Powerspeed Electrical Reviewed Abridged Interim Consolidated Financial Statements for the six months ended 31 March 2023
COMMENTARY
INTRODUCTION
Our half year that ended on 31 March 2023 was no less challenging than the period preceding it. Despite the economic difficulties faced, focused effort on achieving the desired result paid off and our steady rise in volume growth continued during this period.
FINANCIAL PERFORMANCE
Because of the absence of a credible inflation index, the complexity in the production of, and the difficulty in the interpretation of, hyperinflation accounts, it has been decided not to present these. Only historical cost accounting figures in Zimbabwe dollars are presented here. Unfortunately, the differential in value of the local unit between the comparative periods makes comparison utterly meaningless.
Revenue climbed from $7.13b to $42.1b, while gross margin rose from $1.68m to $7.22b. Operating expenses climbed from $1.18b to $5.36b, giving an operating profit of $1.86b, up from the previous $650m. Profit after tax rose from $416m to $1.15b.
During the period under review, there was significant growth in shareholder equity, which rose from $8.2b to $12.3b during the six months. In real terms, the growth in equity value per share was approximately 9.87% during the six months under review.
REVIEW OF OPERATIONS – ELECTROSALES HARDWARE
During the period under review, we moved our branch in Avondale from the small premises in the main shopping centre into a brand-new building behind the centre. The building, our second that is purpose-built, is also our biggest branch with 2 860m2 under roof. Turnover in this branch has been growing steadily and feedback from customers is very good.
A continued focus on ensuring maximum product availability and increased product range and choice has, once again, ensured an increase in volume over the same period the previous year. The market, however, is not growing and there is significant competitive pressure on pricing as well as growing consumer demand for cheaper, lower quality products which is driving margins lower. This problem is exacerbated by the growing informal trade in our market segment.
OUTLOOK
The ever-increasing regulation, complexity, and rising cost, of doing business is steadily undermining the formal business sector in Zimbabwe. Conversely, the informal business sector is not subject to many of these difficulties, which is driving the informalization of the economy. This trend will continue to threaten our business along with all other formal businesses.
Strong funds flow from the diaspora is driving a boom in residential construction throughout the country, which is, in turn, driving demand for building materials. We have substantially improved our ability to service this market and we expect continued growth from this source.
Our branch development program is continuing, and we will be opening a substantially improved and expanded branch in Msasa this month. Our new building in Zvishavane is nearing completion and we will be opening this within the next quarter.
In the light of the foregoing, we anticipate sustained growth going forwards.
DIVIDEND
Given the immediate uncertainty, both in Zimbabwe and internationally, the Board has considered it prudent not to declare an interim dividend for the half year ended 31 March 2023.
By Order of the Board
M.S Gurira
Group Company Secretary
23 May 2023
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