiza, W. Matsaira, A. B. Miek, S. M. Takaendisa |
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Truworths Ltd. published this content on 18 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 January 2023 10:09:08 UTC.
