HARARE – OK Zimbabwe’s audited results for the year ended 31 March 2025 show a deepening loss and a sharp fall in revenue, amid a qualified audit opinion arising from currency translation issues and unresolved inventory verification concerns.
The Zimbabwe Stock Exchange listed company’s external auditors KPMG issued a qualified opinion citing non-compliance with international financial reporting standards and insufficient audit evidence for inventory balances.
The audit report drew attention to material uncertainties regarding OK Zimbabwe’s ability to continue as a going concern.
These uncertainties relate to achieving targeted revenue growth, securing adequate liquidity through banking facilities, and realising fair value from property disposals should the Group need to sell assets.
According to the audit report, the qualification arose from the Group’s non-compliance with IAS 21 The Effects of Changes in Foreign Exchange Rates.
The auditors noted that the company used in-store exchange rates and implied supplier rates when translating opening balances of certain non-monetary assets from Zimbabwean dollars to United States dollars following the change in functional currency on 1 April 2024.
This translation approach did not fully comply with the requirements of IAS 21.
KPMG also highlighted that the retailer continued using in-store exchange rates for a period during the year under review, contrary to IFRS guidelines.
In addition, the auditors said they were unable to obtain sufficient and appropriate evidence relating to the existence and valuation of inventory for both the current and prior financial periods.
“During the current year, from 1 November 2024 to 31 March 2025, the Group’s local currency (Zimbabwe Gold) transactions and balances were translated into the functional and presentation currency (US$) using instore exchange rates, which were not considered appropriate spot exchange rates for transactions as required by IAS 21,” the auditors noted.
OK Zimbabwe’s financial performance deteriorated significantly during the year, with revenue falling by 52% to US$245.17 million from US$511.01 million in the previous financial year.
The Group recorded a loss before tax of US$30.32 million and a net loss of US$25.03 million, compared to a prior-year net loss of US$619,367.
Total assets declined to US$101.83 million from US$136.39 million the previous year, while equity dropped from US$62.38 million to US$33.43 million. Basic loss per share widened to 1.89 US cents, and headline loss per share reached 1.08 US cents.
The Group’s operations were weighed down by supply chain disruptions, liquidity constraints, sharp depreciation of the local currency, and increased competition from the informal sector.
Impairments amounted to US$10.3 million after several cash-generating units were assessed to have recoverable values below their carrying amounts. Capital expenditure was limited to US$0.9 million due to constrained cash flows.
The Board announced it would not declare a dividend for the year, citing the loss-making position.
Management said a recovery plan is underway following a successful rights issue that raised US$20 million, with an additional US$10.5 million expected from ongoing property disposal processes.
The Group expects that increased liquidity, restocking, and operational restructuring will support efforts to stabilise the business in the coming financial year.
