• The operating business generated fee income across all revenue lines. The accounting result was determined by the exchange rate, not the business.

Harare - Zimbabwe Stock Exchange Holdings Limited reported a total USD comprehensive loss of USD 1.3 million for the year ended 31 December 2025, reversing a profit of USD 1.1 million in the prior year, as foreign currency translation differences consumed the full operating return recorded over the period.

ZWG revenue grew 55 percent from ZWG 105.1 million to ZWG 163.2 million, while USD revenue contracted 7 percent from USD 7.5 million to USD 7.0 million, revealing the opposing pictures that Zimbabwe's dual-currency reporting framework produces for an entity whose core transactions denominate in local currency.

BDO Zimbabwe issued an unmodified audit opinion on both the IFRS USD financial statements and the special purpose ZWG-translated report, confirming that both sets of statements present fairly in all material respects, which provides an independent verification layer that separates audit credibility from the currency-driven accounting outcome.

Zimbabwe Stock Exchange Holdings Limited is the listed parent company of the Zimbabwe Stock Exchange, which is the country's primary regulated securities exchange providing trading, listing, clearing, and market surveillance services for equities, bonds, and other instruments. The group's revenue is generated through transaction levy fees, listing fees, membership fees, and document review charges, all of which are structurally linked to the volume and value of activity on the exchange floor. The ZSE listed its own shares in 2019, which makes it one of a small number of exchange operators globally whose own financial performance is directly observable by the market participants it serves. The group operates as a monopoly infrastructure provider within the domestic equities space, which provides a degree of revenue floor protection that most listed companies do not hold.

The divergence between ZWG and USD results arises from the application of IAS 21, which governs how financial statements prepared in a functional currency are translated into a presentation currency for reporting purposes. The group determined that the United States Dollar is its functional currency, a conclusion that reflects the degree to which significant contracts, fee structures, and asset values are referenced in USD-equivalent terms. ZWG revenues generated during the year are translated at rates prevailing at transaction dates or at period-end rates depending on the nature of the item, and where the ZWG has depreciated against the USD over the reporting period, cumulative translation differences flow directly into other comprehensive income rather than through the income statement. This mechanism means that ZWG revenue growth and USD revenue contraction can occur simultaneously, and that the total comprehensive result reflects the direction of the exchange rate as much as it reflects the operational result.

USD revenue fell from USD 7.5 million to USD 7.0 million, which represents a 7 percent contraction. Staff costs held broadly stable at USD 3.34 million against USD 3.32 million in the prior year, while the operating profit compressed from USD 1.84 million to USD 849,000, a decline of more than 53 percent, as the cost base absorbed a proportionally larger share of a reduced revenue pool. The group recorded an impairment loss on intangible assets of USD 320,233, which the notes identify as relating to internally developed ZSE, VFEX and compliance direct systems, which brought the profit before tax to near zero at USD 1,451. The monetary loss line, which captures the impact of holding net monetary assets in a depreciating currency environment, added further pressure below the operating level and contributed to the comprehensive loss outcome.

The financial performance of ZSE Holdings moves directly with capital market activity, meaning that listed companies, stockbrokers, asset managers, and institutional investors collectively determine the fee pool from which the exchange operator draws its income. A sustained contraction in USD-denominated trading values, which arises whenever the ZWG depreciates faster than equity prices inflate, reduces the transaction levy revenue that forms the largest component of the group's income. The impairment of USD 320,233 on intangible assets signals that internally developed technology systems, including surveillance platforms and compliance infrastructure, are not generating recoverable value at the current throughput level. Stockbrokers and market participants whose compliance and reporting obligations are administered through ZSE subsidiaries carry indirect operational exposure to the group's technology continuity.

The release of dual-currency financial statements, one prepared under full IFRS and one prepared as a special purpose translated report in ZWG terms per the Reserve Bank of Zimbabwe Monetary Policy Statement of 6 February 2025, reflects the reporting framework established by the monetary authority to give domestic stakeholders a ZWG-denominated view of entities that also report in USD. Both statements received clean opinions from BDO Zimbabwe, signed on 1 April 2026, which confirms that the framework is being applied consistently across both reporting bases. The audit outcome removes ambiguity about the quality of the financial disclosures and provides a stable base for stakeholder interpretation, though the dual-currency structure continues to create a presentation complexity that requires readers to hold two financial pictures simultaneously. This reflects a policy environment that is broadly stable in its reporting requirements, even as the underlying exchange rate that feeds into those reports remains volatile.

