Zeco Holdings Limited (ZECO.zw) HY2019 Interim Report

We have extracted the Chairman’s Statement from the 2019 half year report for Zeco Holdings Limited (ZECO.zw), listed on the Zimbabwe Stock Exchange:

Directors’ responsibility

The Directors of Zeco Holdings Limited are responsible for the preparation and fair presentation of the group’s consolidated financial statements, of which the press release represents an extract. The abridged group interim financial results have been prepared in accordance with International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03) and the Zimbabwe Stock Exchange listing requirements for provisional interim financial statements (interim reports).

Operating overview

The period under review remained highly volatile for business operations as it was characterised by significant policy changes in a market faced with foreign currency shortages. tight liquidity and high inflation. Annual inflation reached 175.66% in June 2019 and the Government has discontinued publishing the year on year statistics, a phenomenon that will make measurability of performance very difficult. The Government of Zimbabwe, through Statutory Instrument 142/2019 issued on 24 June 2019, introduced the ZWL$ as the sole tender for trading and settlement for domestic transactions. This has resulted in a number of projects, which the Group was poised to benefit from, being either shelved or delayed.

Performance review

The group recorded revenues of ZWL$$0.323 million for the six months ended June 30, 2019. Despite cost containment efforts, the group recorded a loss of ZWL$$0.886 million.

Non-current assets as at 30 June 2019 amounted to ZWL$31.652 million. In February 2019, the Government of Zimbabwe gazetted Statutory Instrument 33 of 2019 which prescribed the take on balances for assets and liabilities on a 1:1 basis for transactions done prior to 21 February 2019 the values of the assets reflected in the financial statements were computed using 1:1 basis. A comprehensive valuation will be carried out during the course of the year taking into account the current market valuation of the entire property, plant and equipment.

The group mainly relies on infrastructure projects and construction materials, due to challenging economic environment, the group’s performance was adversely affected as no major projects were undertaken during the period under review due 10 inflationary pressures resulting in the suspension of major projects.

Dividend

The was no dividend declared or paid during the period under review.

Board changes

There were no changes in the Directorate during the period under review. However, the Group is in the process of appointing additional Directors in compliance with 51134 of 2019 and an announcement shall be made as soon as the process is complete.

Outlook

The monetary and fiscal policies being enunciated by government should positively improve the operating environment although in the short term inflationary pressures may persist with gradual improvement. The Group will continue to innovate and maximize on any opportunity which avails itself including prospects of linkages with local and regional players.

Acknowledgements

I would like to thank all our stakeholders,fellow Board members, Management and St their continued support.

Dr P Chiyangwa
CHAIRMAN