ZECO Holdings reports loss, faces uncertain future

**ZECO Holdings chairman, Engineer Ben Rafemoyo**

Nyashadzashe Ndoro

Zim Now Reporter

Zimbabwean engineering firm ZECO Holdings reported a ZWL$69.0 million (US$3 million) loss for 2023 despite a significant increase in revenue, raising concerns from auditors about the company’s ability to continue operating.

This is revealed in the company’s financial results for the year ended December 31, 2023.

The company reported inflation-adjusted revenue of ZWL$322.1 million (US$790.8 million), a significant increase compared to ZWL$45.9 million (US$644.4 million) in 2022. Despite the revenue growth, ZECO Holdings still recorded a loss of ZWL$69.0 million (US$3 million) for the year.

“The operating environment was characterised by persistent inflation, power supply disruptions and foreign currency volatility, resulting in a disparity between the Zimbabwean Dollar and the United States Dollar in both the official and alternative markets,” the chairman, Ben Rafemoyo said.

“Despite the challenges, the International Monetary Fund reported that the country achieved a GDP growth of 5.3% in 2023.”

Rafemoyo acknowledged the ongoing challenges but expressed optimism for the future.

"The group's performance was subdued as we continue the transition to a new strategic focus," he said.

"Positive performance is expected this year due as the strategic focus will start bearing fruit."

The outlook for the company seems cautiously optimistic.

"The outlook remains positive though there will be a slow down due to El Nino induced drought," Rafemoyo continued.

"The Government of Zimbabwe's focus on infrastructural development should mitigate any slowdown. GDP is projected to be around 3.5% in 2024, which is a decrease from 5.3% in 2023 resulting from the slowdown. Despite the operating circumstances, we believe the business will continue to thrive and enhance shareholder value."

The company's auditors, MGI (Mazhandu) Chartered Accountants, raised concerns about ZECO Holdings' ability to continue as a going concern.

An "adverse opinion" was issued due to the company's non-compliance with International Financial Reporting Standards (IFRS).

"We have concluded that the other information is materially misstated for the same reason with respect to the amounts or other items included therein and affected by the failure to comply with the referred standard," the audit report stated.

The company did acknowledge the going concern risk, stating, "These events or conditions, along with other matters as set forth in note 22, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern."

ZECO Holdings specialises in steel fabrication and installation, plastic component manufacturing, and electric motor distribution. The company's engineering division once produced rolling stock for major Zimbabwean companies but is currently not operational.

ZECO's subsidiaries include Delward Engineering, the country's sole rail wagons manufacturing company, and Crittall Hope, a leading manufacturer of window and door frames.

In 2014, the Institute of Chartered Secretaries and Administrators of Zimbabwe awards (ICSAZ) ranked ZECO as the worst governed company on the stock exchange.