Powerspeed Electrical Trading Update for the period ended 31 December 2020

Trading Environment
The effects of the COVID-19 pandemic had reduced during the quarter and business in Zimbabwe largely returned to ‘normal’, however the difficulties facing our supply chains continued, resulting in product shortages and stock outs. Despite this, we were generally able to maintain satisfactory customer service levels.

We have been able to source a portion of our foreign currency requirements through the ‘auction’ but unfortunately, it has failed to meet our needs. The different exchange rates along with the ZIMRA rules for the payment of taxes in different currencies creates an extremely complex business environment and is contributing to the accelerating informalisation of the economy.

Volume performance and profitability

In general, volumes recovered well and trading was at a very satisfactory level during the quarter, apart from the last ten days of December where, as usual, volumes declined due to the holidays. Volumes of both building and plumbing materials were particularly buoyant, while solar and alternative power products were subdued due to generally reliable power supplies from ZESA.

Margins remain under pressure as more players enter the hardware market, particularly informal players who do not have to deal with the plethora of regulation and fees that formal players have to bear. Despite this, profitability remained reasonable, although this is difficult to assess from financial statements prepared in our sole legal tender, being the Zimbabwe Dollar. However, looking at a real valuation of our balance sheet, we were able to grow shareholder value by almost 5% in the quarter.

Outlook

We continue to be astounded by the resilience of the Zimbabwean people and economy. We have certainly made the most of this opportunity and there is no real reason why this should change. We believe that our operational strategies are well suited to this environment.

By Order of the Board

M. S. Gurira