HARARE – Listed Hunyani Holdings Limited (Hunyani) says an internal probe has unearthed that management overvalued inventories by nearly $600 000 in a bid to reflect enhanced financial performance of the group’s Flexible Products Division.
The paper and packaging materials manufacturer said while there were no cash or stock losses, disciplinary action had been taken resulting in the appointment of new management.
It said following a tip off, “the board commissioned an investigation through the group internal audit department, the findings of which revealed that certain inventories had been overvalued by $567 000, of which $473 000 related to prior years.
The group said the effect of the fraudulent transaction — along with the sale of its properties — will be incorporated in the financial statements for the year to October 2013, to be published in January next year.
Hunyani sold its non-core properties in Bulawayo and Norton and realised a $2,1 million profit on disposal.
The move was part of the group’s rationalisation and restructuring exercise. The group added that it also undertook a valuation of its forestry plantations.
“Due to significant fire damage and extensive harvesting of compartments of mature timber, the valuation arrived at was lower than reported at October 31, 2012 by an amount of $426 000,” it said, adding that it would be accounted for as fair value loss through the profit and loss.
Hunyani recorded a $1,2 million profit before tax in the year to October 2012, before tax.
In a statement accompanying the group’s financial results, the Zimbabwe Stock Exchange-listed firm said it had successfully re-entered the export markets in the second half of the twelve months, albeit at lower margins and this contributed to the profit that was recorded.
The company recorded a $1,4 million profit during the same period in 2011.
It noted that its overall volumes fell by 10 percent owing to the disposal of non-core operations and weak domestic demand.
Dave Bain, the group’s managing director, recently indicated that volumes from all continuing operations were forecast to grow during the current year.
“Tobacco packaging volumes are forecast to grow due to higher crop size this year while commercial and export volumes would be higher than 2012,” he said.