• CFI posted an operating profit compared to a ZWG 62.4 million operating loss in the prior period, supported by a 51.1% increase in turnover
• Headline profit after tax declined sharply to ZWG 32.9 million largely due to a ZWG 51.2 million monetary loss
• The Group showed improved trading momentum with a more than tenfold increase in capital expenditure to ZWG 69.9 million, though operating cash flow declined significantly

Harare- CFI Holdings Limited has reported a swing to operating profitability for the half year ended 31 March 2026, recording operating profit before financing costs, depreciation and impairment of ZWG 182.7 million, a reversal from the ZWG 62.4 million operating loss posted in the comparative period a year earlier according to the latest half year results.

Turnover rose to ZWG 2.30 billion, up 51.1% from ZWG 1.52 billion in the prior comparative period. Profit after tax is where the period's accounting complexity is most visible, and where the headline number risks misleading a reader who takes it at face value. Inflation-adjusted profit was ZWG 32.9 million, down 93.6% from ZWG 515.3 million in the prior comparative period. That decline looks alarming set against the operating profit turnaround described above.

However, the prior period's ZWG 515.3 million figure was inflated by a ZWG 701.9 million monetary gain under IAS 29, the non-cash hyperinflation accounting mechanism that revalues monetary assets and liabilities for the effect of inflation, and a gain of that scale does not recur period to period as a matter of course. In the current half year, CFI recorded a monetary loss of ZWG 51.2 million rather than a gain, and that swing, not any deterioration in the Group's underlying trading performance, is the primary driver of the headline profit decline.

The Group, whose four divisions span retail agro-inputs and hardware through Farm and City, milling, farming through crops and livestock, and property letting and development, has delivered a result that the headline turnover growth most coverage will focus on does not fully capture, because the operating-level reversal reflects a genuine change in trading performance across the divisions rather than an artefact of currency translation or inflation accounting mechanics.

Divisional disclosure shows the shifting weight of contribution behind that turnaround, milling revenue stood at 9.06% of group turnover in the prior comparative period, farming operations contributed 2.18% in the current period against 2.50% a year earlier, and Group properties contracted sharply to 0.37% of turnover from 3.41%. That collapse in the properties division's contribution is a data point the abridged statement does not explain, and whether it reflects a genuine fall in rental and property income, a reclassification, or the divestment of a property asset is a question CFI's full results commentary needs to address directly.

The most significant event in the period, however, does not appear in the income statement at all. It sits in the Statement of Changes in Equity, where a single line, "Acquisition of control of former joint venture entities," reduced total equity attributable to parent shareholders by ZWG 90.1 million on an inflation-adjusted basis and by ZWG 129.0 million on a historical cost basis. This is the accounting consequence of CFI gaining controlling interest in an entity it previously held jointly, which under IFRS triggers a remeasurement of CFI's existing stake to fair value.

When a company moves from joint control to full control, the previously-held interest is remeasured to fair value through profit or loss, and the difference between that fair value and the entity's carrying value, combined with the consideration paid for the additional stake and any non-controlling interest recognised, can produce a gain or a loss depending on the specific valuation.

For CFI, the consolidated effect was a reduction in shareholder equity of ZWG 90.1 million, a transaction large enough to be material against the Group's total equity base of ZWG 902.6 million at period end. What entity CFI took control of, what it does, what it will contribute to the consolidated Group going forward, and what was paid for the additional stake are not disclosed in the abridged statement, and this gap is the single most important follow-up question for analysts and shareholders.

The group recorded a total equity of ZWG 902.6 million against total borrowings of approximately ZWG 730 million, a debt-to-equity ratio of 0.81 times, an unremarkable leverage level for an agro-industrial group of CFI's scale.

Current liabilities of ZWG 1.24 billion, consistent across both accounting bases, exceeded current assets of ZWG 1.49 billion comfortably. Trade and other payables grew from ZWG 795.4 million to ZWG 1.12 billion, a 41% increase within a single half year that significantly outpaced the growth in trade and other receivables, which rose from ZWG 215.1 million to ZWG 390 million, an 81% increase in percentage terms but off a much smaller base.

The faster absolute growth in payables relative to receivables points to a business managing its cash position by extending supplier payment terms, a technique that improves near-term liquidity at the cost of supplier relationship strain and potential future input cost inflation if suppliers begin pricing in that extended payment risk.

Net cash generated from operating activities fell sharply, from ZWG 466.3 million in the prior comparative half year to ZWG 82.1 million in the current period on an inflation-adjusted basis, even as the income statement showed improved operating profitability.

The divergence is explained by working capital changes, which absorbed ZWG 60.6 million in cash during the current period against ZWG 325.6 million absorbed in the prior period, meaning the apparent cash flow improvement is relative to an unusually cash-intensive comparative period rather than evidence that current cash conversion is strong in absolute terms.

Capital expenditure offered a more straightforwardly positive signal. Purchases of property, plant and equipment rose to ZWG 69.9 million in the current half year from just ZWG 6.6 million in the prior comparative period, a more than tenfold increase that, alongside the operating profit turnaround, suggests management is reinvesting in the Group's productive capacity now that trading conditions have improved enough to justify the commitment. Without divisional disclosure of where that capital was directed, milling capacity, farming equipment, retail store expansion, or property development, it is not possible to assess whether the investment is concentrated in the divisions showing the strongest margin improvement or spread across the Group's four segments.

Therefore, CFI Holdings' HY2026 results describe a Group whose core trading performance has genuinely improved, and the swing from operating loss to operating profit is the primary positive signal from this reporting period.

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