Unaudited Abridged Consolidated Financial Statements for the six months ended 31 March 2014
DIRECTORS: Dr. S.H. Makoni, H....
6 Months 6 Months 12 Months
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2014 2013 2013
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9 Cash and cash equivalents
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Powerspeed Electrical Limited HY 2014 financial results

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Powerspeed Electrical Limited HY 2014 financial results

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Powerspeed Electrical Limited HY 2014 financial results

  1. 1. Unaudited Abridged Consolidated Financial Statements for the six months ended 31 March 2014 DIRECTORS: Dr. S.H. Makoni, H.N. Macklin, M.S. Gurira, M.S. Kretzmann, C.C.M. Tambo, N.H. Kretzmer Abridged Consolidated Statement of Comprehensive Income for the six months ended 31 March 2014 6 Months 6 Months 12 Months March March September Notes 2014 2013 2013 USD USD USD Revenue 16 569 360 15 180 510 28 601 573 Cost of Sales (11 466 221) (10 606 018) (19 908 032) Gross Profit 5 103 139 4 574 492 8 693 541 Sundry revenue 160 428 171 781 435 324 Operating expenses (4 421 810) (4 125 871) (7 970 918) Operating Profit 841 757 620 402 1 157 947 Finance cost (288 458) (312 646) (554 570) Profit before taxation 553 299 307 756 603 377 Taxation 4 (142 477) (79 247) (137 475) Profit after taxation 410 822 228 509 465 902 Other comprehensive income: Exchange difference on translating foreign operations (58 932) (110 867) 36 432 Income tax relating to components of other comprehensive income 43 757 22 702 (19 352) Other comprehensive income for the period, net of tax (15 175) (88 165) 17 080 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 395 647 140 344 482 982 Earnings per share Basic earnings per share (in cents) 0.11 0.06 0.12 Diluted earnings per share (in cents) 0.11 0.06 0.12 6 Months 6 Months 12 Months March March September Notes 2014 2013 2013 USD USD USD Assets Property, plant and equipment 5 1 352 415 1 373 949 1 320 820 Investment property 6 3 910 000 4 263 959 3 910 000 5 262 415 5 637 908 5 230 820 Current Assets Inventories 7 11 463 216 8 354 029 9 275 069 Trade and other receivables 8 2 328 072 2 644 571 1 779 395 Cash and cash equivalents 9 133 929 753 323 331 447 13 925 217 11 751 923 11 385 911 Total Assets 19 187 632 17 389 831 16 616 731 Equity and Liabilities Share capital 10 38 366 39 078 38 670 Foreign translation reserve (4 351) (94 421) 10 824 Derived equity 7 588 016 7 964 712 7 638 890 Retained earnings 726 680 78 465 315 858 8 348 711 7 987 834 8 004 242 Non Current Liabilities Deferred taxation 1 206 560 1 321 798 1 192 999 Long term borrowings 12 1 094 146 420 051 1 046 241 2 300 706 1 741 849 2 239 240 Current Liabilities Trade and other payables 11 4 074 023 3 782 873 3 615 337 Borrowings 12 4 408 290 3 827 394 2 754 819 Taxation 55 902 49 881 3 093 8 538 215 7 660 148 6 373 249 Total equity and liabilities 19 187 632 17 389 831 16 616 731 Abridged Consolidated Statement of Financial Position as at 31 March 2014 Abridged Consolidated Statement of Cash Flows for the six months ended 31 March 2014 6 Months 6 Months 12 Months March March September Notes 2014 2013 2013 USD USD USD Operating cashflow before re-investment in working capital changes 974 079 750 647 1 551 572 Decrease in working capital (2 572 276) (628 988) (923 485) Operating cash flow (1 598 197) 121 659 628 087 Income taxes paid (76 110) (48 693) (191 371) Net cash (utilised)/generated in operations (1 674 307) 72 966 436 716 Net cash utilised in investing activities (173 409) (238 424) (343 424) Net cash generated from/(utilised in) financing activities 1 650 198 826 410 (97 432) Net (decrease)/increase in cash and cash equivalents (197 518) 660 952 (4 140) Net cash and cash equivalents at beginning of period 331 447 (1 162 567) 335 587 Cash and cash equivalents at end of period 133 929 (501 615) 331 447 COMMENTARY The group had a substantially improved six months to 31 March 2014, when compared to the same period last year, despite the worsening macro economic conditions in Zimbabwe. These results are confirmation that we have selected the right strategies and they reflect the tireless and dedicated efforts by management and staff to make things work, irrespective of the external environment. FINANCIAL PERFORMANCE Turnover at $16.6m was 9% up on the same period last year while gross profit rose 10.9% to $5.1m. Expenses for the period rose by 