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Unaudited Group Condensed Financial Statements for the half year ended 31 March 2013

COMMENTARY
INTRODUCTION The six months ended 31 March 2013 continued to be very difficult mostly as a result of a depressed market. The effect was most pronounced in our formal sector commercial clients, where we are finding that almost all of our customers are struggling to fund their operations and have no funds for anything beyond necessities. This situation of tight liquidity seems to have spilled over into the retail sector, which is also slower than anticipated. Although the group remains profitable, planned throughput targets are not being reached. FINANCIAL PERFORMANCE Turnover at US$15.2m was marginally up when compared to the same period last year. Gross profit rose by 12.5% to US$4.6m, however, expenses rose by 14% to US$4.1m mainly driven by the expansion of the retail network which, we believe, will ultimately result in an a substantial growth in throughput. As a result, EBIT remained substantially unchanged at US$620k. Interest also remained unchanged at US$312k, which resulted in a static profit before tax of US$308k. A marginal increase in taxation meant a small reduction in the attributable earnings from US$236k to US$229k. Close management of working capital has brought borrowings down to US$3.5m from US$4.9m a year ago, which will result in reduced cost of borrowings. REVIEW OF OPERATIONS Trading Divisions As stated earlier, the performance of the trading operations did not meet expectations, mainly because of market conditions and mostly in the industrial and contracting sales area. The drive to grow the Electrosales brand as a household name, in hardware and electrical products, is working with the retail experience being steadily improved across the nation. Concerted efforts to improve sales to larger, corporate clients have not yielded great results to date, however, we believe that this is due to market constraints and this work is planned to continue. Engineering Divisions The decision, taken about a year ago, to cut overheads in the engineering divisions turned out to have been correct. With the reduced overhead structure the operations were able to maintain improved profitability despite a reduced throughput. Unfortunately, there has been a loss of technical ability as a result of these changes, which, we will have to regain should demand recover. OUTLOOK We are confident that our change in strategic direction last year, was correct, and that we have positioned ourselves well to make the most of the current economic circumstances. Further, the base that we are developing now, will put us in a strong position to capitalise on an improved economic climate, as and when this happens.

Consolidated Statement of Cash Flows


for the six months ended 31 March 2013 6 Months 31 March 2013 USD 750 647 (628 988) 121 659 (48 693) 6 Months 12 Months 31 March 30 September 2012 2012 USD USD 617 531 (1 907 307) (1 289 776) (204 876) 1 544 538 (1 175 239) 369 299 (304 309) 6 Investment property Carrying amount at the beginning Additions Carrying amount at the end

At 31 Mar 2013 USD 4 263 959 4 263 959

At 31 Mar 2012 USD 4 259 650 4 259 650

At 30 Sept 2012 USD 4 259 650 4 309 4 263 959

Notes Operating cashflow before re-investment in working capital changes Increase in working capital Operating cash flow Income taxes paid Net cash generated/(used) in operations

At 31 March 2013, 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 the 31 March 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. At 31 Mar 2013 USD 7 Inventories Finished goods Raw materials Work in progress Goods in transit Allowance for obsolete inventory 7 590 789 843 189 71 222 631 153 (782 324) 8 354 029 8 Trade and other receivables Trade Allowance for credit losses At 31 Mar 2012 USD 7 230 631 1 036 166 161 320 613 583 (214 372) 8 827 328 At 30 Sept 2012 USD 6 520 278 995 922 98 631 732 800 (602 446) 7 745 185

72 966

(1 494 652)

64 990

Net cash used in investing activities

(238 424)

(37 739)

(109 429)

Net cash generated/(used) in financing activities

826 410

2 170 270

(104 463)

Net increase in cash and cash equivalents

660 952

637 879

(148 902)

Net cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

(1 162 567)

(1 013 665)

(1 013 665)

2 109 442 (256 263) 1 853 179 791 392 2 644 571

2 670 515 (63 507) 2 607 008 617 498 3 224 506

2 266 308 (366 709) 1 899 599 747 481 2 647 080

(501 615)

(375 786)

(1 162 468)

Other

Consolidated Statement of Changes in Equity


for the six months ended 31 March 2013 Equity capital Balance at 1 October 2012 Sharebuy back Profit after tax attributable to shareholders Arising on foreign subsidiary exchange difference Balance at 31 March 2013 Balance at 1 October 2011 Profit after tax attributable to shareholders Arising on foreign subsidiary exchange difference Issue of shares Balance at 31 March 2012 39 441 (363) Foreign Derived Translation Equity reserve 7 820 937 143 775 (6 256) Retained earnings/ (loss) (150 044) 228 509 Total

Cash and cash equivalents For the purposes of statement of cash flows, cash and cash equivalents include cash on hand and in banks net of outstanding bank overdrafts. Cash and cash equivalent at the end of of the half year as shown in the statement of cashflows can be reconciled to the related items in statement of financial position as follows At 31 Mar 2013 USD Bank and cash balances Bank overdraft 753 323 (1 254 938) (501 615) At 31 Mar 2012 USD 867 727 (1 243 513) (375 786) At 30 Sept 2012 USD 335 586 (1 498 054) (1 162 468)

7 704 078 143 412 228 509

39 078 34 931 -

7 964 712 7 936 638 -

(88 165) (94 421) (76 049) -

78 465 (395 074) 235 608

(88 165) 7 987 834 7 500 446 235 608 10 Share capital Authorised share capital 500 000 000 ordinary shares at USD 0.0001 per share Issued and fully paid The movement in ordinary share capital is shown below: Ordinary share capital 1 October Ordinary shares issued Share buyback

