CHAIRMAN’S STATEMENT

INTRODUCTION

The previous twelve months have presented significant challenges for businesses and households alike. We have faced a multitude of obstacles, including inflation, rising expenses, increased regulation, informalization, tight liquidity, fluctuating interest rates, dollarization, exchange rate disparities, and corruption, all of which have made conducting formal business a difficult endeavour.

Despite these adversities, the Group has managed to have a reasonably successful year, with an overall increase in trading volumes compared to the previous year. Our implementation of multiple strategies to expand our market share in various areas has yielded positive results.

FINANCIAL PERFORMANCE

These financial reports are presented in Zimbabwe Dollars, as required by law, and are presented in both historical and inflation-adjusted formats. However, due to the prevailing inflationary environment, it is challenging to derive meaningful interpretations from these reports.

Nonetheless, we have remained focused on growing throughput and building real balance sheet value, both of which have been accomplished during the year under review. Shareholder equity has grown from ZWL158.98 billion to ZWL269.59 billion based on historical values. In real terms we achieved a 19.0% growth in net asset value (NAV) per share.

REVIEW OF OPERATIONS

In September 2023, Electrosales Hardware opened its twenty-second branch in Zvishavane, providing large-format hardware supplies to an area that previously did not have access to such conveniences. Although the initial throughput was slow, it has steadily increased since the branch’s opening.

Maintaining a reliable supply of products has proven to be extremely challenging. Suppliers from China have experienced erratic supply patterns for various reasons, while power cuts in South Africa have affected many local suppliers’ ability to meet market demand. Local suppliers have also encountered significant difficulties due to the challenging business environment in Zimbabwe.

Despite these hurdles, we have continued to invest in stock and systems, improving product availability in all our stores. This enhanced product availability has undoubtedly contributed to the increase in throughput throughout the reporting period.

While interest rates have decreased, they remain excessively high. However, the lack of liquidity has been a far more significant issue, affecting both ZWL and USD borrowings and resulting in a total unavailability of capital expansion and working capital finance.

OUTLOOK

Despite the daily challenges we face in our business, we remain committed to pursuing excellence in all our endeavours. We firmly believe that our drive for sustained improvement will enable us to maintain our position as the leading hardware supplier in Zimbabwe.

There exists a national culture of investing in housing development and home improvement, which fuels the demand for our products and services. We wholeheartedly support this culture by offering a wide range of home improvement products that provide excellent value for money.

Our ability to source products from the best global suppliers allows us to deliver exceptional quality and competitive pricing to our customers. We rely on this strategy to increase our market share, even in an environment heavily influenced by informal businesses.

DIVIDEND

The satisfactory performance of the company over the past year has allowed us to share the rewards with our shareholders. Accordingly, the Board has decided to declare a dividend of ZWL 17.280 per share for the 12 months ending on 30 September 2023, payable to shareholders on the register as of 8 January 2024.

APPRECIATION

The Board would like to commend and express gratitude to our Management and all employees for their unwavering dedication during these challenging circumstances. We are also grateful to our partners, including our customers, suppliers, bankers, and other service providers, for their support, which has contributed to the results we are reporting today.

I am personally indebted to my fellow directors for their diligent, zealous, and effective leadership, guidance, and support of our Management throughout the past year.

Despite the economic headwinds faced by the formal economy, we remain fully committed to our growth strategy. In the coming year, we will apply ourselves wholeheartedly to achieve our objectives.

V.R. Gapare
Chairman

8 December 2023

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