HARARE- South Africa’s leading retailer Pick n Pay which has a 49% interest in TM Pick n Pay Supermarkets, says changes in Zimbabwe’s functional and reporting currency aftermath of the October 2018 and subsequent February 2019 monetary policies, resulted in a loss in income.
TM Pick n Pay operates 20 branded stores in Zimbabwe and has been increasingly gaining market share since the consummation of the partnership and the succeeding capitalisation of the business which led to a successful expansion drive.
In an annual report for the period to March 2019, Pick n Pay said its share of associate income was down 6.3% year-on-year, due to the impact of a R42.1 million foreign exchange loss on TM’s adoption of the newly recognised RTGS dollars as its functional currency, and a revaluation of relevant balance sheet items effective October 2018.
Profits earned by TM Pick n Pay since that date have been translated by the Group at a rate of 3.3 RTGS dollars to one US dollar.
To arrive at the appropriate exchange rate for the period between October 2018 and February 20, Pick n Pay said it applied significant judgement in estimating the exchange rates to the RTGS and RTGS Dollar.
The inputs considered in this estimate included the appropriate functional currency for TM Supermarkets, date of change in functional currency and accounting framework for the foreign currency transactions and translation impacts on the reported TM Supermarkets (Pvt) Limited’s results.
The resultant exchange rate of 3.3 was in line with the 1 adopted by insurance giant Old Mutual Limited which has significant regional exposure including Zimbabwe.
Notwithstanding the once off impact of currency adjustment, Pick n Pay said its Zimbabwe operations determined team ensured that TM and Pick n Pay stores delivered a double digit volumes and customer growth which was further solidified by cost discipline and operating efficiencies.
– EQUITY AXIS NEWS
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