Willdale Limited 2022 Annual Report
The year under review was largely characterized by accelerated depreciation of the Zimbabwe dollar and high inflation. The exchange rate moved from ZWL86.1667 at the beginning of the financial year to ZWL621.8922 at the end, and this together with other factors, including the effects of the Ukraine/Russia war, drove up annual inflation which ended the year on 280% from 52% at the beginning. Monetary policy measures introduced towards the end of the year stabilized the exchange rate and inflation but incidentally resulted in liquidity shortages in the market which affected order intake. The fluid operating environment impacted on production and sales volumes during the year under review. Margins and overall profitability remained positive on the strength of a favourable product mix.
Inflation adjusted revenue for the year at ZWL5.1 billion, was 9% above prior year (2021: ZWL4.7 billion). Sales volumes declined by 9% compared to the prior year largely due to production challenges emanating from late April rains but a favourable product mix ensured a better average price and good margins. Operating loss was ZWL356 million (2021: profit ZWL958 million) after accounting for a total of ZWL710 million in depreciation of property, plant and equipment (2021: ZWL 428 million).
The revenue figure was affected by distortions in exchange rates. Other Income of ZWL 66 million (2021: ZWL121 million) was largely comprised of exchange losses. Land and buildings were revalued at the end of the year to reflect fair values in line with accounting policy. Net cash flows generated from operations amounted to ZWL 277 million (2021: ZWL 80 million). Capital expenditure for the year was ZWL151 million (2021: ZWL $133 million) and was all financed from internal resources.
The late rains that were received in April and regular power outages during the year affected production resulting in a 3% drop in green output compared to the prior year. However, fired production was 4% up due to increased throughput from structured kilns. A new crushing plant, which will improve product quality, will be installed in the new year. Further investments in capital expenditure are planned for the coming year to improve productivity and efficiency of both fixed and mobile plant.
Sales and Marketing
Although total volumes declined by 9% compared to the prior year, the product mix was favourable and contributed positively to the average price. Housing and development of educational infrastructure were the main drivers of volumes and are expected to do so into the near future. Brand visibility initiatives buttressed by consistent quality and diversity of products ensured market dominance throughout the year under review.
The management of staff costs, faced with inflation driven increases in the cost of living, remained a critical performance indicator to facilitate delivery of positive results. Regular reviews of wages and salaries were undertaken guided by the relevant National Employment Council and the Board. It is gratifying to note that, despite the challenges in the operating environment, the industrial relations climate remains calm.
I was appointed Chairman of the Board with effect from 19 May 2022. No other changes were made to the composition of the Board post the Annual General Meeting held on 7 April 2022.
The stability in the exchange rate and inflation brought about by the monetary policy measures introduced towards the end of the financial year, if sustained, gives us confidence of a better operating environment for the ensuing year. Demand for bricks for housing development and various infrastructure projects remains high. A sustainable financing model for housing development will result in increased volumes and profitability and will contribute significantly towards housing delivery under NDS1. Provision of stable electricity supply will be critical to efficient production.
The Board is confident that the Company will continue to operate as a going concern for the foreseeable future and, as a result, continues to prepare financial statements using the going concern basis. The Board’s view is based on current positive financial performance ratios, the successful implementation of its strategic plans, continued support from its stakeholders and other initiatives that are being undertaken to improve the Company’s performance and minimize risks that the Company faces.
The directors have resolved to pay a dividend of 0.0056 United States cents per share with respect to the financial year ended 30 September 2022. The dividend is payable to shareholders registered in the books of the Company at the close of business on 13 January 2023 and will be paid in United States dollars on or about 22 January 2023. The shares of the Company will be traded cum-dividend (with dividend) on the Zimbabwe Stock Exchange up to the market day on 10 January 2023 and ex-dividend as from 11 January 2023. Shareholders are advised to lodge their up to date banking details with First Transfer Secretaries, 1 Armagh Road, Eastlea, Harare.
On behalf of the Board and Shareholders, I wish to express my profound gratitude to our valued customers, suppliers and other stakeholders for their support during the year under review. I also wish to thank management and staff for excelling and producing another set of good results under difficult conditions. The Board and management are keen to exploit all opportunities presented in our growing economy and, with our stakeholders continued support, we are confident that we will make it. Merry Christmas and a happy and prosperous 2023 to all.
6 December 2022
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