We are pleased to present the annual report of Axia Corporation Limited, a company listed on the Zimbabwe Stock Exchange for the twelve months ending 30 June 2019. We integrate sustainability information in this report in line with the GRI principles for determining report content to present a balanced view of material issues and performance from our operations in Zimbabwe, Malawi and Zambia. In this report, unless otherwise stated, references to “Axia”, “the Group”, “we”, “our”, and “us” refer to Axia Corporation Limited. REPORTING FRAMEWORKS Our financial statements are prepared in accordance with International Financial Reporting Standards and audited by Deloitte & Touche (Chartered Accountants Zimbabwe) in accordance with International Standards on Auditing. In this financial year, the financial statements did not comply fully with International Financial Reporting Standards, due to noncompliance with International Accounting Standard (“IAS”) 21 – The Effects of changes if Foreign Exchange Rates. Refer to Director’s responsibility and approval of financial statements on page 32 – 33 for more details on this. An independent auditors’ report on the financial statements is contained on Page 35 – 39. The preparation of sustainability information was guided by the Global Reporting Initiative (GRI) Standards. This report has been prepared in accordance to the GRI Standards: Core Option.
AXIA Annual Report 2019
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The operating environment presented a mix of challenges and opportunities for the specialty retail and distribution businesses. Government initiatives and efforts to stabilize exchange rates in the last quarter of the financial year provided a supportive platform for volume growth. However, persistent foreign currency shortages and competition from informal markets required adaptive strategies to sustain growth and profitability. The ongoing shift towards a more informal economy has impacted demand for some of our FMCG products in the modern trade, as certain segments of the market are able to access those products in the informal market at lower prices regardless of quality. Nonetheless, the Group has been proactively addressing this challenge and is making significant strides in reclaiming market share.
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 Group adopted the Zimbabwe Consumer Price Index (CPI) as the general price index to restate transactions and balances as appropriate. Non-monetary assets and liabilities carried at historic cost have been restated to reflect the change in the general price index. Monetary assets and liabilities and non-monetary assets and liabilities carried at revalued amounts have not been restated as they are presented at the measuring unit current at the end of the reporting period. Items recognized in the statement of profit, or loss have been restated by applying the change in the general price index from the dates when the transactions were initially earned or incurred. A net monetary adjustment was recognized in the statement of profit or loss. All items in the statement of cash flows are expressed in terms of the general price index at the end of the reporting period. Comparative amounts in the Group financial results have been adjusted to reflect the change in the general price index. Financial statements prepared under the historical cost convention have also been presented as supplementary information. The auditor has not expressed an opinion on these historical results.
