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BRAINWORKS LIMITED - Reviewed Condensed Consolidated Financial Results for the six months ended 30 June 2019

Release Date: 30/09/2019 16:24
Code(s): BWZ     PDF:  
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Reviewed Condensed Consolidated Financial Results for the six months ended 30 June 2019

Brainworks Limited
Incorporated in the Republic of Mauritius
(Registration number: 115883 C1/GBL)
Share Code: BWZ ISIN: MU0548S00000
(“Brainworks” or “the Company”)


The board of directors of Brainworks presents the reviewed condensed consolidated financial results
of the Company and its subsidiaries (“the Group”) for the six months ended 30 June 2019 (“Interim

Key economic developments in Zimbabwe

The country continued to face economic challenges during the six months ended 30 June 2019, with
shortage of foreign currency, which hampered the availability of critical economic drivers such as fuel
and electricity. Further currency reforms were implemented in line with government’s Transitional
Stabilisation Programme (“TSP”) which was adopted in October 2018.

Representing the second phase of pronouncements on currency reforms, on 20 February 2019, the
Reserve Bank of Zimbabwe (“RBZ”) through a monetary policy statement introduced policies aimed at
establishing a formal trading mechanism of RTGS balances and bond notes with international
currencies by establishing an Interbank Foreign Exchange. The measures were also aimed at
preserving and mobilizing foreign currency for external payments and servicing of the country’s external
obligations. On the same date, the RBZ announced the official designation of the existing RTGS
balances and bond notes and coins in circulation then as RTGS dollars, in order to establish an
exchange rate between them and other foreign currencies. The RTGS dollar thus became part of the
multi-currency system in Zimbabwe from that date. The RTGS dollar began trading on the interbank
platform at a rate of 1US$ to 2.5RTGS dollars towards the end of February 2019.

Since making its debut on the formal currency trading platform, the Zimbabwe dollar has depreciated
against major currencies thereby significantly exerting pressure on the cost of production and eroding
disposable income. Most sectors of the economy were negatively affected by pricing distortions that
followed this policy pronouncement.

On 24 June 2019, the Ministry of Finance and Economic Development announced the issue of Statutory
Instrument (“SI”) 142 of 2019, which instructed the immediate end of the multi-currency regime; thereby
introducing the Zimbabwe dollar (“ZWL”) as the sole legal tender for the settlement of all domestic
transactions. This was the third instructive currency announcement since October 2018.

Confidence in the local currency unit remains subdued as the desired effect of the currency reforms
implemented thus far have not yet been fully achieved. Inflation rate spiralled upwards with June 2019
inflation rates rising to 39.26% and 175.66% for month on month and year on year inflation respectively.
As a result, there are still notable distortions in the pricing for goods and services, as players adopt
various models in factoring the effect of inflation and local currency unit exchange rates against the

As a result of various challenges, the Zimbabwean economy is expected to register negative growth in
the current year.

Financial Highlights of the Group

The Interim Results when compared to the six months ended 30 June 2018 (“Comparative Period”),
are set out below:

 -    revenue decreased by 31% to US$21 million compared to US$31 million for the Comparative
 -    earnings per share decreased by 54% to 3.39 cents per share compared to 7.41 cents per share
      for the Comparative Period;
 -    headline earnings per share improved by 763% to 4.18 cents per share compared to the headline
      loss per share of 0.63 cents for the Comparative Period; and

 -    total debt decreased by 52% to US$8 million compared to US$17.1 million as at the beginning of
      the period under review.

No dividends were declared or paid during the period under review or during the Comparative Period.

The Company’s reporting currency is United States Dollars.

Adverse Review Conclusion

The Company’s auditors have expressed an adverse review conclusion on the Interim Results as a
result of non-compliance with International Financial Reporting Standard (“IAS”) 21 – The Effects of
Changes in Foreign Exchange Rates.

This short form announcement is the responsibility of the Board and does not contain full or complete
details. Any investment decisions by investors and/or shareholders should be based as a whole on
consideration of the reviewed consolidated financial results for the six months ended 30 June 2019
which may be downloaded from: or the Company’s website at:

and may also be viewed, at no cost, at the registered office of the Company and the Johannesburg
office of its Sponsor, during ordinary business hours, for a period of 30 calendar days following the date
of this announcement.

Grand Baie, Mauritius
30 September 2019

Registered office:
Suite 1, Perrieri Office Suites,
C2-302, Level 3, Office Block C,
La Croisette, Grand Baie, 30517

Questco Corporate Advisory Proprietary Limited
First Floor, Yellowwood House, Ballywoods Office Park, 33 Ballyclare Drive, Bryanston.

Date: 30/09/2019 04:24:00
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