Innscor Africa Limited (INN.zw) HY2022 Interim Report
The Holding Company’s Directors are responsible for the preparation and fair presentation of the Group’s consolidated interim inflation-adjusted financial statements, of which this press release represents an extract. These abridged inflation-adjusted interim financial statements are presented in accordance with the disclosure requirements of the Zimbabwe Stock Exchange (“ZSE”) Listing Requirements for interim financial reporting (Preliminary Reports), and in accordance with the measurement and recognition principles of International Financial Reporting Standards (“IFRS”) and in the manner required by the Companies and Other Business Entities Act (Chapter 24:31).
The principal accounting policies applied in the preparation of these financial statements are consistent with those applied in the previous period’s financial statements. There is no impact arising from revised IFRS, which became effective for the reporting period commencing on or after 1 January 2021 on the Group’s interim financial statements.
CAUTIONARY STATEMENT – RELIANCE ON ALL FINANCIAL STATEMENTS PREPARED IN ZIMBABWE FROM 2019 – 2022
The Directors would like to advise users to exercise caution in their use of these abridged interim inflation-adjusted financial statements due to the material and pervasive impact of the technicalities brought about by the change in functional currency in February 2019 and its consequent effect on the usefulness of financial statements prepared in periods thereafter, and which resulted in carry-over effects into the 2021 financial year reporting period (the comparative period for these interim financial statements).
Whilst the Directors have always exercised reasonable due care, and applied judgements that they felt were appropriate in the preparation and presentation of the Group’s financial statements, certain distortions may arise due to various specific economic factors that may affect the relevance and reliability of the information that is presented in economies that are experiencing hyperinflation, as well as technicalities regarding the change in the functional and reporting currency which occurred in 2019.
IAS 29 (FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES)
International Accounting Standard (“IAS”) 29 provides that inflation-adjusted financial statements are the entity’s primary financial statements, and the Group has complied with this requirement for these abridged interim financial statements. The Consumer Price Index (“CPI”) was applied in the preparation of the hyperinflation financial statements in accordance with IAS 29, and under the direction of the Public Accountants and Auditors Board (“PAAB”).
Due to the prevailing distortions in the economy, and the material and pervasive effects that these can have in the application of the methodologies inherent in IAS 29, the Directors advise users to exercise caution in the interpretation and use of these interim inflation-adjusted financial statements. Due to the foregoing, interim financial statements prepared under the historical cost convention have been presented as supplementary information, and financial commentary has been confined to these particular financial statements.
EXTERNAL AUDITOR’S REVIEW STATEMENT
These abridged interim inflation-adjusted financial statements have been reviewed by Messrs Deloitte & Touche Chartered Accountants (Zimbabwe) (“Deloitte”).
Deloitte has issued a modified review conclusion due to the carry-over effects arising from the recognition of statutory receivables (“blocked funds”) during the year ended 30 June 2020 and the consequential impact contained in the comparative period’s information.
The auditor’s review conclusion on the Group’s interim inflation-adjusted financial statements, from which these abridged Group interim inflation-adjusted financial statements are extracted, is available for inspection at the Company’s registered office.
OPERATING ENVIRONMENT AND OVERVIEW
A mostly positive trading environment characterised the period under review as consumer demand remained firm, supported by the productive 2021 agricultural season, a cyclical rebound of international commodity markets, and the convenience brought to the consumer through the multi-currency system. The Group’s strong trading-oriented focus, combined with improved capacity utilisation and a diversified product portfolio, delivered strong volume growth across all business units over the comparative period.
Notwithstanding the positive trading performance, the general macro-economic environment saw a resurgence in inflation levels and renewed exchange rate volatility, exacerbated by a complex and conflicting policy landscape. The Group remains hopeful that progressive and consistent policies will be employed to eliminate the current market disparities impacting business.
COVID-19 related trading restrictions continued to impact the Group’s formal retail trading channels during the first quarter, albeit to a lesser extent than previously.
The pandemic’s impact on global supply chains and the resultant bottlenecks across major supply hubs continue to be a challenge, resulting in elevated transportation costs and delays in shipment of raw materials, spares and other capital items.
The dynamics of the local operating environment remain relatively complex and challenging despite the buoyant trading activity experienced during the period.
In addition to local inflation and exchange rate volatility, global markets are undergoing an inflationary cycle, and combined with current events in Eastern Europe, this could potentially translate to cost-push inflation within certain imported raw material components.
As noted earlier in this report, commentary on the Group’s interim financial results is confined to the financial statements prepared under the hist