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PCL H1 profit up 10% to K12.89 bn

By Mc Donald Chapalapata, a Contributor

PCL Group Chief Executive Officer George Partridge

Conglomerate Press Corporation plc has posted a group after tax profit of K12.87 billion, up from K11.68 billion half-year results representing a 10 % increase on prior year.

In a statement signed by PCL Board Chairman Randson Mwadiwa and Group Chief Executive Officer George Partridge, PCL said the performance was achieved against a background of a challenging operating environment characterized by severe forex shortages and the disruption from Covid-19 on the supply chain for most Group companies.

“Prior year comparatives were restated to take into account Value Added Tax expenses relating to mobile money and airtime credit transactions. In prior year these were booked at year end, but they have now been reallocated to the period of occurrence,” reads the statement in part.

Commenting on the segmental performance, PCL says in the financial services segment, its subsidiary, National Bank of Malawi (NBM) plc continued to be the main driver of Group results and delivered satisfactory results which were driven by a 36% increase in net interest income and a 51% growth in non-interest income.

“Similarly, the Bank’s customer deposits and the loan book grew by 43% and 10% respectively, while treasury bills and treasury notes grew by 49%. Results were however negatively impacted by a 41% and 26% increase in operating expenses and loan impairments respectively as the Bank consolidated results from the newly acquired Akiba Bank (of Taznzania) for the first time,” reads part of the statement.

The telecommunications segment where PCL has subsidiary companies namely mobile phone company TNM plc and fixed telephony and broad band company Malawi Telecommunications Limited (MTL), registered a 25% growth in its profit after tax.

“The mobile phone company registered a 19% growth on its net earnings. As already stated, prior year comparatives were restated to take into account Value Added Tax expenses relating to mobile money and airtime credit transactions. The Company has embarked on several strategic initiatives aimed at regaining its market share and is expected to show significant improvements in the second half.”

“On the other hand, the fixed telephony company reported a 9% improvement in its results driven by improved gross margins and cost containment. Discussions with an equity investor in the fixed telephony business are progressing well,” reads the statement in part.

In the energy segment comprising ethanol manufacturing companies, Press Cane and Ethanol Company (EthCO), PCL says both companies were off season during the first quarter of the year.

“Press Cane, however, had an early start and registered an 85% growth in its earnings while Ethanol had a late start and registered an 85% decline in its earnings. Overall, both companies are on track and are expected to deliver planned results,” reads the statement.

However, PCL says Peoples Trading Centre (PTC) in the consumer goods segment continued to make losses due to a myriad of operating challenges and informs that the search for an equity investor is continuing and some debts may have to be assumed by the Group once an equity investor is identified.

PCL also says its subsidiary, the Foods Company had a late start in fish harvests due to the impact of Covid-19 on the Company’s supply chain for imported feedstock but says performance is expected to improve in the second half of the year.

“The real estate business (Press properties) had a good start and registered a 384% growth in its earnings mainly due to improved occupancy rates as well as the impact of a valuation surplus on investment properties,” reads the statement in part.

The conglomerate says in the equity accounted businesses segment, the results were below expectations as all companies save for the fuel distribution business (PUMA Energy) and the newly operationalized LifeCo, reported losses.

The equity accounted business for PCL include joint ventures PUMA Energy, a fuel distribution company and Macsteel, a steel processing and trading company; associated companies, Limbe Leaf, a tobacco processing company, Open Connect Limited, a telecom fibre backbone infrastructure company and LifeCo, a pension and asset management company.

“Going forward into the second half, results from tobacco processing and trading, being a seasonal business are expected to significantly improve and so too the steel processing businesses as most steel mills where raw materials are sourced are now fully operational. Full year projections show significant growth in profit in this segment,” reads part of the statement.

Looking ahead, PCL says the current shortages in forex pose a big risk to achieving planned results adding that the focus of the Group is on feasibility of new projects and to consolidate gains made in the existing restructured and streamlined portfolios.

Directors of the conglomerate therefore have resolved to pay an interim dividend amounting to MK721.53 million (2020: MK721.53 million) representing MK6.00 per share (2020:MK6.00 per share). The dividend will be paid on Friday, 29th October 2021 to shareholders whose names appear on the register as at the close of business on 15th October 2021.

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