Zimbabwe’s hyperinflation causes financials release delays

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  • Hyperinflation has changed accounting standards in reporting
  • Hyperinflation accounting was adopted in the second half of 2019
  • Before dollarisation Zimbabwe used hyperinflation accounting
  • Companies delaying financials release as a consequence

Listed companies in Zimbabwe will delay release of their earnings for the period to December 2019 due to adoption of a new reporting standard in line with hyperinflation being experienced in the country.

On Tuesday, cigarette manufacturer and subsidiary of BAT Plc, BAT Zimbabwe announced that it will delay the publication of its financials for the 12 months period to December following its adoption of IFRS 29, which relates to hyperinflationary accounting.

“This is due to the extensive work necessary to conform to the requirement that Financial Statements are adjusted for hyper-inflation so as to comply with International Accounting Standard 29 – Financial Reporting in Hyperinflationary Economies” said the company in the quoted statement.

Another company, Zimre Holding Limited, a player in the insurance space, also issued a statement highlighting that it will delay publication of its earnings for the 12 months period to December as well. It said this was due to factors beyond its control.

A least 80% of the total 62 listed companies have a December year end and typically these companies should release their earnings before the end of March. The bourse gives companies a dispensation of 3 months post year end to release their earnings to the market.

Based on the prior years, most companies would have already released their financials by now and it is likely that most of these companies have asked for a waiver from the ZSE to extend the period as they finalise the preparations.

In 2019, Zimbabwe adopted hyperinflation accounting which entails reporting financials after factoring the impact of inflation. Typically, companies use historical cost accounting and a shift in standards demand complex alterations which may drag the process longer than usual.

The PAAB announced the decision citing inflation which by accounting measures had met all conditions of hyperinflation. As at December Zimbabwe’s inflation was at 520% and closed February 2020 at 540.16%.

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