Our half year ended on 31 March, a period characterised by rising inflation, accelerating devaluation, and increasing regulation and controls attempting to arrest these issues. This provided an extremely difficult environment for the operation of formal business. Despite this the group managed to achieve some volume growth.
Because of the complexity in production of, and the difficulty in the interpretation of hyperinflation accounts, it has been decided not to present inflation adjusted accounts and 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 meaningless.
Revenue climbed from $3.65b to $7.13b, while gross margin rose from $663m to $1.68b. Operating expenses climbed from $539m to $1.18b, giving an operating profit of $650m, up from the previous $294m. Profit after tax rose from $73m to $416m, and this combined with property revaluation lifted comprehensive income from $549m to $1.15b.
During the period under review, there was significant growth in shareholder equity, which rose from $2.2b to $3.3b during the six months. In real terms, the growth in equity value was approximately 5.1% per share during the six months under review.
REVIEW OF OPERATIONS
Having disposed of our Engineering Division on 30 September 2021, we only have one operating division, our core business, Electrosales Hardware.
We have moved into better premises in Mutare which are larger and has on-site parking.
Apart from ensuring improved availability, an expanded range of products, and improving our offering to our retail customers, we have been improving our ability to service non-retail sectors, including agriculture, mining, and construction.
We do believe that our strategies have been successful judging from our volumes, which have increased substantially. We believe that this indicates that we are taking market share from our competitors.
The ever-increasing complexity, and rising cost, of doing business in Zimbabwe combined with the complete lack of policy consistency is threatening the very survival of formal business in Zimbabwe. At the same time, informal businesses are not being subjected to many of these difficulties which will add to the growing informalization of the economy. This will continue to threaten our business along with all other formal organizations.
The Zimbabwean economy is being sustained by diasporan remittances as well as small scale gold mining. The lack of confidence in the banking sector in Zimbabwe is preventing this value from entering normal savings channels and is pushing this value into domestic construction. We are focussed on providing inputs to this construction, which we believe will continue for the foreseeable future and will therefore continue to sustain our business.
Our branch development program is continuing, and we will be opening a number of new branches in the next year, which should ensure a continued increase in market share.
Although there was some disruption due to Covid during the period under review, these disruptions are now behind us.
In the light of these considerations, we anticipate our growth pattern to be sustained going forwards.
Given the continuing 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 2022.
By Order of the Board
Group Company Secretary
23 May 2022
Powerspeed Electrical interim financial report – 2022.pdf