Powerspeed Electrical 2020 Annual Report
Chairman’s Statement
Overview
The COVID-19 pandemic and the national response to it, in the form of lockdowns, as well as timing and movement restrictions, had a huge negative impact throughout the economy and society, especially during the total lockdown period between March and June 2020. In addition to the Covid related difficulties, the general economic environment has not been conducive to the smooth flow of business. This environment was characterised by changes in legislation and banking rules, made without prior notice, serious devaluation and hyperinflation.
However, the reintroduction of the USD somewhat moderated the hostile environment, and made the conduct of formal business easier.
Fortunately, business recovered surprisingly well after the partial lifting of the lockdown, and the Group had a very good year; with volumes significantly above the previous year. Electrosales grew its market share, by taking market from both formal competitors, as well as from the informal sector. The latter was severely disrupted by the lockdown and border closures.
Throughout this difficult time, Management maintained focus on continuous improvement of the Electrosales Hardware brand, to be the first-choice supplier of hardware and home improvement products throughout Zimbabwe.
Financial review
As required by law and the Zimbabwe Stock Exchange, the financial reports presented here are given in Zimbabwe Dollars, and are reported in both Historical Cost and Inflation Adjusted formats. Unfortunately, the distortions caused by the massive devaluation and currency changes during the year, make both interpretation and comparison extremely difficult. In that regard, the Inflation Adjusted figures give the more accurate picture of the financial outcome.
We remain focused on increasing throughput, and building balance sheet value, both of which have been achieved during the year under review.
Operational review
There were no new branches added during the year under review. However, we opened a new branch in Bulawayo during November this year, it becoming our twentieth branch. This addition raises our total retail floor space to 13 958 square metres. Supply lines have suffered some major disruptions in the past year, with the COVID-19 pandemic, and its knock on effects, being the leading causes. A further factor disrupting our supply lines has been the chaos reigning at our border posts, in particular, Beitbridge, where delays of over two weeks have become common place.
Despite the supply line disruptions, we have been able to make record numbers of line items available in all of our stores, and this has undoubtedly contributed to the increase in throughput being experienced.
Unfortunately, health precautions related to COVID-19, meant that we had to put our various training programs on hold, which slowed down our manpower development. Fortunately, however, this does not seem to have dampened our staff’s enthusiasm to serve customers. However, we are delighted that recently training resumed, virtually.
We have opened a 24 hour call centre, manned by several well-trained staff members, who answer queries and provide quotations, in response to requests coming in by phone, WhatsApp, email and social media.
Our Engineering Division continued to produce goods and services, generating a reasonable profit. Fabricated products from this division are being channelled for sale through the Electrosales branch network. This strategy is working well, and has shown potential for significant growth, enhancing the value of the Engineering Division to the rest of the Group, through vertical integration.
Prospects
Once again, it is difficult to tell where our country is going. We hear from our leaders, many promises of reforms and a prosperous future. However, there seems to be little evidence of sustainable economic and social improvement anywhere. The country needs a coherent, credible macroeconomic policy framework, and regulatory regime, within which the economy can operate, so that we can plan for the future.
Despite the multitude of difficulties that the country faces, we have found the hardware sector to be remarkably resilient. The myriad of problems facing the monetary and financial sector in Zimbabwe, has rendered traditional ways of saving money worthless. Instead, people opt to put any spare disposable incomes into their homes. In turn, we strive to support the people’s value preservation instincts, by offering a broad range of good quality, value for money home improvement products.
Finally, our focus to procure product from global best sources, has enabled us to offer our customers value for money that is second to none. We believe that this strategy will help us continue increasing our market share, despite an uneven business playing field.
Delisting
At an EGM held on 14 December this year, our shareholders voted unanimously to remove the Company from the Zimbabwe Stock Exchange, effective from Friday 18 December 2020. This ends a listing that started 20 years ago, when Powerspeed was listed through a Dividend in Specie from Mashonaland Holdings, in July 2000.
Although we will no longer be listed, we are still a public company, and, as such, remain committed to building value for all our shareholders, large and small. We thank all shareholders for supporting the company all these years, and trust that we can count on the same support going forward. We are committed to establishing a credible and dynamic “Over The Counter” (OTC) market for the Company’s shares, such that shareholders can realise fair value for their assets.
Dividend
The good performance of the Company over the past year, has once again put us in a position to share the rewards with shareholders. Accordingly, the Board has resolved to declare a dividend of ZWL 4.75 cents per share, for the 12 months ended 30 September 2020, to shareholders on the register on 8 January 2021.
Appreciation
The Board commends and thanks our Management and all employees, for their dedicated efforts during very difficult circumstances. We are also grateful to all our partners, especially the customers, suppliers, bankers and other service providers, for supporting us in ways that enabled us to achieve what we have.
I am deeply indebted to my fellow directors for leading and guiding our Management diligently, zealously and effectively, over the past year.
We remain committed to our growth strategy, despite the economic headwinds facing the formal economy, and we will be doing everything that we can to achieve our objectives.
Dr S.H. Makoni
Chairman
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