Axia profit surges to $17m

HARARE - Axia Corporation (Axia) says it recorded a 31,2 percent increase in profit after tax for the year ended June 2018 from $12,8 million to $16,8 million.

Luke Ngwerume, Axia chairperson, yesterday said the Innscor specialty retail and distributing business also achieved a revenue growth of 31 percent to $275,9 million in the year under review.

“The group sustained growth in profitability by recording an operating profit of $25,8 million and a profit before tax of $24,3 million for the year notwithstanding substantial once-off legacy charges recorded in the distribution business,” he said in a statement appending the firm’s financials for the year under review.

Ngwerume highlighted that the once off charges were incurred as a result of derecognising some historical debtors and inventory balances that arose as a result of a compromised control and governance environment.

“Management has dealt with the control environment issues and believes that they have cleared all historical balances as part of the balance sheet restructuring exercise in the affected subsidiaries,” he said.

The Axia boss also noted that the group had placed focus on reducing its foreign creditor position and securing additional inventory as a way to ensure superior offerings to customers

“Although this has resulted in a significantly changed working capital profile, the group managed to generate cash from operating activities,” he said.

In the year under review, Axia’s basic and headline earnings per share amounted to 2,02 US cents, with headline earnings 47 percent above the comparative period and when adjusted for income earned on the derivative option, were 28 percent above prior year at 1,76 US cents.

Capital expenditure for the year totalled $3,9 million while net borrowings also increased by $10,5 million mainly to support strategic working capital investments resulting from increased gearing.

Axia also reassessed its position of control of Transerv, where the group has an effective 26,01 percent share, the group equity accounted Transerv’s results and says it will only consolidate the business when effective holding of above 50 percent is achieved.

“In addition, through a scheme of reconstruction, the group has consolidated the results of Hat On Investments and Baobab Africa through its subsidiary Ditribution Group Africa…

“The change in accounting treatment is notwithstanding the fact that there has been no change in the group’s effective shareholding in Baobab while the effective shareholding in Hat On increased by 0,02 percent,” said Ngwerume.

In terms of operations, TV Sales and Home achieved a 19 percent increase in units sold over the prior year, translating to a turnover growth of 36 percent driven by significant growth in both cash and lay-byes.

The distribution unit, Distribution Group Africa recorded a 17 percent rise in revenue while the Malawi unit posted a 32 percent increase in revenue, as did the Zambian unit.
— The Financial Gazette

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