RETAIL and distribution company Axia Corporation Limited has foregone declaring a dividend for its financial year ended June 30, 2024 to reinvest its money into expansion projects.
The main operating business units in Axia are TV Sales & Home, Distribution Group Africa and Transerv.
In its annual report for its financial year ended June 30, 2024, Axia had a slight dip in its profit after tax to US$6,06 million from the prior year comparative of US$6,18 million.
The drop was owing to a near 5% drop in revenue to US$193,84 million during the same period, from the 2023 comparative.
Axia’s total asset position grew by US$9,38 million to US$127,55 million in the year under review, from the comparative 2023 period, while borrowings increased by 59% to fund working capital and capital expenditure for its current year.
“The board has decided not to declare a final dividend for the financial year ended June 30, 2024. The group will be reinvesting most of its free funds towards expansion projects which are aimed at creating additional business opportunities,” Axia chairperson Luke Ngwerume said in the firm’s annual report for the period ended June 30, 2024 released last week.
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“The board remains committed to prudent financial management and ensuring the long-term growth and sustainability of the group. The board hopes to resume dividend payments at the interim stage.”
The expansion projects include the expansion of the store network at Transerv and TV Sales & Home as well as the completion of its bedding manufacturing plant.
The group also seeks to investn in working capital to aggressively grow the debtor’s book at both Transerv and TV Sales & Home.
Ngwerume said the group was hopeful that the Zimbabwe Gold currency would remain stable as it will help ease import costs and improve pricing stability.
“Our efforts to boost demand in the formal market through close partnership with retailers have started to pay dividends,” Ngwerume said.
“The group will aim to increase its product offerings and consolidate its market share by continuing to look for new markets for its products.
“The group’s management teams remain committed to managing gearing levels by aligning the amount and cost of debt across the group, enhancing free cash flow, investing free funds in high-return assets, managing foreign currency exposure and safeguarding the balance sheet value.”
He said the group would direct the free cash generated towards funding its expansion projects.
“The group’s proactive measures to address economic shifts and consumer preferences will play a pivotal role in sustaining and potentially increasing market share,” Ngwerume said.
“Overall, the combination of strategic initiatives and improved currency stability will steer the group to an improved performance in the coming year.”
Heading into its current financial year, Axia had nearly US$1,51 to every dollar of short-term debt should it become due showing the firm had enough liquidity for its expansion plans.