Truworths : FY23 Unaudited Preliminary Results

ZIMBABWE LIMITED

(Incorporated in Zimbabwe in 1957, under Company Registration Number 602/57)

UNAUDITED PRELIMINARY GROUP RESULTS

FOR THE YEAR ENDED 09 JULY 2023

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 preliminary results 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-compliance stated in the paragraph below.

The principal accounting policies applied in the preparation of these preliminary results are consistent with those applied in the previous annual financial statements, except for non-compliance with International Accounting Standard (IAS) 8 (Accounting Policies, Changes in Accounting Estimates and Errors), (IAS) 21 (Effects of Changes in Foreign Exchange Rates), valuation methodology on Property, Plant and Equipment and the consequential impact on (IAS) 29 (Financial Reporting in Hyperinflationary Economies). There is no significant impact arising from new and revised IFRS which became effective for reporting periods commencing on or after 1 January 2023.

CAUTIONARY STATEMENT - RELIANCE ON ALL FINANCIAL STATEMENTS PREPARED IN ZIMBABWE FOR 2022/2023

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 2022/2023 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 reasonable 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-adjusted financial statements. Financial statements prepared under the historical cost convention have been prepared as supplementary information.

KEY FINANCIAL REPORTING MATTERS

Users are advised to exercise caution in the interpretation of these financial statements.

We expect to publish the audited financial results on or about 29 February 2024 in line with the Zimbabwe Stock Exchange approval.

OPERATING ENVIRONMENT

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	Full year to
	09 July 2023	10 July 2022
Units	-33.8%	+9.5%

Units sold declined by 33.8% due to the suspension of ZWL$ credit from 1st of July 2022.

USD Credit was introduced in February 2023.

Units sold were negatively affected by informalisation of the economy which has resulted in cheap and fake imports selling at below local and international manufacturing costs. The business could not viably compete against these imports.

Sales participation by enabler

	Full year to	Full year to
	09 July 2023	10 July 2022
Cash sales	82%	66%
Credit sales	18%	34%

The ZWL$ cash sales value was negatively affected by the following:

• Price controls enforced by the FIU through the use of the official (exchange rate) in the sale of merchandise. The business maintained competitive US dollar pricing in order to be able to compete on a US dollar basis, translating the US dollar price to ZWL price at the Auction Rate resulted in the uneconomic ZWL prices and loss of value.
• Informalisation of the economy which has resulted in cheap and fake imports selling at below manufacturing costs which the business could not compete against.

CREDIT MANAGEMENT

The debtors book declined as ZWL$ credit sales were stopped in July 2022. This was due to the increase in the prime interest rate to 200% per annum which made credit sales unviable for the business. However, the business resumed credit sales in February 2023 but ONLY IN USD.

RIGHTS ISSUE

Pursuant to the need for Truworths to re-capitalize its operations, the directors proposed a renounceable rights offer of 384,067,512 or "Rights Offer" Ordinary Shares of a nominal value of ZWL$0.0001 each, at a price of ZWL$5.80 per Rights Offer Share, on the basis of one (1) Rights Offer Share for every one (1) ordinary share held at the 11 July 2023. The approval to raise capital by way of renounceable rights offer was granted at an Extra - Ordinary General Meeting of the Shareholders held on 4 July 2023, and the rights offer closed on 9 August 2023.

Of the ZWL$2,227,591,570 amount to be raised, ZWL$301,000,000 had been raised by the reporting date (09 July 2023). The resultant balance was settled post reporting date on 9 August 2023.

DIVIDEND

The directors deemed it prudent not to declare a dividend for the year.

OUTLOOK

The Economic Environment continues to be uncertain, unstable and complex.

To return to sustainable profitability, the business needs to offer credit in a stable currency and access long-term funding at affordable interest rates. Regrettably these conditions do not currently exist in the Zimbabwean Economy.

We remain hopeful that currency reforms will lead to stability and improved liquidity.

APPRECIATION

The Board would like to express their heartfelt thanks to Management, Staff and all other stakeholders for their efforts and support under difficult circumstances.

