COMPANY D (PVT) LTD T/A SUPER PAINTS Schedule 7 STATEMENT OF CHANGES IN EQUITY 2018 (114,825.79) at Fiscal Year End Y2018, Y2019 and Y2020 2019 86,448.81 2020 (28,376.98) - 142,716.66 Retained Earnings at 1 January 114,339.68 (28,376.98) Current Year Profits 1,847,989.85 - Dividend Paid 114,339.68 - Retained Earnings at 31 December - 163,169.75 1,962,329.53 - 163,169.75 34,605.00 Add - 1,564,405.00 - Ordinary Share Capital 163,169.75 Members Contribution 1,564,405.00 - 169,397.77 Non Distributable Reserves Distributable Reserves - 1,841,914.43 Equity 3,689,904.28
COMPANY D (PVT) LTD T/A SUPER PAINTS Schedule 9 STATEMENT OF ACCOUNTING POLICIES for the Fiscal Years Y2018, Y2019 and Y2020 The principal accounting policies of the company, which are set out below, are consistent with those applied in the previous years except where stated and otherwise, and have been followed in all material respects to conform to the International Financial Reporting Standards. 1.0 GENERAL DISCLOSURES 1.1 Country of Incorporation and Main Activities The company and its associated companies are incorporated in Zimbabwe. The main activity of the company is manufacturing. 1.2 Currency The financial statements are expressed in Zimbabwe (RTGS) Dollars. 2.0 ACCOUNTING POLICIES 2.1 Accounting Convention The financial statements are prepared in terms of the historical cost convention. No procedures have been adopted to reflect the impact on the financial statements of specific price changes or changes in the general level of prices. Where the multiple currency other than the US$ is used it is converted into the reporting currency in terms of IAS 21. 2.2 Depreciation of Fixed Assets Fixed assets are depreciated over their anticipated useful lives as follows using the straight line method: Asset Depreciation % Machinery 10.00% Office Furniture, Fittings 10.00% Computers & Equipment 20.00% Motor Vehicles 20.00% 1
2.3 Intangible Assets Goodwill is amortised on a straight-line basis over a period not exceeding 5 (five) years. 2.4 Inventories & Work in Progress Inventories and work in progress are valued at the lower of cost on a Weighted Average basis and estimated net realisable value. In the case of finished manufactured goods and work in progress cost includes materials, direct labour and an appropriate proportion of allocated overheads. 2.5 Turnover Turnover comprises the value of goods sold net of value added tax. 2.7 Bad Debts Provision for bad debts is made in the financial statements on a percentage of the book value of all debts such percentage being estimated doubtful debts. 2.8 Multiple Currencies Assets and liabilities denominated in currency other than the reporting currency Zimbawe (RTGS$) are converted at the rates of exchange ruling at the balance sheet date. Transactions during the year are converted at the rates of exchange ruling at the time of the transaction. 2.7 Taxes 2.7.1 Current Tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be received from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the balance sheet date. Current income tax relating to items directly in equity is recognised directly in equity and not in the income statement. 2.7.2 Deferred Taxation Provision for deferred taxation is made in the financial statements on a full liability basis in respect of material temporary differences resulting from the recognition of income and expenses in differing periods for accounting and tax purposes. 2
3.0 REVENUES / TURNOVER 2020 2019 2018 January 779,889.81 71,829.72 21,413.62 February 1,171,006.57 100,383.12 14,933.11 March 1,161,850.30 125,913.43 13,685.79 April 165,379.33 33,643.24 May 726,752.23 178,636.50 42,783.06 June 2,438,768.75 341,099.80 68,342.54 July 5,687,559.38 217,059.88 56,597.04 Aug 3,430,695.36 443,960.12 67,062.25 Sep 3,209,692.71 760,846.42 136,396.54 Oct 4,001,334.37 476,695.71 148,481.51 Nov 4,869,345.19 636,366.50 162,632.25 Dec 4,805,107.55 247,056.73 25,802.33 Total Sales 5,477,745.20 3,765,227.27 791,773.28 37,759,747.44 4.0 PURCHASES 2020 2019 2018 January 385,813.17 58,024.61 14,138.88 February 869,519.79 45,476.52 12,083.99 March 961,144.10 105,829.03 April 359,495.79 104,073.06 9,736.47 May 1,579,821.05 159,491.66 