Coming from an audit background, being meticulous has to be in your DNA. Presentation of your work has to be logical, flawless and all numbers must cast. You especially have to be spot on when drawing up financial statements as they have to follow a certain guideline. In the world of accountants, this guideline is known as International Financial Reporting Standards (IFRS) and all public companies in Zimbabwe have to present their accounts in that format. Come the AMG Global Chartered Accountants audited Petrotrade financial results for 2015; I was left rolling on the floor in laughter. How could a firm of qualified accountants allow such comically presented financial statements to be published?
As is tradition, the statement to shareholders is written by the Chairman but in Petrotrade’s case the acting Chief Executive Officer signed off the statement. This is despite the company having a Chairman of the Board; Honorable Walter Mutsauri (MP). Ironically the statement was signed off on 1 October 2016 but within the statement the acting CEO refers to a dividend which was declared on 26 October 2016, how can he report on events that ‘happened’ in the future? The acting CEO, Mr Godfrey Ncube refers to cash shortages in 2015 and blames the phenomenon as contributing to depressed demand for fuel. I am not sure if I live in the same Zimbabwe with him but I do not recall any cash shortages in 2015, do you? Cash shortages started bedevilling our nation in May of this year, maybe I am mistaken, I stand to be corrected. Mr Ncube went on to say, “Despite rooted challenges, Petrotrade manged to attain a profit after tax of $749,612…” on revenues of $110 million, like seriously!
Last but not least, perhaps the publisher is to blame but the Statement of Cash Flows is meaningless. It does not cast with the cash and cash equivalents figure on the Statement of Financial Position and it is incomplete. Perhaps the printer ran out of space? Even if it is the case, their auditors AMG Global must have picked it up and rectified prior to publishing.
Comical financial performance
Petroleum products wholesale and retail business is a thin margins business. On revenues of $110 million for 2015, Petrotrade posted an 8% gross profit of $9 million. Of this gross profit figure, 95% was gobbled up in administration and other expenses leaving a paltry operating profit of $0.49 million or 0.4% of revenues. I wonder why the acting CEO was happy about posting such a pathetic operating profit figure. Overall net profit after taxation was $0.75 million after taking into account income from other ‘non-core’ business activities.
Being a parastatal, I forgive them – as I recall in the early 2000s when one government minister said at a managerial retreat of a parastatal that making profit was not one of their objectives. So what is the main objective of being in business if it is not making profits? Apparently in parastatals it seems to be ministers and top officials lining up their pockets that the expense of struggling average Zimbos.