M.P. Mahlangu	B. Ndebele
Chairman	Chief Executive Officer
19 February 2024

Registered Office

4 Conald Road

Graniteside

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
		09 July 2023		10 July 2022			09 July 2023		10 July 2022
	Note	ZWL$		ZWL$			ZWL$		ZWL$
Revenue		2 596 719 409		750 710 666			1 927 710 158		573 697 653
Revenue from contract with customers		2 472 256 077	622 473 112	1 856 261 761	475 697 735
Cost of sales		(517 581 952)	(149 723 843)	(475 054 837)	(114 419 871)
Gross profit		1 954 674 125		472 749 269			1 381 206 924		361 277 864
Other operating income		6 956 678	4 586 718	5 978 589	3 505 198
Manufacturing profit		103 781 745	17 885 496	140 723 559	13 668 205
Trading expenses		(3 030 896 955)	(631 244 049)	(2 780 996 203)	(482 400 539)
Trading loss		(965 484 407)		(136 022 566)		(1 253 087 131)		(103 949 272)
Finance income		46 884 438	116 462 539	42 375 034	89 001 380
Finance costs		(375 011 788)	(38 569 810)	(344 297 437)	(29 475 283)
Exchange gain / (loss)		2 542 635 153	(4 148 088)	2 468 341 831	(3 169 994)
Monetary (loss) / gain		(207 969 662)	265 526 465	-	-
Profit / (loss) before tax		1 041 053 734		203 248 540			913 332 297		(47 593 169)
Tax credit		394 230 918	7 284 676	345 564 942	5 566 994
Profit / (loss) for the year		1 435 284 652		210 533 216			1 258 897 239		(42 026 175)
Other comprehensive income
Revaluation of property, plant and
equipment (net of tax)		1 150 378 235	123 377 146	1 212 379 782	94 285 565
Total comprehensive income for the year		2 585 662 887		333 910 362			2 471 277 021		52 259 390
Earnings / (loss) per share
Basic and diluted earnings / (loss)
per share (cents)		376.81	55.27	330.50	(11.03)
Basic and diluted headline
earnings / (loss) per share (cents)	6	376.81	55.27	330.50	(11.03)
Key ratios
Gross margin		79.06	75.95	74.41	75.95
Trading expenses to retail merchandise sales	122.60	100.88	149.82	100.88
Trading margin		(39.05)	(22.52)	(67.51)	(22.52)
Operating margin		(37.16)	(3.81)	(65.22)	(3.81)

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 09 July 2021		50 258	(415)	8 852 901	40 167 595	123 426 324	172 496 663
Profit for the year	-	-	-	-	210 533 216	210 533 216
Revaluation of property,
plant and equipment	-	-	-	163 891 002	(40 513 856)	123 377 146
Balance at 10 July 2022	50 258	(415)	8 852 901	204 058 597	293 445 684	506 407 025
Profit for the year	-	-	-	-	1 435 284 652	1 435 284 652
Revaluation of property,
plant and equipment	-	-	-	1 528 132 618	(377 754 383)	1 150 378 235
Proceeds from Rights Issue	5 190	-	300 994 810	-	-	301 000 000
Balance at 09 July 2023	55 448	(415)	309 847 711	1 732 191 215	1 350 975 953	3 393 069 912
				HISTORICAL COST
				Non-
		Share	Treasury	Distributable	Revaluation	Retained
		Capital	Shares	Reserve	Reserve	Earnings	Total
		ZWL$	ZWL$	ZWL$	ZWL$	ZWL$	ZWL$
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,

ABRIDGED GROUP STATEMENT OF FINANCIAL POSITION

		INFLATION ADJUSTED		HISTORICAL COST
		As at		As at		As at		As at
		09 July 2023		10 July 2022		09 July 2023		10 July 2022
ASSETS	Note	ZWL$		ZWL$		ZWL$		ZWL$
Non-current assets		2 179 450 340	509 831 633	2 080 123 857	161 552 597
Property, plant and equipment		1 736 618 375		483 077 196		1 687 482 279		158 923 254
Intangible assets		281 099		11 903 080		214 818		221 724
Right of use asset		2 347 944		14 851 357		1 605 079		2 407 619
Deferred tax asset		440 202 922		-		390 821 681		-
Current assets		4 020 256 241	705 583 955	3 569 870 960	357 248 524
Inventories	3	3 524 069 891		526 995 485		3 073 684 610		215 191 591
Receivables - trade	4	400 844 736		125 123 208		400 844 736		115 232 688
- other		32 894 174		43 530 823		32 894 174		19 232 286
Cash and cash equivalents		62 447 440		9 934 439		62 447 440		7 591 959
Total Assets		6 199 706 581	1 215 415 588	5 649 994 817	518 801 121
EQUITY & LIABILITIES
Equity		3 393 069 912	506 407 025	2 862 073 844	89 796 823
Non-current liabilities		406 542 029		180 471 727		387 826 333		25 304 820
Deferred tax liability		405 077 113		179 065 702		386 361 417		24 230 327
Non current portion of lease liability		1 464 916		1 406 025		1 464 916		1 074 493
Current liabilities		2 400 094 640	528 536 836	2 400 094 640	403 699 478
Payables - trade	5	1 207 345 150		448 790 660		1 207 345 150		177 874 376
- other		1 122 377 561		17 631 006		1 122 377 561		178 356 312
Short term borrowings		36 493 799		56 108 209		36 493 799		42 878 234
Current portion of lease liability		821 678		2 324 669		821 678		1 776 526
Current tax		33 056 452		3 682 292		33 056 452		2 814 030
Total Equity & Liabilities		6 199 706 581	1 215 415 588	5 649 994 817	518 801 121
Number of shares in issue (net of treasury shares)	380 901 152		380 901 152		380 901 152		380 901 152
Net asset value per share (cents)		890.80	132.95	751.40	23.57

plant and equipment	-	-	-	114 928 136	(20 642 571)	94 285 565
Balance at 10 July 2022	38 407	(317)	6 765 441	145 624 456	(62 631 164)	89 796 823
Profit for the year	-	-	-	-	1 258 897 239	1 258 897 239
Revaluation of property,
plant and equipment	-	-	-	1 610 493 866	(398 114 084)	1 212 379 782
Proceeds from Rights Issue	5 190	-	300 994 810	-	-	301 000 000
Balance at 09 July 2023	43 597	(317)	307 760 251	1 756 118 322	798 151 991	2 862 073 844

