Powerspeed Electrical Reviewed Abridged Interim Consolidated Financial Statements for the 6 months ended 31 March 2021
COMMENTARY
INTRODUCTION
Our half year, which ended on 31 March 2021, included the second national lockdown imposed in January, in response to the second wave of Covid 19. During this period, we successfully prioritized the safety of staff and customers.
Fortunately, Powerspeed was among businesses classified as essential services, and therefore, allowed to continue operating during the lockdown period. Despite operating over reduced hours, we have been able to increase the range of products available, and volumes are substantially up on the prior year.
FINANCIAL PERFORMANCE
Because of the uncertainty and confusion surrounding the application of the various financial indices in the production of hyperinflation accounts, the Board has decided not to present inflation-adjusted accounts. As a result, only historical cost accounting figures in Zimbabwe Dollars, are presented. Although there has been some stability in the relative value of the Zimbabwe Dollar over the last nine months, and a corresponding reduction in inflation, the differential in the respective values of the local unit between the current and prior periods, makes comparison of relative values difficult.
Revenue climbed from ZWL518 m to ZWL3.65 bn, while gross margin rose from ZWL115 m to ZWL663 m. Operating expenses climbed from ZWL87.5 m to ZWL538.9 m, giving an operating profit of ZWL128 m, up from the previous ZWL36 m. Profit after tax rose from ZWL25m to ZWL73m, and this, combined with property revaluation lifted comprehensive income from $107m to ZWL549m.
During the period under review, shareholder equity, grew from ZWL1.7 bn to ZWL2.2 bn representing 6.0% growth per share in real terms.
REVIEW OF OPERATIONS
Trading – Electrosales Hardware
We continue to build our Electrosales Hardware brand, with the opening of our 20th branch in Bulawayo. In addition, we continued to improve product availability across all branches, although this has been hampered by reduced operating hours, increased manufacturing lead times and unreliable foreign currency availability.
Our key motivation has been to adjust our stocking models to accommodate the needs of our customers. Our staff training programs have been improved, to ensure that staff are equipped with the appropriate knowledge to serve customers to their satisfaction.
We believe that our business growth strategies are succeeding. The substantial increase in trading volumes, well ahead of the national growth rate, suggest that we are taking market share from competitors.
Engineering
The Engineering Division performed particularly well during the period under review. We have focussed on increasing the range of products manufactured in house, and subsequently sold through our retail outlets. This has helped increase volumes and profitability in the Division.
OUTLOOK
The ever-increasing complexity in the environment, and rising cost of doing business, are mitigating against the growth of formal business in Zimbabwe, and incentivising informal businesses. This will continue to be a threat to our business.
Conversely, the loss of confidence in the country’s banking sector is driving investment of significant amounts of disposable income in residential properties, as a means of saving. This, combined with the income arising from the high gold price, is driving demand upwards. We believe that this will continue for the foreseeable future.
We are in the process of developing our branch network through internal revamps, re-sizing, and the opening of new branches, which should ensure continued increase in market share.
In light of the above considerations, we anticipate our growth pattern to be sustained going forwards.
SHARE BUY BACK
During the period, the Company purchased 6 609 806 shares in terms of its buyback scheme representing 1.55% of the pre-buyback shares in issue. This will have the effect of enriching the remaining shareholders share of equity and future earnings.
DIVIDEND
The Board has not declared an interim dividend for the half year but anticipates declaring a dividend at the end of the financial year.
By Order of the Board
M.S Gurira
Group Company Secretary
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