The Nairobi Securities Exchange in Kenya has navigated a comparable challenge in recent years, as a weaker shilling reduced the USD translation value of shilling-denominated fee income despite nominal volume growth on the domestic bourse. The Lusaka Securities Exchange in Zambia experienced a period of kwacha volatility before the currency stabilised in 2022, during which the exchange operator's USD-reported figures contracted even as kwacha activity grew. Both cases demonstrate that exchange infrastructure entities in Africa carry a structural sensitivity to the currency environment that is distinct from the sensitivity faced by non-financial companies, and that the operating model, which collects fees as a percentage of transaction value, amplifies currency movement directly into revenue outcomes.

The implied ZWG/USD exchange rate embedded in the income statement, calculated by dividing ZWG revenue by USD revenue, moved from approximately ZWG 14.0 per USD in 2024 to approximately ZWG 23.3 per USD in 2025. This single ratio encodes the full story of the result: ZWG revenue grew 55 percent in nominal terms, but the ZWG itself lost approximately 40 percent of its USD value over the same period, which produced the 7 percent USD revenue contraction. A trend line mapping the implied ZWG/USD rate against annual USD revenue over three to five years would illustrate the inverse relationship clearly and would serve as a leading indicator for analysts monitoring the group's USD-reported earnings trajectory.

The primary risk facing ZSE Holdings over the near term is further ZWG depreciation, which would maintain the inverse pressure on USD revenue regardless of how strongly ZWG fee income grows. The impairment of intangible assets warrants continued monitoring, as additional write-downs on surveillance and compliance systems would reduce net asset value and suggest that the group's technology investment cycle is not generating returns at the expected throughput level. Investors assessing ZSEH as a listed security should distinguish between the total comprehensive result, which is determined largely by currency translation, and the operating cash generation, which reflects the actual fee-earning capacity of the business and which the statement of cash flows presents without the translation adjustment overlay. The unmodified audit opinion removes audit risk from the assessment framework, leaving exchange rate trajectory, market activity volumes, and technology asset performance as the three variables most likely to determine whether 2026 presents an improvement.

ZSE Holdings enters 2026 with a structurally sound operating model, a verified set of financial statements, and a ZWG revenue base that grew substantially over the reporting period. The question that should concentrate investor attention is whether Zimbabwe's exchange rate trajectory will allow the USD-reported result to reflect the operational progress that the ZWG statements already confirm. The distance between those two pictures is not an accounting anomaly. It is the precise measure of currency risk embedded in every capital markets position in Zimbabwe, and it is visible, clearly and in full, in the financial statements of the exchange operator itself.

The chart makes the core signal immediately visible that is ZWG revenue bars growing sharply left to right in teal, USD revenue bars barely moving in the opposite direction in coral, and the dashed rate line showing the ZWG/USD implied translation rate widening from 14.0 to 23.3, which is the single variable that explains the entire gap between the two stories.

The three metric cards below anchor the key numbers are the rate movement, and the swing from a USD 1.1 million profit to a USD 1.3 million loss.

ZSE Holdings closed FY2025 with its operating model intact, its audit clean, and its ZWG revenue base expanding at a rate that the USD result could not reflect. The business generated fee income across all its revenue lines, contained its staff cost growth, and maintained market infrastructure that continues to serve Zimbabwe's listed corporate sector. What the USD comprehensive loss of USD 1.3 million records is not a failing business. It records the cost of operating a capital markets infrastructure entity inside a currency environment where the unit of domestic account lost approximately 40 percent of its USD value over the reporting period. As 2026 opens, three variables will determine whether the current trading year produces a different outcome. The first is the trajectory of the ZWG against the USD, which feeds directly into every line of the USD-reported income statement through the IAS 21 translation mechanism. The second is the level of market activity on the exchange floor, which drives transaction levy volumes and listing fee income in both currency bases. The third is whether the impaired intangible assets, which relate to surveillance and compliance systems, can be rebuilt or replaced at a cost that the current throughput level justifies. Zimbabwe's capital markets are entering a period where investor confidence, currency stability, and digital infrastructure will need to move in the same direction at the same time. ZSE Holdings is the entity through which that alignment, or the absence of it, will be most directly measured.

- Equity Axis Zim