DIRECTORS’ RESPONSIBILITY
The Directors of Axia Corporation Limited are responsible for the preparation and fair presentation of the Group’s consolidated financial statements. The six months financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and in the manner required by the Companies and Other Business Entities Act (Chapter 24:31) and the Victoria Falls Stock Exchange (“VFEX”) listing requirements.
The principal accounting policies of the Group are consistent with those applied in the previous annual financial statements. The financial statements are prepared with the objective of complying fully with International Financial Reporting Standards (IFRS). Complying with IFRS achieves consistency with the financial reporting framework adopted by the Company and the Group since its inception. Using a globally recognized reporting framework also facilitates understandability and comparability with similar businesses and allows consistency in the interpretation of the financial statements.
OPERATING ENVIRONMENT AND OVERVIEW
The Zimbabwean trading environment in the first half of the financial year has been challenging for the formal retail sector, with several major retailers facing difficulties. The Group relies on an efficient route to market through formal retail channels .The ongoing struggles of some of the major retail giants, underscores the tough operating conditions. Exchange rate stability remained a significant hurdle to the Group’s operations. The official exchange rate on local currency depreciated from 13.908 to the US Dollar at the beginning of the year, underwent an official devaluation by 43% on 27 September 2024, and further weakened by 7% to 31 December 2024. These devaluations resulted in substantial financial losses amounting to US$2.287m being incurred for the Group especially on the ZWG Treasury Bill instruments arising from outstanding auction funds. Additionally, the downsizing and closure of some companies have further dampened effective demand across the economy.
Furthermore, the continued informalization of the economy has negatively impacted formal retail, as compliance costs remain a burden that informal traders often bypass. This has resulted in formal retailers being outpriced in certain product categories, further exacerbating the competitiveness of formal businesses. Of concern is the proliferation of counterfeit products in the market.
In Malawi, the Kwacha continued to weaken, depreciating by 29% against the US Dollar on the informal market and thereby creating a high inflationary environment. Counterfeit and parallel products mainly from within the region, due to different exchange rate behaviors, continue to be a key challenge in this market.
