Tawanda Musarurwa Senior Business Reporter
Listed diversified media group Zimbabwe Newspapers (1980) Limited’s profit after tax for the six months to June 30, 2018 rose 41 percent to $1, 6 million as all divisions recorded improved performances during the period.
Group revenue for the period rose 10 percent to $20,2 million from $18,3 million, which management attributed to “organic growth” across all its operational divisions.
The commercial printing division was the best performer during the first half of the year, increasing revenues by 44 percent to $3, 6 million on the back of a multiplication in product range and the commissioning of a second printing press at the end of 2017.
The subsidiary’s profit before tax was up 16 percent to $0,42 million, although the profit margin was down 5 percent due to the rise in operating costs.
The broadcasting division posted a 9 percent rise in revenue to $2,5 million as advertising volumes increased. Profit before tax, however, slipped by 24 percent to $0, 2 million attributable to increased provision for credit losses following the implementation of the International Financial Reporting Standard 9 (IFRS9).
The newspaper division also saw an upturn in revenues, which went up 5 percent to $14,2 million from $13,5 million in the prior comparable period. Resultantly, profitability for the division jumped 40 percent to $1,79 million.
The group managed to skirt the fundamental macro-economic challenge of foreign currency shortages to improve both its bottom-line and topline.
Newsprint, inks, plates and printing press spares are key raw materials that the group needs to import to sustain daily operations.
“During the period under review, the company struggled to secure adequate foreign currency balances to import these key raw materials. Resultantly, the company recorded cost increases on the procurement of major raw materials and print spares,” said chairman Mr Delma Lupepe in a statement accompanying the results.
Operating costs were up by 5 percent to $10,9 million.
But cost optimisation initiatives implemented during the period saw EBITDA rise 9 percent to $3,5 million, which drove group profit before tax to $2,4 million up from $1,6 million in the same period in 2017.
Trade debtors at $9,1 million were largely flat, notwithstanding the growth in revenue.
Cash generated from operations amounted to $4,2 million from $2,1 million previously. Management said the 104 percent increase in cash flow from operating activities during the period under review was due to improved profitability and better working capital management.
Capital investment expenditure for the six months rose to $1,7 million, from $0,3 million prior comparable period as the group focused on equipping the business to enhance better efficiencies as well as capacitating its television project, Zimpapers Television Network (ZTN).
Total borrowings were down by 26 percent.
Going forward the group anticipates that its diversification strategy will continue to cushion its revenue growth.