Axia Corporation releases its 2023 Annual Report

By Published On: November 10th, 2023Categories: Corporate announcement, Earnings
Axia Corporation Limited 2023 Annual Report

Axia Corporation Limited (AXIA.vx) 2023 Annual Report



The Group had a steady increase in the use of foreign currency across its businesses and reassessed its functional currency in accordance with the requirements of IAS 21. The Group concluded that based on the primary operating environment and the Group’s own operating activities, there had been a change in its functional currency from Zimbabwean Dollar (“ZWL”) to United States Dollars (“USD”) with effect from the beginning of the current financial year. IAS 21 directs that entities operating in hyperinflationary economies should translate their last reported inflation-adjusted financial statements using the closing rate of exchange at the reporting date in order to derive and present comparative financial statements under a newly assessed functional currency.

The Directors are of the opinion that using the provisions of IAS 21 to convert the Group’s inflation-adjusted financial statements from previous period, as a basis for presenting comparative and opening statement of financial position information in the new functional currency, will result in material misstatement of the Group’s comparative financial statements. Therefore, the Group applied alternative procedures and techniques in the translation of ZWL financial statements to USD financial statements in an endeavour to present the best possible view of the comparative financial performance and position of the Group, in terms of the newly assessed functional currency.

The Directors have always exercised reasonable due care and applied judgments that they considered to be appropriate in the preparation and presentation of the Group’s financial statements, and whilst they believe that the alternative procedures and techniques used in the translation process, as described above, provide users with the best possible view of the comparative financial performance and position of the Group, attention is drawn to the inherent subjectivities and technicalities involved in the translation of ZWL financial statements to USD financial statements.

The alternative procedures and techniques applied for the translation of ZWL financial statements to USD financial statements have been summarized in Note 2 of the accompanying abridged financial statements. This has resulted in the external auditor issuing an adverse opinion on the Group’s consolidated financial statements.


As part of procedures and techniques applied in the translation of ZWL financial statements to USD financial statements, the Group changed its accounting policy for Property, Plant and Equipment from cost to revaluation model. The revaluation was performed at the end of the financial year.

The revalued amounts were based on a valuation exercise performed by an independent accredited valuer, Hammer and Tongues for Zimbabwean units and R.M Fumbeshi & Co for Zambian entities and PCDA Consultants for Malawian entities. Hammer and Tongues has experience in valuing assets of the Group’s nature. A valuation model in accordance with that recommended by the International Valuation Standards Committee has been applied.

The revaluation surplus, net of deferred tax, has been included under Non Distributable Reserves, with the movement for the current year shown under Other Comprehensive Income.


The operating environment was characterized by a surge in inflation which led to the adoption of a blended inflation rate, surges in market liquidity and the depreciation of the local currency which worsened during the last six months of the financial year. The Government’s efforts to control excess liquidity via contractionary monetary policy measures saw increased USD transactional flow, particularly within the informal market, where consumer demand remained firm. The formal market experienced subdued aggregate demand due to pricing issues. The economy, however, benefited from government infrastructure spending, increased diaspora remittances and increased mining activities.

The stance taken by both fiscal and monetary authorities towards the end of the financial year resulted in a constrained monetary space which helped stabilize the exchange rate. During the last quarter of the financial year, the businesses faced foreign and local currency supply constraints.

In Zambia, consumer spending was under pressure throughout the year as the impact of price increases, mainly from South Africa, was felt. These shocks were largely mitigated by periodic appreciation of the local currency during the financial year.

Malawi has consistently run a current account deficit through the years resulting in foreign currency shortages. The official currency exchange rate depreciating by 41% during the year.


The Group reported revenue of US$203.8 million during the year resulting in a marginal decline against the comparative year. Despite the revenue decline, the Group realized growth in gross margin which increased by 2% on the prior year. Management made efforts to contain operating expenditure although cost push pressures were evident in fuel costs and human capital costs resulting in increases over the comparative period. The Group posted an operating profit of US$20.84 million, representing a 16% decline to the comparative period. The financial loss line is predominantly comprised of foreign currency exchange losses resulting from the depreciation of monetary assets denominated in local currency as the local currency significantly devalued in the last quarter of the financial year. Net interest expenses amounted to US$3.22 million, with 48% of this incurred in the first quarter of the financial year following the sharp increase in interest rates on ZWL denominated borrowings. Profit before tax was US$11.19 million, which was 32% below the prior year. Basic Earnings Per Share and Headline Earnings Per Share both declined by 34%.

The Group’s financial position remained solid. Borrowings grew by US$3.19 million.

The Group generated cash of US$15.932 million from operations which enabled it to incur capital expenditure for the year of US$6.6 million. The Group’s free cash generation will enable it to continue executing exciting expansion opportunities.


As part of its commitment to ensuring the sustainability of its businesses, the Group will continue to uphold these responsible business practices and values across its operations to ensure that long-term business success is achieved in a sustainable manner. We remain committed to making positive impacts on society, natural environment, and climate by ensuring our operations have limited negative impacts.


The main operating business units in the Axia Corporation Limited Group are TV Sales & Home (TVSH), Distribution Group Africa (DGA) and Transerv. TVSH is Zimbabwe’s leading furniture and electronic appliance retailer with sites located countrywide. DGA’s core areas of expertise lie in inbound clearing and bonded warehousing, ambient and chilled warehousing, logistics, marketing, sales, and merchandising services. Transerv retails automotive spares and accessories through retail stores and fitment centers to service the needs of its customers.

TV Sales & Home

The fourth quarter revenue performance for TV Sales & Home was up 7% compared to the same period prior year. The year-to-date volume performance increased by 4% compared to the prior year. Revenue increased by 5% primarily a result of the generic growth of stores in the store network. Most operating costs incurred during the financial year were indexed to the US$ resulting in significant growth against prior year. A hike in interest rates by authorities on ZWL borrowings led to high interest costs.

