• Grant Thornton issued a qualified audit opinion on Unifreight Africa's FY2025 financial statements, citing non-compliance with IAS 21 on foreign currency translation
• This means the Y-o-Y comparisons that show 75% revenue growth and 18% EBITDA decline are built on a foundation the auditors have formally flagged as non-compliant
• Net cash generated from operating activities collapsed 99.1% in a single year, while trade payables surged 435%, trade receivables grew 127%, and a ZWG 66 million overdraft
• Against a net cash position of negative ZWG 26.7 million, ZWG 184.5 million in trade and other payables, and ZWG 4 million in full-year operating cash generation, the board has declared a dividend of US$390,000

Harare- Unifreight Africa Limited, the Zimbabwe Stock Exchange-listed road transport and logistics group formerly known as Pioneer Corporation Africa which operates a fleet-intensive road transport business spanning inter-city freight consolidation, domestic distribution, courier services, fourth-party logistics, and cross-border operations across the SADC region saw a 75% increase in topline for the FY2025 at ZWG 1.30 billion against ZWG 744 million in FY2024 according to the latest full-year financial results.

Net cash generated from operating activities was ZWG 4.04 million from ZWG 467.5 million in 2024, a 99.1% collapse in operating cash generation in just a year. Digging into the cash flow statement shows that cash generated from operations before interest and tax was ZWG 50.1 million, against interest paid of ZWG 23.2 million and tax paid of ZWG 22.9 million, producing the ZWG 4 million net figure.

The pre-interest, pre-tax operating cash of ZWG 50 million compares against ZWG 491 million in the prior year, still a collapse of 89.8%, but one whose explanation is at least partially visible in the working capital movements embedded in the operating activities section.

The working capital story explains the cash collapse in part and amplifies it in another. Trade receivables surged from ZWG 123.6 million to ZWG 280.8 million, an increase of ZWG 157.2 million or 127%. Trade payables surged from ZWG 22.6 million to ZWG 121.1 million, an increase of ZWG 98.5 million or 435%. The receivables build means Unifreight's customers are taking longer to pay for logistics services, absorbing cash that the group has already delivered service to earn.

The payables surge means Unifreight is funding its operations by extending the time it takes to pay its own suppliers. A company that simultaneously sees its receivables grow 127% and its payables grow 435% is operating a working capital model where the inflow from stretching creditors is funding the outflow from slow-paying debtors, and both are moving in the wrong direction.

Adding to this, a ZWG 66 million bank overdraft appeared in the current liabilities in 2025 where none existed in 2024, confirming that the stretched working capital cycle has required the group to draw on short-term bank facilities to fund day-to-day operations.

Against the backdrop of ZWG 4 million in operating cash generation, a ZWG 66 million overdraft, ZWG 184.5 million in trade and other payables, Unifreight's board has declared a dividend of US$390,000, equivalent to US$0.0036629 per share.

The chairman's statement frames this as reflecting the Board's confidence in the underlying business while remaining mindful of the need to fund fleet renewal, corridor capacity and continued investment in operational execution. Both parts of that sentence are true and both parts are in tension with each other.

A company that is confident enough in its business to pay a dividend is also acknowledging that it needs to fund fleet renewal, corridor capacity, and operational investment,  all of which require cash. The group has ZWG 4 million in net operating cash, a ZWG 66 million overdraft, and has committed to 80 vehicle acquisitions in 2026, including 70 FAW 380FT trucks and trailers.

The dividend of US$390,000 is not funded from the ZWG 4 million generated in 2025, it is funded from retained earnings, which stand at ZWG 1.40 billion on the balance sheet. The retained earnings balance is real and the dividend is legally supportable from it. But retained earnings are not cash, they are an accounting accumulation of profits over the company's history, held partly in vehicles, investment property, and other non-liquid assets.

The cash position at year end was ZWG 39.3 million before the overdraft is netted, and ZWG minus 26.7 million net of the overdraft. Paying a US$390,000 dividend, approximately ZWG 10 million at current exchange rates, from a net cash position of negative ZWG 26.7 million requires either drawing down further on the overdraft, liquidating assets, or generating sufficient operating cash in early 2026 before the payment date.

The FY2025 cash flow record does not provide confidence that the last option is straightforward.

The functional currency change from ZWG to USD is analytically significant beyond the IAS 21 qualification it has generated. The decision, taken at the beginning of FY2025 and described by management as reflecting the USD basis of the group's revenue and cost structure, aligns Unifreight with the broad direction of travel across Zimbabwe's ZSE-listed sector.

First Capital Bank, Proplastics, and a growing list of listed companies have concluded that USD is their functional currency given Zimbabwe's dollarised operating reality. For Unifreight specifically, the decision makes commercial sense, cross-border logistics pricing is predominantly USD, fuel costs are USD, vehicle acquisition is USD, and the tobacco transport that drives 84 million kilograms of volume is priced and settled in USD.

The functional currency change is not controversial in its direction. What it has produced is a set of financial statements whose comparative figures, as Grant Thornton has confirmed, are not fully IAS 21-compliant in their translation methodology, making the year-on-year analysis that any investor needs to assess the business's trajectory materially more difficult than it should be.

The foreign currency translation reserve of negative ZWG 346.9 million that appeared in equity during 2025 is a direct consequence of the functional currency change and the subsequent translation of the group's USD functional currency financials back into ZWG for reporting purposes.

As the ZiG exchange rate moves, the translation of USD-functional assets and liabilities into ZWG for reporting purposes produces translation gains or losses that flow through other comprehensive income rather than the profit and loss account. The negative ZWG 346.9 million in the translation reserve represents the accumulated translation loss from restating USD-functional balances into ZWG at the year-end exchange rate versus the rates at which they were originally recorded. This is not an operational loss, but an accounting consequence of reporting a USD-functional business in ZWG. But it reduced total equity from ZWG 889.2 million at the start of 2025 to ZWG 692.9 million at year end, a 22% decline in the equity base, at the same time that EBITDA was declining and the working capital cycle was deteriorating.

Unifreight's FY2026 operational plan is ambitious relative to the cash position it enters the year with. The group plans to grow its fleet from approximately 270 trucks to 340 by December 2026, requiring the acquisition of 80 vehicles including 70 FAW 380FT trucks with Afrit trailers. Capital expenditure committed at the date of results approval was ZWG 38.4 million. Borrowings at year end stood at ZWG 110.7 million across long and short-term facilities, with interest rates on USD accounts between 12.15% and 13% per annum.

The tobacco transport target of 100 million kilograms against the 84 million achieved in FY2025 represents 19% volume growth in the group's most important revenue segment. LTL targets a 10% reduction in operational costs, an improvement in on-time delivery from 90% to 93%, and fleet availability improvement from 91% to 93%. These are operationally credible targets for a management team that knows its network.

The question is whether the working capital position, the overdraft, and the cash generation trajectory at the end of FY2025 leave the group with sufficient financial headroom to fund the fleet expansion, service the dividend, and manage the trade payables book, all simultaneously and from an operating cash base that generated ZWG 4 million in the year just completed.

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