CHAIRMAN’S STATEMENT

INTRODUCTION

The twelve months ending 30 September 2024, once again presented many challenges for business and for the population in general, however, it has been the formal business sector that has borne the brunt of it. In particular, the price controls imposed through the managed exchange rate, have made it exceedingly difficult for formal retailers to offer competitive pricing to their customers, which has driven these customers into the informal sector. In addition to this, the fiscal and regulatory burden continues to increase, and if this continues, many formal businesses will be forced out of business.

Faced with these difficulties, the group’s performance has not been as good as we would have liked, however we have remained profitable and have been able to continue our drive for expansion. Once again, our trading volumes increased over the previous period as our strategies to increase market share continue to bear fruit.

FINANCIAL PERFORMANCE

The financial reports presented here are presented in USD as it had become increasingly difficult to produce meaningful figures in local currency, not made any easier by the shift from ZWL to ZWG.

The group generated a profit of $4.3m, from a turnover of $128m, however, the focus remained the growth of shareholder equity, which closed the year just short of $50m.

REVIEW OF OPERATIONS

During the period under review the group only opened one new branch, being the Madokero branch which opened in May 2024. In the meantime, the focus remained on getting more out of the existing branch network. However, much of the growth came from building materials, which highlighted the lack of space in several of our branches. Efforts are underway to address this shortcoming through expansion or more efficient utilisation of the space available.

One significant gap in our product offering has been Timber, and a decision was taken to rectify this. During the year we created a new division known as Electrosales Timber, and we have begun the trade in timber and related products. Although still small, we can see the potential and we expect significant growth over the coming years. We are investing in a timber processing plant in Mutare which will facilitate value addition and the production of a variety of timber products.

Maintaining reliable supplies of products continued to be another significant challenge which absorbed a large amount of management effort; however, we are pleased to report that we have been able to maintain and expand our offering to our customers.

Our retail “Benefits card”, which was launched in November 2023, has grown dramatically with over 90 000 registered customers. This card provides a simple change solution, gives our customers a loyalty rebate and access to other special offers. We will be launching our “Business Trade Card” shortly, which will offer similar benefits to trade customers.

Access to capital to fund our expansion program has been a significant problem. Zimbabwean banks and financial institutions continue to struggle with liquidity and cannot be relied on to provide capital while interest rates remain inordinately high driven by perceived country risk. Another problem is the uncertainty over the functional currency and the future use of the US Dollar, this prevents any form of long-term borrowing which is vital to fund construction and expansion programs.

OUTLOOK

Despite the continuous problems that we face in our day-to-day operations, we remain committed to pursuing excellence in all our endeavours. We firmly believe that our diligent drive for sustained improvement is the only thing that will enable us to maintain our position as the leading hardware supplier in Zimbabwe.

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

We believe that there is no alternative to offering our customers excellent service and value for money, but also, that by doing so, we will retain existing customers and capture new customers. Further, this growth in market share will drive our future profitability, despite the difficult economic environment.

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 USD 3.74 per share for the 12 months ending on September 30, 2024, payable to shareholders on the register as of January 10, 2025.

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, once again, apply ourselves wholeheartedly to achieve our objectives.

V.R. Gapare
Chairman

20 December 2024

Related Download

Powerspeed Electrical Audited Abridged Consolidated Financial Statements FYE 30 September 2024.pdf