Specialty retail and distribution group, Axia Corporation Limited, has increased its stake in automotive spares company Transerv to an effective 50,51 percent shareholding from 26,01 percent.
The acquisition, effective January 1, 2020, was done through the group’s wholly-owned subsidiary domiciled in Mauritius, Excalibur Mauritius Limited, for a purchase consideration of US$900,000.
Group chairman Mr Luke Ngwerume, indicated that goodwill amounting to $15,63 million was recognised at the date of the transaction.
“This acquisition will enable Transerv to pursue strategies that maximise shareholder value with further alignment and support from the Axia group, which will enhance the long-term returns,” said Mr Ngwerume in a statement accompanying the group’s financial results for the year to June 30, 2020.
“As a result, the group has consolidated the results of Transerv with effect from 1 January 2020,” he said.
According to the group, Transerv remained profitable despite a challenging year characterised by economic volatility.
“The operating environment was volatile and presented a number of challenges characterised by the weakening Zimbabwe dollar, re-emergence of hyperinflation, shortage of foreign currency and liquidity constraints that led to reduced consumer disposable income and demand,” said Mr Ngwerume.
This was worsened by Covid-19, which resulted in reduced business hours with the retail services closing for almost the whole month of April in compliance with lockdown regulations.
For Transerv, the business had to endure a month of national lockdown with no business activity thus significantly affecting the year’s revenue and volumes.
Overall, the business suffered a volume decline of 38 percent compared to prior year.
However, the strategy to focus on fast-moving stock lines and managing operating costs despite inflationary pressures helped the business to remain profitable.
An operating profit growth of 274 percent was achieved against prior year. Despite the adversities, the business maintained its 24 trading outlets, 15 Fitment Centres, a diesel pump room (ADCO), Clutch and Brake Specialists (CBS) and an Autocycle Centre. Renovations were completed on 5 retail outlets and 5 fitment centres to enhance customer experience.
Despite the economic uncertainties compounded by Covid-19 pandemic, the group is upbeat of good performance driven by volumes as the group consolidates its market share.
Said Mr Ngwerume: “In the coming year, management will continue to explore ways to improve volumes as well as expanding the store footprint.”