Jacob Chisese, chief executive officer of the Financial Gazette
A TEAM of analysts and judges has begun an evaluation of the financial performance of Zimbabwe Stock Exchange (ZSE)-listed companies for this year’s Top Companies Survey, which will be held in June rather than the traditional December period.
The survey, produced by the country’s most influential business weekly, the Financial Gazette, will once again be bankrolled by financial services behemoth, Old Mutual Zimbabwe, for the fourth year running.
The team, consisting of top economic and financial analysts, will analyse quoted companies to come up with the best performers for 2016.
A committee working on the event’s programme has already identified and contacted a guest of honour who will be unveiled in the next few weeks.
The judging process, together with a series of events taking place behind the scenes, will culminate in an awards ceremony scheduled for June 2 in Harare.
Winners will walk away with certificates and trophies as well as get coverage in a comprehensive magazine, which will profile the winning firms and highlight prospects for the economy going forward.
The theme for this year’s survey is “Adaptation for growth,” which is in line with current government efforts aimed at rebuilding the economy.
Launched in 1980, the Top Companies Survey had run for 28 years before it was suspended in 2008 due to the economic crisis, which started in 2000 and worsened in 2008 before receding on dollarisation in 2009.
The situation had therefore made it impossible to continue with the survey, which was re-launched in 2014.
Commenting on this year’s survey, Jacob Chisese, the chief executive officer of the Financial Gazette, said: “When we courted Old Mutual to bankroll the Top Companies Survey, we were alive to the fact that the trading and business environment was going to be exceedingly difficult because of both exogenous and endogenous factors, and, for businesses to survive in such a hostile environment, there was need to encourage them not only to perform well at times, but, to be adaptive to the dynamic economic conditions.”
He said in order to reward top performers on the Zimbabwe Stock Exchange, the survey “must speak to behavioural traits that listed companies have to adopt not only to be the best among the quoted companies but, more importantly, to survive the turbulent economic conditions”.
“If both our sponsor, Old Mutual, and ourselves, succeed in influencing listed companies to be innovative and become adaptive to the new normal then our vision of the Top Companies Awards would have been fulfilled.”
He said the survey has “retained our traditional benchmarks of recognising consistent and positive financial performance, maintaining a healthy financial position which is critical in the prevailing environment that is highly illiquid and superior total returns to shareholders as well as the qualitative factors of promoting good corporate governance practices including providing adequate disclosures, transparency, environmental awareness and corporate social responsibility in determining the top performers”.
“We are eternal grateful to our all weather partner and sponsor, Old Mutual without whose generous sponsorship we would not have been able to fulfil our vision of the Top Companies Survey. If one analyses the characteristics of top performers on the Zimbabwe Stock Exchange in the previous years and internationally, one can discern the same DNA exhibited by those companies in terms of being successful compared to their counterparts in being adaptive to the hostile trading environment,” said Chisese.
The aim of the survey is to promote good corporate governance practices, ethical conduct and corporate social responsibility, while at the same time providing a platform for networking among corporate leaders and other invited guests.
The survey has correctly been credited with promoting a strong corporate sector mainly because it promotes excellence in corporate performance. It is also quite evident that there has been a positive competitive spirit among companies that are listed on the ZSE because of the spotlight that has been shown on them.
Old Mutual Zimbabwe chief executive officer, Jonas Mushosho
The credibility of the largest investor on the ZSE, Old Mutual, had also enhanced the image and reputation of the Top Companies Survey especially in an environment where a number of dubious awards had been dished out since dollarisation and thereby debasing the awards for excellence and high achievement.
In a company, apart from being profitable and declaring a dividend, investors and shareholders seek disclosure and simplicity. The more companies are transparent about where they are making their money, debts structures, how they are spending their resources, profiles for their managers and directors and issuing cautionary statement, investors are more comfortable with them.
Over the years mounting evidence suggests that the market gives a higher value and attention to firms that are transparent, adhere to good corporate governance and are upfront with investors and analysts.
Good corporate governance, relevant and reliable information means less risk to investors and shareholders resulting in a lower cost of capital, which naturally translates into higher valuations and returns.
A key finding has been that companies that share their key metrics and performance indicators are regarded highly and ranked as being more valuable than those companies that keep information to themselves.
Transparency makes analysis easier and thus lowers an investor’s risk when investing in stocks. That way investors and shareholders, are less likely to face unpleasant surprises.
Some financial statements of some firms in Zimbabwe have been criticised for being designed to hide rather than reveal relevant information that an investor, analysts or shareholders require to make informed decisions and projections for the future.
Investors should steer clear of companies that lack transparency in their business operations. Companies with inscrutable financials and complex business structures are riskier and less valuable investments.
Financial analysts rely on data to analyse the performance of, and make predictions about, the future direction of a company’s stock price.