- Amalgamated Regional Trading Holdings reports 67% decrease in profits for FY 2023
- Auditors express concerns over compliance with international accounting standards
- ART focuses on value preservation and de-risking amid challenging operating environment
Amalgamated Regional Trading Holdings Limited (ART), a leading trading and manufacturing company based in Zimbabwe, has released its financial results for the fiscal year ended September 30, 2023. The company reported a decline in profits, and its auditors’ expressed concerns regarding compliance with international accounting standards.
Despite challenging economic conditions and a volatile operating environment, ART recorded a total comprehensive profit of ZWL 78.2 million ($0.9 million) for the year, representing a decrease of 67% compared to the previous fiscal year's figure of ZWL 239.4 million ($2.8 million). This decline in profitability can be attributed to various factors, including intensified competition from imported products, power shortages, and rising energy prices.
The company's auditors, Grant Thornton Chartered Accountants (Zimbabwe), issued an adverse audit opinion on the consolidated financial statements. The opinion was primarily due to non-compliance with International Accounting Standard (IAS) 21 - The Effect of Changes in Foreign Exchange Rates and IAS 29 - Financial Reporting in Hyperinflationary Economies. The auditors identified key audit matters related to revenue recognition and the valuation of biological assets.
ART's revenue from contracts with customers surged to ZWL 125.2 million ($1.5 million), reflecting an increase of 81% in inflation-adjusted terms compared to the previous year. However, the company experienced a decline in overall sales volumes, with a 5% decrease compared to the prior year. Export volumes also dropped by 8%, despite a 40% growth in the fourth quarter.
The company's total assets stood at ZWL 291.9 million ($3.4 million), while total equity amounted to ZWL 143.1 million ($1.7 million). Total liabilities amounted to ZWL 148.9 million ($1.7 million), indicating a significant increase compared to the previous year.
In response to the challenging operating environment, ART highlighted its focus on value preservation, de-risking, and active management of its businesses across formal, informal, and export markets. The company emphasized the importance of export sales as a natural hedge against local currency volatility and changing policies.
Despite the decline in profits, ART remains confident in its ability to leverage its brands, regional networks, and skilled workforce to strengthen its financial position. The company is committed to implementing sustainability priorities and maintaining a focus on sustainable management practices.
Looking ahead, ART expects the operating environment to remain complex, characterized by foreign exchange rate volatility and inflationary pressures. The company anticipates continued efforts to streamline operations, reduce debt, and improve its liquidity position. It also intends to explore opportunities to dispose of unutilized land assets to enhance its cash position.
ART's financial statements and the complete auditors' report are available for inspection at the company's registered office. Investors and shareholders are urged to review the full abridged consolidated financial statements for a comprehensive understanding of the company's financial performance.
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