Simbisa Brands Limited

Simbisa Brands releases its 2023 Annual Report

By Published On: November 7th, 2023Categories: Corporate announcement, Earnings

Chairman’s Statement

Simbisa Brands Limited – A Year of Growth despite the Challenges


Simbisa Brands Limited has had a strong year, recording good overall revenue and EBITDA growth of 23% and 9%, respectively. This success can be attributed to various factors, including the expansion of our store footprint and the continued development of the Group’s digital channels.

The Company has seen a significant increase in the total number of stores, with a net growth of 7% since the beginning of the financial year under review. The Group closed the financial year with 646 stores (30 June 2022: 605).

While the results for the year are commendable, the Board acknowledges the challenges that need to be addressed to achieve the Group’s long-term objectives.


During the period under review, Kenya experienced economic headwinds, resulting in depressed customer count growth and cost volatility. Consequently, revenue growth in this market was significantly constrained during the financial year, weighing down the operating profit in the Region segment. Initiatives to overcome these challenges and achieve sustainable growth in the future are being implemented.


The Board is proactively addressing the multifaceted economic risks stemming from the persistent challenges faced in Zimbabwe, such as soaring inflation, volatile exchange rates, uncertain economic policies, and energy deficiencies. Simbisa is implementing effective strategies to navigate these hurdles and sustain the growth of its business operations within the Zimbabwean market. Despite these and other challenges, the Zimbabwe business recorded impressive growth in Revenue and Operating Profit.


The Group is dedicated to ensuring the sustainable management of its business, placing a strong emphasis on minimising its environmental footprint and enhancing its social influence. Simbisa has proactively introduced a range of initiatives to accomplish these objectives, encompassing energy conservation measures and comprehensive employee welfare schemes. Moreover, the Group is determined to make a positive difference in the communities it serves, actively contributing to their development and well-being.

In the past year, we expanded our offerings to include additional staff health services. We understand that these are difficult times and that we need to look after our most important asset, our staff. That’s why we now offer a 24-hour mental health support line to all our staff.

On the education front, in collaboration with like-minded organisations, we sponsored two marathons in the financial year to raise funds for the USAP Community School, which educates high-achieving, low-income Zimbabwean students to excel at the world’s top universities and return home to build the nation.


i) Change in functional and presentation currency from the ZWL to the USD
Effective 1 July 2022, Simbisa Brands Limited changed its functional currency from ZWL to USD. This decision was made to reflect the Group’s financial performance better and provide greater transparency to investors. The presentation currency was also changed to USD on the same date.

The Group exercised careful judgment in the conversion of comparative financial statements that were originally denominated in ZWL. This process entailed differentiating between USD and ZWL transactions and balances. Previous years’ transactions and balances in USD were retained in their original currency, with only the ZWL transactions and balances converted into USD at the transaction-based rate, as further explained below. For property, plant and equipment, an independent valuation was performed. The valuation was performed as of 1 July 2022. This same value was then employed in the statement of financial position dated 30 June 2022 to enhance comparability. This methodology, however, deviates from IAS 21, which specifies that inflation-adjusted financials should be converted at a spot exchange rate into the new functional and reporting currency. Applying IAS 21 would have led to significant distortions in the financial statements, given that CPI indices do not mirror the actual foreign currency exchange rate trends in the economy. Also, adherence to IAS 21 would have resulted in a different value for a transaction or balance originated in USD. The Group strongly believes that its chosen methodology provides a fair and accurate depiction of the financial performance of business. These deviations from IAS 21 have led the independent auditors to issue a qualified opinion on the consolidated financial statements.

ii) Use of estimated foreign exchange rates
Despite the anticipated improvement in the financial statements due to the transition to reporting in USD, the distortion in exchange rates persists. This distortion results from the significant gap between the official exchange rate and the implied real exchange rate, which is determined by comparing local and foreign currency prices. Although there has been some stability in the exchange rate after the end of the financial year, it is essential to note that the relevant authorities are yet to fully address this issue.

The Chairman’s previous reports accompanying the Group’s financial statements for the financial years ended 30 June 2021 and 30 June 2022 respectively, emphasised that the exchange rate derived from the Reserve Bank of Zimbabwe’s weekly Foreign Currency Auction System (known as the “Auction Rate”) is deemed inappropriate. To accurately represent the Group’s financial performance and position, Simbisa has continued to use an estimated exchange rate based on market transaction rates, which are then used to translate monetary foreign currency balances. This approach was deemed fair and accurate by the Board. However, the Group’s Independent Auditors have a different opinion. They consider the Auction Rate to be compliant with IAS 21 and have issued a qualified opinion, for the same reason as the adverse audit opinion for the previous financial year.

