ZSE says listed companies are free to report results in USD

(pic: Anchor)

Companies listed on the Zimbabwe Stock Exchange have the option of preparing their financial statements in US dollars, given the currency’s dominance in the economy, the chief executive officer of the bourse said.

Making the switch would require the approval of directors and shareholders, ZSE CEO Justin Bgoni said. “It’s a multi-currency environment, so they can report in US dollars.”

He adds: “We need financials that make sense and are appropriate for the current environment and investors.”

Zimbabwe recently extended the use of the greenback as legal tender until 2030. Authorities said that move provides policy certainty to the market, which has been disrupted by changes to currency regulations in the past. The Zimbabwe dollar was reintroduced in 2019 after a decade-long hiatus, but bouts of instability mean most citizens try to avoid using it for payments.

Companies have had to contend with a volatile exchange rate, along with a widening gap between the official and parallel market value for the currency. The Zimbabwe dollar has weakened 89% on the official market against the US dollar so far this year.

ZSE-listed companies are already switching to USD reporting. Proplastics recently reported its half-year results in USD while Delta, the country’s biggest beverage company, says it may switch to USD results for its full-year report. The currency accounts for more than 80% of its revenue, Delta said during a Nov. 10 analyst briefing.

In their most recent trading updates, property company Masholand Holdings and Dairibord, the country’s biggest dairy producer, presented numbers in USD.

Using US dollars for company earnings will give investors “a much clearer picture of true profitability,” according to Imara Asset Management, a brokerage in Harare that oversees more than US$100 million. “Reporting in Zimbabwe dollars, apart from being meaningless to investors and bankers, can hide a multitude of sins and gives a wrong impression of true profitability,” the brokerage said in an October note.

Dairibord says 93% of its sales in the quarter to September were in USD, up from the average of 39% in the first half of last year.

Almost all bank loans, 94% according to the Reserve Bank of Zimbabwe, are now in USD, after authorities went on a campaign to limit the circulation of Zimdollars to tame inflation.

Bloomberg (with additional reporting by newZWire)