7.3% to $4.4m mainly driven by the expansion of retail capacity in line with group strategy. EBIT rose substantially from $620k to $842k. Interest declined to $288k, which resulted in an 80% increase in profit before tax to $553k. A similar increase in taxation leads to attributable earnings increasing from $229k to $411k. Although borrowing levels fluctuate continuously, there has been an increase in borrowings to fund stock in line with the expansion program. This process is carefully managed to ensure that any increase in borrowings results in a substantial increase in return on capital. REVIEW OF OPERATIONS Trading Trading now constitutes the bulk of the group's business operations and most resources are being directed at retail. We have continued to expand the Electrosales Hardware brand by increasing the number of branches, the size of the branches and the range of products on offer. We believe that we are now the market leader in hardware retail in Zimbabwe with 14 branches, nationwide. Non-retail trade, which includes sales to industry, construction, contractors and other re-sellers remains an important part of the group's trading operations but remains severely constrained by the poor state of the economy in general and businesses in the formal sector. Engineering Our engineering operations contributed to profits during the period under review, however this contribution has become even less significant in the overall picture. The operations are focussed on the manufacture and service of products traded by the group and, as such, remain an important part of the group. OUTLOOK We are confident that our strategic direction is correct under the prevailing circumstances. The fact that we have been able to grow both topline and bottom line performance in the current economic environment, gives us confidence to continue to build on the base that we have established and we believe that this will substantially increase shareholder value. DIVIDEND Given the continuing need for working capital required for growth, the Board has considered it prudent not to declare a dividend for the half year ended 31 March 2014. INTRODUCTION Abridged Statements of Changes in Equity for the six months ended 31 March 2014 Equity Derived Foreign Retained Total capital Equity Translation earnings Reserve USD USD USD USD USD Balance at 1 October 2013 38 670 7 638 890 10 824 315 858 8 004 242 Share buyback (304) (50 874) - - (51 178) Total comprehensive income for the period - - (15 175) 410 822 395 647 Balance at 31 March 2014 38 366 7 588 016 (4 351) 726 680 8 348 711 Balance at 1 October 2012 39 441 7 728 948 (6 256) (150 044) 7 612 089 Total comprehensive income for the period - - (88 165) 228 509 140 344 Share buyback (363) 235 764 - - 235 401 Balance at 31 March 2013 39 078 7 964 712 (94 421) 78 465 7 987 834 Balance at 1 October 2012 39 441 7 728 948 (6 256) (150 044) 7 612 089 Total comprehensive income for the period - - 17 080 465 902 482 982 Share buyback (771) (90 058) - - (90 829) Balance at 30 September 2013 38 670 7 638 890 10 824 315 858 8 004 242
  2. 2. 6 Months 6 Months 12 Months March March September 2014 2013 2013 USD USD USD 9 Cash and cash equivalents For the purposes of statement of cash flows, cash and cash equivalents include cash on hand and in banks. Bank and cash balances 133 929 753 323 331 447 10 Share capital Authorised share capital 500 000 000 ordinary shares at USD 0.0001 per share 50 000 50 000 50 000 Issued and fully paid The movement in ordinary share capital is shown below: Ordinary share capital 1 October 38 670 39 441 39 441 Share buyback ( 304) ( 363) ( 771) 38 366 39 078 38 670 Number of issued ordinary shares at 1 October 386 708 069 394 412 217 394 412 217 Share buyback (3 046 502) (4 087 529) (7 704 148) Number of issued ordinary shares at end of period 383 661 567 390 324 688 386 708 069 Percentage bought back 1% 1% 2% 11 Trade and other payables Trade 1 129 879 1 437 788 823 255 Other 2 944 144 2 345 085 2 792 082 4 074 023 3 782 873 3 615 337 12 Borrowings Long term borrowings 1 094 146 420 051 1 046 241 Short term borrowings Bankers acceptances 2 848 000 2 572 456 1 871 968 Bank overdraft 1 560 290 1 254 938 882 851 4 408 290 3 827 394 2 754 819 Borrowings amounting to US$2 848 000 are secured against stocks and debtors, while the rest are unsecured. 