Axia Corporation Limited has disposed off its entire 66.7% stake in Baobab Africa (Pvt) Limited.
This was revealed by the company’s board chairman, Luke Ngwerume, in a statement accompanying the group’s latest financial results,published this week.
“The group, through its subsidiary Distribution Group Africa disposed its 66.67% shareholding in Baobab Africa (Pvt) Limited, a business distribution business,” Ngwerume said.
“Baobab group had net liabilities of ZWL$2.3m which arose as a result of exchange losses incurred during the period.
A profit of ZWL$2.3m was recognised on the disposal of this subsidiary.”
In its financial results for the six months to December 31,2019, Axia, which operates TV Sales & Home, Distribution Group Africa Zimbabwe, Distribution Group Africa Region and Transerv, reported a 4% growth in revenue to ZWL$1.7m from ZWL$1.6m recorded in the comparative period in 2018.
“The impact of price increases negatively affected demand thus turnover volumes were below those traded in prior year.
An improved performance was noted in the last quarter of the half year, where volumes growth was better than that achieved in prior year,” Ngwerume said.
The group sustained growth in profitability by recording an operating profit of ZWL$209.9m, representing a 1296% growth from ZWL$91.7m in the same period in 2018, despite inflationary pressures on costs Profit for the year rose to ZWL$74.8m during the period under review from ZWL$45.4m achieved in the same period in prior year.
Ngwerume said: “The group continues to prepare a set of results using the United States dollar as a reporting base for internal measurement which reflect an earnings growth in real terms of 35%.”
Total assets for the group were ZWL$1.1bn from ZWL$1.01bn in the comparative period prior in year.
The group’s net borrowings increased by ZWL418.9m mainly as a result of increased borrowings to fund working capital resulting in more effective gearing.
The group generated cash amounting to ZWL$26m from operations, which was a 78% decline from the comparative period in 2018.
The group’s capital expenditure for the period under review was ZWL$16.4m and this was limited to critical maintenance and expansion projects as these were also affected by inflationary pressures, Ngwerume said.
Turnover for TV Sales & Home was down 7% while profit grew by 122%.
Volumes were down 30% below prior period although the business is witnessing a good volume recovery post December 31,2019, according to Ngwerume.
Turnover for Distribution Group Africa Zimbabwe was down 11%, while operating profit was up 73%.
Volumes were down 39% and the impact of the price increases led to a margin increase which was better than turnover growth.
The shortages of foreign currency resulted in the business reducing its imported stock component due to the concomitant pricing pressures.
Distribution Group Africa Region’s turnover grew by 16% over prior year in United States dollars terms.
The growth was to the acquisition of new agencies such as Nestle and Blue Band in Zambia and the addition of Pro Group in Malawi.
Gross margins also improved as a result of the sales mix and this filtered to operating profit.
“Despite high levels of stock write-offs and provisioning in Zambia on the back of customer returns, the improved regional performance is encouraging,” Ngwerume said.
Transerv continued to face challenges of an onerous trading environment. Volumes declined significantly by 46% during the period under review.
“As the vast majority of Transerv’s stocks is imported, pricing pressures in the current environment have resulted in volumes decline.
Some product lines have suffered a slowdown in stock turn due to the continuously declining consumer disposable income,” Ngwerume said.