PowerSpeed Electrical Ltd, a supplier of electrical goods and services, posted a 40% increase in revenue for the year ended September 30 2011 compared to the same period last year despite incurring huge expenses.
The company’s chairman, Simba Makoni, said liquidity in the country remained tight characterised by low local and foreign direct investments negatively impacting on businesses in general.
PowerSpeed’s revenue increased to $26,3 million from $18,8 million in the previous year.
“Borrowings for the group went up to $3,8 million from $2,9 million, while the total cost of borrowings were down to $667 000 from $741 000 due to favourable borrowing terms,” said Makoni.
“There was a substantial increase in tax because no tax losses were brought forward as was the case in the previous period. This absorbed most of the increase earnings, meaning the attributable profit for the year rose only significantly to $322 000 from $294 000.”
Profit before tax stood at stood at $460 000 during the period under review.
“However, competitive pressures combined with a low capacity utilisation in Airflo, Relmo and Wire Systems Technology (WST) divisions reduced gross margins from 30,3% last year to 28,4%.
Unfortunately, there was a disproportionate growth in expenses mainly as a result of general rising in costs in the country,” he said.
Earnings per share for the group rose to 0,085 cents from 0,078 cents.
Makoni said the company would be on a growth path in the next trading year.
“There is still substantial unutilised capacity available for increase in throughput without requiring any significant growth in expenses or significant capital expenditure. Any such increased capacity utilisation should result in a substantial improvement in bottomline performance,” he said.
The company did not declare a dividend in the period under review.
PowerSpeed operations include Relmo, WST, Electrical Lightning Supplies, Electrosales, Industrial electric, Electrocables and H&E Distribution and Airflo.