13 Financial risk management objectives and policies The Group’s principal financial liabilities comprise, loans payable, bank overdrafts and trade payables. The main purpose of these financial liabilities is to raise finance for the Group’s operations. The Group has various financial assets such as trade receivables and cash and short term deposits, which arise directly from its operations. Exposure to credit, interest rate and currency risk arises in the normal course of Group’s business and these are main risks arising from the Group’s financial instruments. The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below: Credit risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Group assumes foreign credit risk only on customers approved by the Board and follows credit review procedures for local credit customers. Interest rate risk The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long and short term debt obligations and bank overdrafts. The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debts. Currency risk The Group is exposed to foreign currency risk on transactions that are denominated in a currency other than the United States Dollar. The currency giving rise to this risk is primarily the Zambian Kwacha. In respect of all monetary assets and liabilities held in currencies other than the United States Dollar, the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances. The Group’s exposure to foreign currency changes is not significant. By Order of the Board MS Gurira Group Company Secretary 13 June 2014 Unaudited Abridged Consolidated Financial Statements for the six months ended 31 March 2014 (continued) DIRECTORS: Dr. S.H. Makoni, H.N. Macklin, M.S. Gurira, M.S. Kretzmann, C.C.M. Tambo, N.H. Kretzmer PSP130614IND Notes to the interim consolidated financial statements for the six months ended 31 March 2014 1 General information Powerspeed Electrical Limited, the Group’s parent company, is a limited liability company incorporated and domiciled in Zimbabwe. Its registered office and principal place of business is Stand 17568, corner Cripps Road/Kelvin North, Graniteside, Harare, Zimbabwe. Powerspeed Electrical Limited’s shares are listed on the Zimbabwe Stock Exchange. 2 Statement of compliance The abridged interim consolidated financial statements are based on statutory records maintained under the historic cost convention. These interim financial statements were approved for issue by the Board on Thursday 29 May 2014. 3 Basis of preparation The interim consolidated financial statements for the six months ended 31 March 2014 have been prepared in accordance with IAS 34 “Interim financial reporting”. They do not include all of the information required for full annual financial statements and should be read in conjunction with the audited financial statements for the year ended 30 September 2013, which have been prepared in accordance with International Financial Reporting Standards. In preparing the interim consolidated financial statements, the significant judgements made by management in applying the company’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited annual financial statements as at 30 September 2013. 6 Months 6 Months 12 Months March March September 2014 2013 2013 USD USD USD 4 Income tax recognised Current 128 921 79 247 155 788 Deferred 13 556 - (18 313) 142 477 79 247 137 475 5 Property, plant and equipment Cost or Valuation 2 764 084 2 625 823 2 625 823 Additions 188 099 282 454 464 800 Disposals (29 000) (46 153) (326 539) Depreciation for the period (1 570 768) (1 488 175) (1 443 264) Carrying amount at end of period 1 352 415 1 373 949 1 320 820 6 Investment property Carrying amount at the beginning 3 910 000 4 263 959 3 910 000 Carrying amount at the end 3 910 000 4 263 959 3 910 000 At 31 March 2014, investment property comprised: Land and buildings located in Ruwa, Gweru, Bulawayo, Chiredzi and Chinhoyi. The fair value is based on a Directors valuation done on 30 September 2013. The fair value was determined based on current prices in an active market for similar property in the same location and condition. The properties are leased out on operating leases. 7 Inventories Finished goods 10 188 499 7 590 789 7 923 893 Raw materials 256 946 843 189 269 997 Work in progress 106 875 71 222 75 428 Goods in transit 1 367 272 631 153 1 400 119 Allowance for obsolete inventory (456 376) (782 324) (394 368) 11 463 216 8 354 029 9 275 069 8 Trade and other receivables Trade 1 516 191 2 109 442 1 226 742 Allowance for credit losses (149 115) (256 263) (149 116) 1 367 076 1 853 179 1 077 626 Other 960 996 791 392 701 769 2 328 072 2 644 571 1 779 395

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