eBusiness Weekly
Business Writer
Investors in companies listed on the Zimbabwe Stock Exchange, will only know how much an impact the Covid-19 pandemic and the subsequent 21-day lockdown is having on company performance after the expiry of the statutory lockdown period which expires on April 19, 2020.
Even after the expiry of that lockdown period, companies will still have a grace period of up to May 15, 2020 before they can disclose the full impact of the lockdown and the coronavirus pandemic.
Both Covid-19 and the subsequent lockdown has put so much strain on companies and naturally, they would have been required to issue cautionary statements advising shareholders of what to expect in terms of company performance.
According to ZSE’s listing requirements under SI 134 or 2019 section 32 a listed firm must, without delay, unless the information is kept confidential for a limited period of time in terms of section 33 (3), release an announcement providing details of— (a) any circumstance or event that is or is likely to have a material effect, whether positive or negative, on the financial results, financial position or cash flow of the issuer or any of its material subsidiaries.
But given the significant impact, which has resulted in some companies stopping operations for 21 days while others are facing headwinds in accessing critical raw materials and markets, the ZSE believes all companies should operate under cautionary and will only release special trading updates for the benefit of the investors and the market at large on or before May 15, 2020.
In light of the challenges noted above, there is need to protect shareholders and investors during this volatile, uncertain, complex and ambiguous time, according to the ZSE.
A statement signed by ZSE chief executive officer Justin Bgoni reads: “Due to the effects of the lockdown on issuers and with immediate effect trading in securities of all issuers listed on the Zimbabwe Stock Exchange shall be done under caution until the expiry of the statutory
lockdown period which expires on April 19, 2020.
“Consequently, there shall be no need for issuers to issue individual cautionary statements in respect of the circumstances affecting their businesses arising from the effects of the lockdown as this directive is sufficient in this regard,” reads part of the statement.
Already signs from snap surveys being conducted by industry body CZI, shows the Covid-19 impact on business has been adverse.
The impact on those companies that have closed shop such as African Sun, Truworths, Powerspeed, and those that have scaled down operations cannot be underestimated.
There is obviously material impact on both company operations and financials.
The ZSE given time to issuers, allowing companies to fully assess the impact before publishing “special trading updates for the benefit of the investors and the market at large on or before May 15, 2020.”
“The special trading updates shall in addition to the previously given guidelines on preparation of trading updates include the following;
“Update on the effects of Covid-19 pandemic on the business of the Issuer, statement on the Business Continuity Plan adopted by the Issuer in light of the Covid-19 pandemic and the lockdown order as well as statement on the solvency position of the Issuer in light of the effects of Covid-19 and the lockdown order on its business.”
Meanwhile, the ZSE has given listed entities to publish due results for the half year and full year to December 2019.
The results were due to be publish end of March 2020 but prior to the gazetting of the lockdown order, some listed entities were already struggling to finalise their half-year and full-year financial statements because of the unsettling effects of Covid-19.
The ZSE then issued a blanket dispensation to all issuers whose half-year and full-year financial statements were due for publication by March 31, 2020 to be published on or before April 30, 2020.
Following the issuance of the lockdown order some listed entities have either scaled down or completely halted their operations and the future remains uncertain. In the unfortunate event that the lockdown is extended, it is likely to put operational and financial pressure on many listed companies.
