• Edgars has resolved to pursue a voluntary delisting from VFEX barely two years after migrating from the ZSE to secure USD capital
• The retailer improved revenue, volumes, profit and market capitalisation during 2025, though operating cash flow declined 31%
• The departure raises a wider capital markets question because VFEX delivered currency stability and USD reporting , though Edgars continued financing growth through borrowings and shareholder linked debt instead of public equity

Harare -Edgars Stores Limited has resolved to pursue a voluntary delisting from the Victoria Falls Stock Exchange barely two years after leaving the Zimbabwe Stock Exchange for the United States dollar denominated market, taking the retailer from the country’s oldest exchange to VFEX and now towards an unlisted ownership structure.

The company announced the decision through a cautionary statement and said further transaction details will follow after the required regulatory processes.

“Further details of the transaction will be provided to Shareholders once all regulatory processes and further deliberations have been finalized,” the company said in a circular.

Edgars has not disclosed the consideration available to minorities, the proposed ownership structure or the specific reason for leaving VFEX. The available evidence places capital access, ownership concentration and the limited economic use of the listing at the centre of the transaction.

Edgars migrated to VFEX in April 2024 after shareholders approved the move from the ZSE. The company told investors that the foreign currency exchange would improve access to United States dollar capital, widen the investor base, support expansion, lower trading costs and permit stable financial reporting.

It also cited easier repatriation of dividends and disposal proceeds, a lower withholding tax for foreign shareholders and exemption from capital gains tax. The migration therefore carried a clear commercial objective. VFEX was expected to become a source of growth capital and a better mechanism for discovering the United States dollar value of the business.

The delisting decision arrives before that capital market thesis produced a visible equity raise. Edgars’ issued share count remained unchanged at 609.7 million shares between January 2025 and January 2026, and the group’s annual report records no new public equity issuance during the year.

Capital expenditure reached US$1.1 million and management funded inventory, store activity, manufacturing retooling and its debtors book through operating cash, borrowings and other liabilities. The company that joined VFEX partly to gain access to United States dollar equity continued relying on debt based funding.

That funding structure provides the clearest explanation for why the listing may have lost strategic value, even though management has not formally stated this as the reason. Total borrowings stood at US$9.5 million at the end of the 2025 financial year, with bank overdrafts taking total gross debt to US$10.5 million.

Finance costs increased by 29% from US$2.36 million to US$3.04 million and absorbed 57% of the group’s US$5.30 million operating profit. Edgars also carried US$2.64 million in loans from Annunaki Investments, its largest shareholder, at an annual interest rate of 14%, supported by guarantees from shareholders and related parties. A public listing that does not materially broaden access to equity leaves the company paying the regulatory and disclosure costs of public ownership while growth capital continues to come from lenders and controlling shareholders.

The delisting does not follow an operating collapse. Edgars delivered its strongest recent United States dollar performance during the 52 weeks to 4 January 2026. Group revenue increased by 12.3% from US$36.73 million to US$41.27 million, merchandise sales increased by 11.9% from US$30.46 million to US$34.08 million and total units sold increased by 19.6% from 1.99 million to 2.38 million.

Profit after tax increased by 139% from US$813,349 to US$1.95 million. Market capitalisation increased by 87% from US$7.5 million to US$14.0 million and return on equity increased from 3.74% to 12.88%.

The operating recovery carried an important weakness. Unit growth exceeded merchandise revenue growth by 7.7 percentage points, reducing average merchandise revenue per unit by about 6.5% from approximately US$15.31 to US$14.32.

Edgars generated growth by selling more items at a lower average revenue contribution, a pattern consistent with constrained household incomes and increased dependence on the value segment. Jet turnover increased by 10.2% to US$14.7 million and the Express format continued expanding its presence among price sensitive customers. The result strengthened volume and profit, though it placed future growth on scale, working capital and cost discipline instead of stronger consumer pricing power.