ABRIDGED GROUP STATEMENT OF CASHFLOWS

		INFLATION ADJUSTED			HISTORICAL COST
		52 weeks to		52 weeks to			52 weeks to		52 weeks to
		09 July 2023		10 July 2022			09 July 2023		10 July 2022
		ZWL$		ZWL$			ZWL$		ZWL$
Net cash generated / (utilised) in operations	81 650 446	(102 277 662)	57 407 500	(78 161 211)
Net finance income	(328 127 350)	77 892 729	(301 922 403)	59 526 097
Tax paid	-	(889 663)	-	(679 886)
Net cash (utilised in) / generated
from operating activities	(246 476 904)		(25 274 596)			(244 514 903)		(19 315 000)
Cash utilised in investing activities	(2 068 989)	(534 861)	(2 020 039)	(408 744)
Net cash generated from financing activities	301 058 894		27 962 706			301 390 423		21 369 270
Net increase in cash and cash equivalents	52 513 001	2 153 249	54 855 481	1 645 526
Cash and cash equivalents at beginning of year	9 934 439	7 781 190	7 591 959	5 946 433
Cash and cash equivalents at end of year	62 447 440		9 934 439			62 447 440		7 591 959

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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

ZIMBABWE LIMITED

(Incorporated in Zimbabwe in 1957, under Company Registration Number 602/57)

UNAUDITED PRELIMINARY GROUP RESULTS

FOR THE YEAR ENDED 09 JULY 2023

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 09 July 2023 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-compliancewith
   International Financial Reporting Standards explained below. The Group's inflation adjusted 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 financail 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 1 (Presentation of Financial
   Statements) and IFRS 15 (Revenue from Contracts with Customers) on presentation 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.

1. IAS 21 (The Effects of Changes in Foreign Exchange Rates)
   As noted in the Group's 2019 financial statements, the Government of Zimbabwe promulgamated 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 confluct 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 exercies caution in their use of these inflation- adjusted financial statements.
2. 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 09 July 2023. 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 follow:

	Indices	Conversion factor
CPI on 30 June 2023	100.33	1.000
CPI on 30 June 2022	76.67	1.309
CPI on 30 June 2021	53..07	1.890
CPI on 30 June 2020	43.75	2.293
Average CPI - 12 months to 30 June 2023	1.15
Average CPI - 12 months to 30 June 2022	1.60

	INFLATION ADJUSTED			HISTORICAL
	2023		2022	2023	2022
	ZWL$	ZWL$			ZWL$		ZWL$
3. INVENTORIES
Finished goods	3 472 451 736		466 736 045	3 024 418 369	190 585 451
Raw materials	49 315 481		58 850 945	47 620 772	24 031 000
Work in progress	2 302 674		1 408 495		1 645 469		575 140
	3 524 069 891		526 995 485	3 073 684 610	215 191 591
4. TRADE AND OTHER RECEIVABLES
Trade receivables	400 844 736		125 123 208	400 844 736	115 232 688
Prepayments	17 592 148		7 355 669	17 592 148	5 779 706
Other receivables	31 438 966		56 044 717	31 438 966	29 027 447
Deduct: allowances for credit losses	(16 136 940)	(19 869 563)	(16 136 940)	(15 184 441)
	433 738 910		168 654 031		433 738 910		134 464 974

5. TRADE AND OTHER PAYABLES

	Trade payables	1 207 345 150	448 790 660	1 207 345 150	177 874 376
	Other payables and accruals	1 122 377 561		17 631 006	1 122 377 561	178 356 312
		2 329 722 711		466 421 666	2 329 722 711	356 230 688
6.	HEADLINE EARNINGS / (LOSS) PER SHARE
	Earnings / (loss) attributable to shareholders	1 435 284 652	210 533 216	1 258 897 239	(42 026 175)
	Adjusted for non-recurring items:-
	Profit on disposal of property,
	plant and equipment	-		-		-		-
	Headline earnings / (loss)	1 435 284 652		210 533 216	1 258 897 239	(42 026 175)
	Headline earnings / (loss) per share (cents)	376.81	55.27	330.50	(11.03)
	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	2 068 989		1 660 137		2 020 039		1 268 687

1. 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.
2. EVENTS AFTER THE REPORTING PERIOD
   There have not been any events after reporting date that have had an impact on the financial statements. The Rights offer was closed on 9 August 2023 after the reporting period and this had no impact on the financial statements being presented.

Top Quality Clothing That Lasts

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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