Consolidated Statement of Comprehensive Income


for the six months ended 31 March 2013 6 Months 31 March 2013 USD 15 180 510 (10 606 018) 4 574 492 171 781 (4 125 871) 620 402 (312 646) 307 756 (79 247) 228 509 6 Months 12 Months 31 March 30 September 2012 2012 USD USD 14 538 976 (10 474 279) 4 064 697 168 020 (3 613 714) 619 003 (313 213) 305 790 (70 182) 235 608 29 212 004 (21 014 552) 8 197 452 466 091 (7 276 224) 1 387 319 (676 132) 711 187 (175 758) 535 429

50 000

50 000

50 000

Notes

5 186 40 117 34 931 (1 153) 5 663

(8 963) 7 927 675 7 936 638 (119 444) 3 743

(174 698) (250 747) (76 049) 69 793 -

(159 466) (395 074) (290 399) 535 429 -

(174 698) (3 777) 7 557 579 7 500 446 (290 399) 605 222 (120 597) 9 406

Turnover Cost of Sales Gross Profit Sundry Revenue Operating Expenses Operating Profit Finance Cost Profit before taxation Taxation Profit after taxation

Balance at 1 October 2011 Adjustment to prior year Profit after tax attributable to shareholders Share buyback Issue of shares Balance at 30 September 2012

39 441 (363) 39 078

34 931 5 663 (477) 40 117

34 931 5 663 (1 153) 39 441

11 Trade and other payables Trade Other

1 437 788 2 345 088 3 782 876

1 574 171 2 483 291 4 057 462

1 125 688 2 367 192 3 492 880

39 441

7 820 937

(6 256)

(150 044) 7 704 078 12 Borrowings Long term borrowings Short term borrowings Bankers acceptances Bank overdraft

Notes to the interim financial statements


for the six months ended 31 March 2013 1 General information Powerspeed Electrical Limited, the Groups 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 Limiteds shares are listed on the Zimbabwe Stock Exchange. Presentation currency These financial statements are presented in United States Dollars being the functional and reporting currency of the primary economic environment in which the group operates. 2 Statement of compliance The 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 Tuesday, 28 May 2013. Basis of preparation. The interim financial statements for the six months ended 31 March 2013 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 2012, which have been prepared in accordance with International Financial Reporting Standards. In preparing the interim 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 for the year ended 30 September 2012. At 31 Mar 2013 USD 4 Taxation Current taxation Deferred taxation 79 247 79 247 At 31 Mar 2012 USD 70 182 70 182 At 30 Sept 2012 USD 196 300 (20 542) 175 758

420 051

557 288

464 902

2 572 456 1 254 938 3 827 394

3 899 809 1 243 513 5 143 322

1 844 707 1 498 054 3 342 761

Consolidated Statement of Financial Position


as at 31 March 2013 6 Months 31 March 2013 USD 1 373 949 4 263 959 5 637 908 Current Assets Inventories Trade and other receivables Cash and cash equivalents 6 Months 12 Months 31 March 30 September 2012 2012 USD USD 1 442 914 4 259 650 5 702 564 1 353 943 4 263 959 5 617 902

Notes Assets Property, plant and equipment Investment property

5 6

13 Financial risk management objectives and policies The Groups principal financial liabilities comprise finance lease liabilities, loans payable, bank overdrafts and trade payables. The main purpose of these financial liabilities is to raise finance for the Groups 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 Groups business and these are main risks arising from the Groups 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 Groups exposure to the risk of changes in market interest rates relates primarily to the Groups long and short term debt obligations and bank overdrafts. The Groups 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 Groups exposure to foreign currency changes is not significant.

7 8 9

8 354 029 2 644 571 753 323 11 751 923

8 827 328 3 224 506 867 727 12 919 561 18 622 125

7 745 185 2 647 080 335 586 10 727 851 16 345 753

Total Assets

17 389 831

Equity and Liabilities Share Capital Foreign Translation Reserve Derived Equity Retained earnings/(loss)

10

39 078 (94 421) 7 964 712 78 465 7 987 834

40 117 (250 747) 7 927 675 (159 466) 7 557 579

39 441 (6 256) 7 820 937 (150 044) 7 704 078

Non Current Liabilities Deferred taxation Long term borrowings

12

1 321 798 420 051 1 741 849

1 306 474 557 288 1 863 762

1 321 808 464 902 1 786 710

Current Liabilities Trade and other payables Borrowings Taxation

11 12

3 782 873 3 827 394 49 881 7 660 148

4 057 462 5 143 322 9 200 784 18 622 125

3 492 880 3 342 761 19 324 6 854 965 16 345 753

Total equity and liabilities

17 389 831

Carrying amount at end of period

1 373 949

1 442 914

1 353 943

28 June 2013

DIRECTORS: Dr. S.H. Makoni, H.N. Macklin, J.B. Reid, M.S. Gurira, M.S. Kretzmann, C.C.M. Tambo, N.H. Kretzmer

PSP MAR13 IND

Property, plant and equipment Cost or Valuation Additions Disposals Depreciation for the period

2 625 823 282 454 (46 153) (1 488 175)

2 511 373 50 239 (12 500) (1 106 198)

2 511 373 214 719 (100 269) (1 271 880)

By Order of the Board MS Gurira Group Company Secretary

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