On 15 August 2023, the International Accounting Standards Board (the IASB or Board) issued Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates) (the amendments). The amendments specify how an entity should assess whether a currency is exchangeable and how to determine a spot exchange rate when exchangeability is lacking. Simbisa is still assessing the impact of this standard on the Group’s financial statements. However, the Group believes that this amendment is relevant to the current Zimbabwe economic environment and that the Group’s method of estimating the transaction-based rate used in the current financial statements is aligned with the principles in the amendment. The Group intends to adopt this amendment in the financial year beginning 01 July 2023.

iii) Change in accounting policy for property, plant and equipment
Effective 1 July 2022, the Group has changed its accounting policy for property, plant, and equipment from the cost model to the revaluation model in accordance with International Financial Reporting Standards (IFRS). The revaluation model provides a more accurate representation of the fair value of property, plant, and equipment. The fair value of the assets has been determined based on independent valuations conducted by qualified professionals. Revaluation gains or losses are recognised in other comprehensive income, in accordance with IAS 16. The revaluation of Zimbabwean operations was however applied to the 30 June 2022 carrying amount as part of the take-on balances, to cater for the change in functional currency and restatement of the comparative statement of financial position.


Simbisa Brands Limited achieved significant financial milestones during the year:

  1. Revenue increased by an impressive 23% overall, with Zimbabwe contributing with a growth rate of 34% and the Region growing 5%. This revenue growth in Zimbabwe was primarily driven by a considerable increase in customer counts of 24%. In the Region, customer counts grew by 2.5%.
  2. Adjusted operating profit measure – This measure is after adjusting attributable profit for the impact of IFRS 16, ‘Leases’. IFRS 16 treats leases previously classified as operating leases under the previous standard, IAS 17, as financing arrangements. The Directors believe that considering the nature of the Group’s lease arrangements, an adjusted profit measure excluding the impact of IFRS 16 is valuable to users of the financial statements. The adjusted measures are as follows:

    In Zimbabwe, the adjusted operating profit witnessed a commendable growth of 9%. However, the Region’s operating profit experienced a decline of 13%, primarily due to the challenging economic conditions in Kenya. These conditions were largely influenced by the uncertainty surrounding the elections, high inflation, and business disruptions due to cost-of-living protests, which significantly impacted customers. This overall growth in adjusted operating profit was 9%.
  3. Depreciation, amortisation, and impairment witnessed an increase of 10%, driven by the upward revaluation of fixed assets conducted by the Group at the start of the financial year.
  4. The profit from associates represents the share of profit from the Group’s non-controlling stake in InnBucks MicroBank.
  5. The adjusted profit attributable to shareholders was down marginally as reflected below.
  6. The financial position of Simbisa Brands Limited as of 30 June 2023 demonstrates its sustained growth trajectory. The total assets have experienced a significant increase, primarily driven by strategic investments in capital expenditure. These investments have been financed through a combination of current-year profits and increased debt and working capital funding.
  7. Excluding the IFRS 16 liabilities, the net debt position of the Group stood at -USD1.4 million (compared to USD1.9 million in the previous period). The additional debt was utilised to support various capital expenditure projects to expand and maintain the Group’s operations.
  8. The cash generated from operations remained robust and exceeded 100% of the operating profit, indicating a healthy cash flow generation potential for the Group.
  9. A substantial portion of the cash generated, amounting to USD27.1 million (equivalent to 60%), was spent on investing activities, mainly towards capital expansion and maintenance initiatives. This demonstrates the Group’s commitment to investing in its infrastructure and ensuring the long-term sustainability of its operations.


The Board resolved to declare a final dividend of 0.433 US cents per share. This takes the full year dividend to 1.313 US cents per share. Furthermore, the Board approved a dividend of USD121,713 to the Simbisa Employee Share Trust. The dividend will be payable in United States dollars on or about 16 November 2023 to shareholders registered in the books of the Company at the close of business on 10 November 2023. The last day to trade cum-divided is 7 November 2023, and the ex-dividend date is 8 November 2023.


Simbisa Brands Limited sees significant growth opportunities in its largest markets for its flagship brands. The Group has invested in talented leaders to lead these brands and has recruited skilled personnel to ensure quality, consistency, and innovation within its franchising division.

For the year ending 30 June 2024, Simbisa plans to open 92 new stores at a total cost of more than USD22 million. Additionally, the Company is exploring value-creating initiatives with partners throughout its value chain. These strategic moves aim to fuel further growth and expansion for Simbisa Brands Limited. There will be a continuous strategic review of operations in all the smaller markets.


On behalf of the Board, I commend our Executive and Management teams for their contribution to Simbisa Brands Limited’s performance for the year ended 30 June 2023. The company achieved substantial revenue and Operating profit growth, positioning it well for continued success in the future.

The Company is also grateful to its loyal Customers who continue to support our brands. In the year under review the Group served more than 62 million customers.

We thank the various suppliers, partners, and stakeholders in all our markets without whom this performance would not be possible.

Given the pipeline of stores planned for financial year ending June 2024 and the planned optimisation of our business operations, we are optimistic that our Company will continue to deliver improved results.

Independent Non-executive Chairman

27 October 2023

Related Downloads

Simbisa Brands Limited 2023 Annual Report

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Simbisa Brands Limited (SIM.vx)

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