Powerspeed Electrical 2021 Annual Report
Chairman’s Statement
INTRODUCTION
The past twelve months have continued to be extremely challenging. The Covid-19 lockdowns and restrictions remained hugely disruptive.
Despite the above difficulties, the Group had a reasonably good year, with volumes traded increasing, compared to prior year. Investment in inventory and improved quality of our branch network, drove this growth, and helped us increase our market share.
FINANCIAL PERFORMANCE
The financial statements are presented in historical format only, as distortions in inflation indices make inflation adjusted figures difficult to interpret.
During the period under review, we continued to focus on growing throughput, and building real balance sheet value, both of which were achieved. Shareholder equity grew from ZWL1.7bn to ZWL2.1bn, representing a 25.67% growth in real terms.
REVIEW OF OPERATIONS
In November 2020, Electrosales Hardware opened its twentieth branch in the Bulawayo CBD. In addition, we re-located the Mutare Branch into significantly bigger and better premises, in November 2021. The market response to both these moves, has been very positive.
Supply lines have suffered major disruptions in the past year. Most local suppliers have been unable to meet demand. Besides, local product prices have constantly escalated, in response to domestic inflation and exchange rate distortions.
Many of our foreign suppliers have increased their lead times substantially, and there have been significant increases in US Dollar prices, in line with global price increases. However, the biggest increases have been in the global cost of freight. Increases in transit times at ports of entry, notably BeitBridge and Forbes border posts, have compounded the situation.
Despite the supply line disruptions, investment in stock and systems has enabled us to once again, make record numbers of line items available in all our stores. This, undoubtedly, contributed to the increased throughput.
Unfortunately, restrictions, regulations and disruptions related to the Covid-19 pandemic, caused great difficulties in our operations. Reduced operating hours meant trying to do more in less time, exposing both staff and customers to increased risk. Travel and gathering restrictions seriously hampered our training programs. Although some of these were replaced by online or virtual training, this was not as effective as face to face sessions.
The Engineering Division had a reasonable year, during which it increased the volume of products manufactured for and sold by Electrosales, there-by making a modest contribution to Group profitability.
With effect from the end of September 2021, this division was sold to Capital Laser Engineering, a focused engineering entity, which plans to invest in, and grow the business. We are working with the new owners to ensure the success of the business, which will continue as an important supplier to Electrosales.
DELISTING
Powerspeed successfully delisted from the Zimbabwe Stock Exchange on 18 December 2020. Since then, the Group’s shares have been available on an OTC market managed by Imara Edwards Securities, where there has been active trading.
Although we are no longer listed, we remain a public company. As before, we are committed to building value for all our shareholders.
OUTLOOK
Despite all the difficulties we face every day, we, as a business, are committed to continuing to strive for excellence in all we do. We believe that the drive for continuous improvement will bring us benefits and rewards.
Zimbabwe has the attribute and fortune of a national culture of investing in new homes, and home improvement. This culture constantly brings customers to our sector, and our business. We strive to support this culture, by offering a broad range of value for money home development and home improvement products.
Finally, our ability to procure product from global best sources, has enabled us to deliver excellent value to our customers. We believe that this strategy will help us maintain our market share, even though the business environment is heavily tilted in favour of informal business.
As a business, and we are sure the country as a whole, pray and hope for a credible, coherent, consistent, and sustainable macro-economic policy framework and regulatory regime, within which the economy can operate normally, and confidently plan for the future.
DIVIDEND
From the results reported above, it is apparent that the Group had a good year. However, there has also been substantial re-investment in the business. Firstly, increased volumes, supply line disruptions and price increases, have absorbed, and will, in future, absorb huge resources. Secondly, we have made large investments in properties, to expand the branch network, and to bring these new sites into full operation.
As a result, the Board considered it prudent not to declare a dividend this time, in order to conserve resources for on-going operations.
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, and we will be doing everything that we can, to achieve our objectives.
Dr S.H. Makoni
Chairman
December 2021