25,543.06 June 5,233,744.62 197,805.86 30,652.62 July 2,480,906.31 149,817.93 46,369.60 Aug 1,946,096.84 294,151.86 35,799.25 Sep 2,850,432.72 388,905.25 58,233.23 Oct 4,027,501.21 493,605.21 57,264.22 Nov 2,176,073.12 384,105.81 92,036.44 Dec 1,499,176.00 459,522.66 53,344.62 Total Purchases 24,369,724.72 2,840,809.46 101,681.50 536,883.88 5.0 FIXED ASSETS AND DEPRECIATION 5.1 Fiscal Year 2020 Depreciation Schedule Depreciation Cost Current Charge Accumulated Book Value 449,500.00 379,800.00 Plant & Machinery 980,000.00 44,950.00 69,700.00 751,333.33 Motor Vehicles 16,740.08 Computers & Equipment 24,374.78 196,000.00 228,666.67 91,486.50 Furniture & Fittings 111,755.00 Total Assets 1,565,629.78 4,874.96 7,634.70 1,239,359.91 11,175.50 20,268.50 257,000.46 326,269.87 3
5.2 Fiscal Year 2019 Depreciation Schedule Depreciation Cost Current Charge Accumulated Book Value 449,500.00 424,750.00 Plant & Machinery 980,000.00 13,000.00 24,750.00 947,333.33 Motor Vehicles 21,615.03 Computers & Equipment 24,374.78 32,666.67 32,666.67 102,662.00 Furniture & Fittings 111,755.00 Total Assets 1,565,629.78 1,424.96 2,759.75 1,496,360.37 3,615.50 9,093.00 50,707.12 69,269.41 5.3 Fiscal Year 2018 Depreciation Schedule Depreciation Asset Cost Current Accumulated Net Book Value Plant & Equipment 23,500.00 2,355.06 11,750.00 11,750.00 Computer Equipment 1,374.78 267.53 1,334.79 39.99 Furniture & Fittings 5,477.50 5,477.50 Total 10,955.00 1,097.86 35,829.78 3,720.46 18,562.29 17,267.49 4
COMPANY D (PVT) LTD t/a SUPER PAINTS COMENTARY AND FINANCIAL PERFORMANCE Based on the Financial Statements for Fiscal Years Y2018, Y2019 and Y2020 1.0 SALES TURNOVER GROWTH, PEFORMANCE & TRENDS 1.1.1 TURNOVER DYNAMICS 2020 2019 2018 January 779,889.81 71,829.72 21,413.62 February 1,171,006.57 100,383.12 14,933.11 March 1,161,850.30 125,913.43 13,685.79 April 165,379.33 33,643.24 May 726,752.23 178,636.50 42,783.06 June 2,438,768.75 341,099.80 68,342.54 July 5,687,559.38 217,059.88 56,597.04 August 3,430,695.36 443,960.12 67,062.25 September 3,209,692.71 760,846.42 136,396.54 October 4,001,334.37 476,695.71 148,481.51 November 4,869,345.19 636,366.50 162,632.25 December 4,805,107.55 247,056.73 25,802.33 Total Sales 5,477,745.20 3,765,227.27 791,773.28 37,759,747.44 Year on Year Dollar Growth 33,994,520.18 2,973,453.99 401,773.28 Year on Year % Growth 902.85% 375.54% 103.02% 1.1.2 YEARLY SALES COMPARISON GRAPH Sales Comparison 6,000,000.00 4,000,000.00 2,000,000.00 0.00 2020 2019 2018
Sales at $37.75 million for the year 2020, $3.765 million for year 2019 and $791.77 thousand for year 2018. Sales were up 902.85 percentage points in fiscal year 2020 from fiscal year 2019 levels and up 375.54% percentage points in fiscal year 2019 from fiscal year 2018 levels. Average year on year inflation rate for fiscal year 2018 was 10.61%, fiscal year 2019 was 255.29% and fiscal year 2020 was 557.2%. Fiscal year 2020 sales were impressive surpassing rate of inflation by 755.92%. 2.0 PROFITABILITY AND PERFOMANCE METRICS 2020 2019 2018 2.1 EARNINGS DYNAMICS 36.55% 25.61% 32.60% Below are the earnings ratios: - 6.97% 5.73% 12.64% 4.89% 3.79% 10.92% GP% NPBIT NP The earnings of the company were commendable for the three fiscal years under review. Gross margin at 36.55% ($13.8 million) for fiscal year 2020, 25.61% ($964.41 thousand) for fiscal year 2019 and 32.60% ($258.12 thousand) for fiscal year 2018. Gross margin rose 6.99 percentage points from fiscal year 2018 to fiscal year 2019 and rose 10.94 percentage points in fiscal year 2020.. Net profit margin at 4.89% ($1.487 million) for fiscal year 2020, 3.79% ($142.716 thousand) for fiscal year 2019 and 10.92% ($86.44 thousand) for fiscal year 2018. 2.2 EXPENSES 2020 2019 2018 Below are the expense ratios: - 29.58% 19.88% 19.96% Expenses Total expenses at 29.58% ($11.16 million) for fiscal year 2020, 19.88% ($748.533 thousand) for fiscal year 2019 and 19.96% ($158.04 thousand) for fiscal year 2018. 2.3 RETURN ON CAPITAL EMPLOYED Return on Capital Employed 2020 2019 2018 110.64% 10.28% 45.28% Return on capital fell by 35 percentage points from fiscal year 2018 to fiscal year 2019 and rose by 100.36 percentage points from fiscal year 2019 to fiscal year 2020.
