Zimbabwe Newspapers Group (Zimpapers) reported a US$12,9 million pre-tax loss in the full year to December 2014 (FY14), down from a US$453,910 profit in the prior year owing to a staff rationalisation exercise and impairment on the old printing press.
Revenue also tumbled 7% to US$41,6 million from US$44,9 million registered last year.
In a statement attached to the group’s financials, Zimpapers chairman Charles Utete attributed the loss to a staff rationalisation programme the company undertook, the impairment of the old printing press and general liquidity challenges that characterised FY14.
Operating expenses before retrenchment and severance packages of US$5,96 million increased by 17% from US$32,8 million the prior year.
The expenses include a Zimra tax audit of US$2,5 million, provision for doubtful debts of US$911 218 million and impairment of stock amounting to US$694.626
“The liquidity constraints of 2014 negatively affected both circulation and advertising revenues for the Zimpapers company. Other media companies have either shut down down completely or closed their non-performing newspaper titles,” Utete said in the statement.
The Zimbabwe Mail, owned by Transport minister Obert Mpofu discontinued operations last month while Alpha Media Holdings shut down its regional daily, Southern Eye.
The company’s gross profit also declined to US$31,99 million from US$33,1 million attained last year.
Finance costs increased 22% to US$1,62 million due to expensive short term borrowings to finance capitalisation.
The company has long-term borrowings of US$1 million and short-term borrowings of US$3,559 million.
Zimpapers had net liability of US$19,95 million compared to US$4,14 million the previous year attributed to retrenchment packages and statutory obligations difficult to liquidate due to cash flow constraints.
The newspaper division registered an operating loss of US$56 914 before finance costs compared to an operating profit of US$3,6 million the previous year due to subdued demand, high staff costs and the challenging economic environment.
Commercial printing recorded a US$1,1 million operating loss compared to US$528 284 in 2013 due to working capital constraints.
Zimpapers’ broadcasting subsidiary operating loss was US$197 418 down from US$281 680 last year.
“Both directors and management believe that the current economic challenges are temporary. Directors and management are also confident that all the initiatives being pursued by government, underpinned by the Zimasset economic blue print,will see a change in fortunes for the fortunes for both the country and Zimpapers.
The company will continue with its cost containment strategies and right sizing workforce while rigorously exploring new revenue streams to mitigate the challenges faced by the economy,” said Utete.