Cash conversion also weakened beneath the profit recovery. Net cash generated from operating activities declined by 31% from US$2.59 million to US$1.80 million as inventory increased by US$2.35 million and trade and other receivables increased by US$1.78 million. The group spent US$1.06 million on property and equipment and ended the year with US$3.87 million in cash.

Management withheld a dividend for the second consecutive year to preserve funds for ERP renewal, manufacturing expansion, store development and working capital. Shareholders therefore received a higher quoted valuation and stronger reported earnings without receiving a cash distribution from the operating improvement.

Ownership concentration strengthens the economic case for private control. Annunaki Investments held 22.28% of Edgars at the end of December 2025, Bellfield Limited held 21.79%, Mega Market held 18.20%, ZMD Investments held 7.59% and the Zimedgroup Employee Trust held 5.90%. The five largest shareholders controlled 75.76% of the company.

This leaves a comparatively small portion available for active market trading and reduces the price discovery benefit associated with a public listing. A tightly held company can reach strategic decisions through a small shareholder group, making public market governance less valuable when the exchange is not providing fresh capital or meaningful liquidity.

Edgars still gained several benefits from moving to VFEX. The company adopted the United States dollar as its functional and presentation currency, giving investors clearer comparisons across periods and reducing distortions created by hyperinflation accounting.

Its share price increased from US1.23 cents to US2.30 cents during the 2025 financial year and the market placed the company close to its US$15.12 million book value. Those benefits improved reporting and valuation visibility. They did not materially change the group’s capital structure, and the 2025 financial statements still carried a qualified audit opinion linked to the treatment of the earlier change in functional and presentation currency.

The transaction therefore separates two functions that have frequently been combined in the case for VFEX. A foreign currency listing can provide stable valuation, lower transaction costs and United States dollar financial reporting. It only becomes a capital formation platform when companies issue shares, attract new investors and finance expansion through the market. Edgars achieved the first set of benefits during its two years on VFEX. The second set remained largely unrealised, leaving the business dependent on expensive debt and shareholder linked financing.

This places the proposed exit within a wider change affecting Zimbabwe’s listed markets. Several large companies have moved from the ZSE to VFEX to protect valuations and gain access to United States dollar trading. Edgars is moving beyond migration and questioning whether remaining listed creates enough value for the company and its controlling shareholders.

The company’s exit does not establish that VFEX has failed across every issuer because different companies use the exchange for different purposes. It does establish that currency denomination alone cannot retain a counter when liquidity, capital raising and investor depth remain below the company’s strategic requirements.

Minority shareholder treatment will determine the investment quality of the transaction. Edgars must disclose the valuation basis, the exit mechanism, the identity of the acquiring parties and whether minorities will receive cash, replacement securities or continued ownership in an unlisted company.

The year end market price of US2.30 cents valued the business at US$14.0 million, close to its US$15.1 million net equity position. Current profitability, brand value, the Club Plus lending book, the Carousel manufacturing operation and the improving Jet and Express formats must form part of any fair value assessment. A price anchored only to thin market trading would transfer future recovery value from minorities to the shareholders taking the company private.

The board also needs to explain what private ownership will unlock. Delisting can reduce listing fees, disclosure costs and the administrative burden attached to public reporting. It can permit faster restructuring, capital injections and strategic transactions under a concentrated ownership structure. Those savings carry limited value unless the new structure reduces Edgars’ financing cost, increases working capital capacity and funds the US$2.1 million capital expenditure programme budgeted for the current year. The decisive benchmark is whether private capital replaces the borrowing model that consumed US$3.04 million in finance costs during 2025.

For VFEX, the event creates a more important test than the loss of one retailer. The exchange was created to mobilise foreign currency capital and attract domestic and international investors. Edgars joined with that exact mandate and is preparing to leave without issuing new equity.

VFEX must demonstrate that its growing list of counters can translate into rights offers, placements, new investor participation and sustained secondary market liquidity. A market that protects valuation without financing expansion remains useful as a reporting and trading venue, though it falls short of its larger capital formation objective.

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