Simbisa Brands hit hard by exchange losses from currency devaluations
HARARE – Simbisa Brands' liabilities have ballooned 276 percent while net foreign exchange losses accelerated during the year ended in June on the devaluation of the Zim dollar.
Simbisa’s balance sheet was previously based on a 1:1 exchange rate valuation against the US dollar, but has now revalued to the prevailing 1:14.
The company, which runs Nando's, Chicken Inn and Steers in Zimbabwe said total liabilities firmed 288 percent to ZWL181.2 million, while total debt surged 276 percent to ZWL163.2m for the full year period to end June 2019.
Zimbabwe's currency reforms have put pressure on companies’ bottom lines, with most failing to comply with International Financial Reporting Standards.
“A net foreign exchange loss of ZWL2.7m includes exchange losses arising from the revaluation of foreign currency denominated assets and liabilities on the Zimbabwe balance sheet,” Simbisa chairperson Addington Chinake said.
The group said 87 percent of liabilities could be attributed to the translation of assets and liabilities in foreign subsidiaries.
The group, however, declared a ZWL0.91 cents dividend for the second half, taking its total for the full year to 1.91c from 1c last year.
It said it also had to contend with currency fluctuations in Zambia and Ghana, but has committed to expanding in its troubled markets such as Zimbabwe and the DRC.
“Zambia and Ghana in particular have been affected by exchange rate weakness with the Ghanaian Cedi and the Zambian Kwacha respectively, which depreciated significantly against the US dollar over the duration,” added Chinake.
The group opened more stores in the DRC and Kenya, taking its counters to 14 outlets outside Zimbabwe.
Customer counts in Zimbabwe, however, dropped 5 percent on economic difficulties that dampened consumer spend.
Overall revenues rose 91 percent stronger to ZWL390m, translating to an operating profit of ZWL64m.
Simbisa is nonetheless expanding its presence in the casual dining business category.
It has also invested in a dial-a-delivery mobile application, which it has rolled out in Zimbabwe and Kenya. The app will be expanded to the group’s other operations across its sub-Saharan Africa operations that also encompass Mauritius.