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Companies mull reporting in US dollars

THE Zimbabwe Stock Exchange (ZSE) is analysing proposals submitted by listed companies to report their accounts in United States dollar terms as a means of getting around the delays in the release of inflation figures.

ZSE chief executive officer Emmanuel Munyukwi said the local bourse had received a number of proposals from quoted companies after the Central Statistical Office (CSO) failed to publish inflation results for the greater part of last year.

Munyukwi said the proposals were submitted before the CSO released the annual inflation figures for December 2007 two weeks ago. He said the ZSE would look at the merits of the proposals.

The CSO has failed to publish year-on-year inflation figures on time for the past seven months.

Munyukwi said companies had argued in their proposals that the delay in the release of inflation figures was affecting the release of their inflation-adjusted accounts.

They also argued that most of their costs were United States dollar-denominated.

“There is a drive at the moment by some of these (listed) companies to publish their (financial) statements with figures denominated in US dollars,” Munyukwi said.

“We are not too sure if that is legal but we are looking into it,” he said.

Mining counter, Falgold, was the first to publish its financial statements in United States dollars last year. However, this move was met with stiff resistance from the ZSE forcing Falgold to eventually publish its statements using the local currency.

Listed companies are required by both the ZSE and the Companies Act to publish their audited financial statements at least 90 days after the financial year end. The 90-day requirement is also observed internationally.

The delay in the release of the inflation figures has made it difficult for most listed companies to release their account with the required 90-day period.

Most quoted companies changed their financial year end to December 31 when Zimbabwe changed its tax year.

Foreign-owned companies have been hardest hit by the CSO’s delays.

The majority are required to prepare their audited and inflation adjusted financial statements well before the 90-day deadline to allow the holding companies to consolidate their accounts into the group statements before deadline, which is an international standard, lapses.

Munyukwi said there were fears that some local companies could fail to submit their audited statements on time because of the delays in the inflation figures.

“We are not encouraging companies to delay in releasing their audited financial statements. The inflation figures were released last week so they should try and make sure they comply. But we know some will fail because of genuine reasons. If they do, why punish them when the fault was not theirs?”

He would not however divulge which exchange rate the companies would use. Zimbabwe has three main exchange rates – the official one at US$1:$30 000, the Old Mutual Implied Rate and the parallel market rate.

“I would rather not go into details on that as we are talking to the companies concerned and the Institute of Chartered Accountants of Zimbabwe (ICAZ),” Munyukwi said.

ICAZ chief executive officer Sonny Mabheju said annual reporting by both quoted and unquoted companies had become a nightmare because of the delay of inflation figures.

“Foreign owned companies are the worst affected,” Mabheju said. “They have stricter reporting requirements as holding companies will have to consolidate and report within 90 days. The late release however of December inflation figures may avert our worst fears.”

Confederation of Zimbabwe Industries (CZI) president Callisto Jokonya said: “Inflation figures are always of importance as they help us plan. We are talking to the Minister of Finance who is the first port of call. If we quote in other currencies, it would look like we are not working with government. But government has to make the environment favourable by providing these figures.” — Kuda Chikwanda

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