3.0 LIQUID RISK ANALYSIS (LIFE BLOOD ANALYSIS) 3.1 CURRENT ASSETS 3.1.1 INVENTORY DAYS Inventory 2020 2019 2018 6.84 5.79 3.38 Inventories held by the business at fiscal end 2020 was in the amount of $455.35 thousand (6.84 days), at fiscal year end 2019 was in the amount of $45.009 thousand (5.79 days) while that at fiscal year end 2018 was in the amount of $5 thousand (3.38 days). The business is operating a just in time inventory purchasing system which affords it the opportunity to hold minimal buffer stocks. The inventory days for all fiscal years were ideal. 3.1.2 TRADE RECEIVABLES (DEBTORS) Trade Receivables (Debtor) Days 2020 2019 2018 48.21 106.08 90.25 Trade receivables were in the amount of $5.057 million (48.21 days) at fiscal year end 2020, $1.109 million (106.08 days) at fiscal year end 2019 and $198.5 thousand (90.25 days) at fiscal year end 2018. Trade receivable days for fiscal years 2019 and 2018 were adverse while those for fiscal year 2020 are close to the ideal trade receivables days (30 days) for the business. 3.2 CURRENT LIABILITIES 3.2.1 TRADE PAYABLES (CREDITORS) Trade Payables (Creditor) Days 2020 2019 2018 6.90 25.75 4.72 Trade payables were in the amount of $459.08 thousand (6.90 days) at fiscal year end 2020, $200.29 thousand (25.75 days) at fiscal year end 2019 and $6.99 thousand (4.72 days) at fiscal year end 2018. The business maintains minimal credit lines buying bulk of their raw materials using cash. 3.3 NET LIQUIDITY (NET CURRENT ASSETS) 3.3.1. Current Ratio Current Ratio 2020 2019 2018 200.46% 220.60% 613.66% The liquidity of the business as measured by the current shows that the business has sufficient liquid assets to meet current liabilities.
The liquidity of the business as measured by the current ratio was reasonable at 200.46% at fiscal year end 2020, 220.60% at fiscal year end 2019 and 613.66% at fiscal year end 2018. 3.3.2. Acid Test Ratio Acid Test Ratio 2020 2019 2018 185.71% 213.03% 598.99% The acid test ratio was 185.71% at fiscal year end 2020, 213.03% at fiscal year end 2019 and 598.99% at fiscal year end 2018. Both the current and the acid test ratios for all the three fiscal years depict a healthy relationship between the business’s current assets against its current liabilities. The business thus has demonstrated that it can meet its obligations with its liquid assets when called to do so. 4.0 SOLVENCY FINANCIAL LEVERAGE 4.1 DEBT CAPACITY (BORROWING/EQUITY RATIO) Debt Capacity (Borrowing / Equity Ratio 2020 2019 2018 27.04% 15.85% 10.38% The business increased its gearing as measured by the Borrowing to Equity ratio from 10.38% at fiscal year end 2018 to 15.85% at fiscal year end 2019 and finally to 27.04% at fiscal year end 2020. Despite increasing its gearing the business still has room to increase borrowings to meet working capital requirements. 4.2 TOTAL LIABILITIES / ASSETS & TOTAL LIABILITIES / EQUITY RATIOS 4.2.1 Liabilities / Assets Ratio Liabilities / Assets 2020 2019 2018 50.32% 34.42% 25.30% The business’s Liabilities to Assets ratio was 50.32% at fiscal year end 2020, 34.42% at fiscal year end 2019 and 25.30% at fiscal year end 2018 showing a growing trend year by year. 4.2.2 Liabilities / Equity Ratio 2020 2019 2018 Liabilities / Equity 101.28% 52.49% 33.87% The business’s Liabilities to Equity ratio was 101.28% at fiscal year end 2020, 52.49% at fiscal year end 2019 and 33.87% at fiscal year end 2018 showing a growing trend year by year. The growth trend year by year in liabilities both in the liabilities to assets ratio and the liabilities to equity ratio is attributable to the growing business and growing working capital requirements.
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