As previously mentioned at half year, TV Sales & Home continues to invest in volume growth initiatives with the introduction of a new product range from the group’s local manufacturing units as well as imported products. The business managed to reengage Samsung Electronics as a trade partner after a very prolonged absence and the potential of this partnership is significant.

Three new stores were opened in Harare during the financial year. However, two stores were also closed in Harare as the business was given notice by the landlord. Plans are underway to continue expanding the retail store network. At least four new stores will be opened in the first half of the new financial year with a new store concept, Bedtime Store, opening two stores. The first outdoor world, garden furniture, store was opened in September 2023. Volumes are expected to improve in the new financial year, ceteris paribus, following the addition of new home appliances and homeware distribution business lines.

Restapedic is a bed manufacturing business unit of TV Sales & Home. Volumes for the fourth quarter at Restapedic improved by 10% resulting in quarterly turnover growth of 7% against the comparative quarter. However, year-to-date volumes and turnover decreased by 14% and 9% respectively primarily as a result of poor performance in first quarter and third quarter of the financial year. The business experienced intermittent raw material supply gaps attributed to delays on auction payments in the third quarter. The business moved to the new bedding factory in Sunway City, Harare, in April 2023 and production volumes have improved since then. Third quarter performance was affected by disruption of production as different factory units were moved to the new factory in Sunway City, Harare. After moving to the new bedding facility in Sunway City, Harare in April 2023, production volumes are on the upward trend. A new conveyor system has been delivered and is currently being installed thus improving in automation in the manufacturing process which would result in improving production volumes. Some orders were sold to new markets in the region and response from those markets has been encouraging.

Legend Lounge is a lounge suite manufacturing business unit fully owned by TV Sales & Home. The business also experienced raw material supply gaps attributed to delays in the auction payments which negatively impacted the imports supply chain. This resulted in volumes decline of 7% against the comparative year which led to a 9% decline in turnover. The new management team is focusing on volume growth, improving gross margin dollars and managing operating costs.

Distribution Group Africa (DGA) – Zimbabwe

Volumes for the year were 29% below the prior year and this resulted in a decline in revenue. This was due to weaker demand in the formal sector. The business incurred losses during the year due to exchange losses arising from delays in payments from its major customers. This led to management’s decision to stop supplying to some customers as a way to manage the risk on debtors. Management are continuously working with all parties to build demand in the formal sector.

The business remains poised to exploit growth opportunities from economic activities in the informal business sector that will not require extended credit terms. The business continues to safeguard and grow shareholder value by embarking on projects that generate positive cash flows and achieve the required returns.

Distribution Group Africa – Region

In Zambia, volumes increased by 22% on the prior year resulting in 14% revenue growth. The sales mix was skewed towards high margin products which led to improved margins. The business increased its operating profit by 199% on a like-for-like basis, in US$ terms. The business continues to monitor and correct its pricing positions in response to market conditions. Management will remain focused on pursuing real equity growth.

In Malawi, the economy continues to face foreign currency shortages. The foreign currency shortages resulted in the business reducing its ordering of imported stock as management decided to sell imported stock only to the extent to which they can generate foreign currency to replace it. This led to a decline in sales volumes of 15%. Operating expenditure was well managed, and this resulted in the business posting a decent profit. Plans have been implemented to generate foreign currency to settle foreign suppliers and this helped to grow the US$ shareholders’ equity. Management will continue to foster relationships with suppliers and financial institutions to manage the foreign currency situation.


During the year under review the Company’s revenue increased by 5% compared to the prior year. The increase in revenue was driven by rapid expansion in the Company’s retail footprint. During the year, the Company opened seven new retail stores in Harare and one in Kadoma. The Company continues with its drive to increase its retail footprint in a bid to bring convenience and improve the overall customer shopping experience. Management is confident that in the 2024 financial year, revenue will continue to grow as the Company reaps the full benefits of footprint expansion.


The establishment of the wholesale willing buyer willing seller market has brought renewed confidence in the foreign currency auction system. The Group is hopeful that this will be a reliable source of foreign currency to enable the Group to pay foreign suppliers and price products accordingly. The right pricing of goods will stimulate demand thus improving sales volumes.

The Group’s management teams will focus on balancing pricing and volume objectives, broadening product ranges, achieving growth in margin dollars as well as managing operating costs. The Group will continue to focus on growth from existing businesses whilst looking out for new opportunities. Management in Zambia will focus on pushing volumes, looking for new distributorship agencies, monitoring and managing pricing positions in response to market conditions.

In Malawi, the authorities have pressure to officially devalue the Malawi Kwacha. Management will continuously look for opportunities to source foreign currency to adequately provide product to the business.


The Board has declared a final dividend of US$0.0010 (0.10 US cents) per share in respect of all ordinary shares of the Company. This brings the total dividend paid for the year to US$0.0028 (0.28 US cents). The final dividend is payable in respect of the financial year ended 30 June 2023 and will be paid in full to all ordinary shareholders of the Company registered at close of business on the 10th of November 2023. The payment of this dividend will take place on or around the 13th of November 2023. The shares of the Company will be traded cum-dividend on the Victoria Falls Stock Exchange up to the 7th of November 2023 and ex-dividend as from the 8th of November 2023.

The Board has also declared a final dividend of US$25,000 to the Axia Employee Trust (Private) Limited which will be paid on or around the same date.


I express my sincere gratitude to the Board of Directors, executives, management and staff for their ongoing efforts during the year under review. Their commitment, despite the challenging operating environment, is greatly appreciated. I also take this opportunity to thank the Group’s valued customers, suppliers and other stakeholders for their continued support and trust.

27 October 2023

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