Willdale Limited

Willdale releases its 2023 Annual Report

By Published On: March 20th, 2024Categories: Corporate announcement, Earnings
Willdale Limited 2023 Annual Report

Willdale Limited (WILD.zw) 2023 Annual Report

CHAIRMAN’S STATEMENT

Overview

Key economic variables such as inflation and the exchange rate improved in the second half of the year under review resulting in relative stability in the operating environment. The Zimbabwe dollar depreciated from ZWL621.8922 to the United States dollar at the beginning of the financial year to ZWL5,422.7466 at the end while inflation which was at 85.29% at the beginning of the year, ended the year on a blended rate of 18.4%. A blended inflation rate was introduced from February 2023 while the computation of the rate was revamped by adopting the geometric aggregation method in August 2023. Persistent power cuts negatively impacted production and sales volumes for the year under review. Good gross margins were earned on sales but operating profit was reduced by exchange losses.

Financial Results

Inflation adjusted revenue for the year totaled ZWL37 billion and was 106% above prior year (2022: ZWL18 billion). Lower availability of stock as a result of electricity shortages, contributed to a 5% decline in sales volumes compared to the prior year. Margins were however sustained by a favourable product mix which kept average prices at acceptable levels. Operating loss at ZWL6.9 billion (2022: ZWL1.25 billion) was 19% of revenue compared to (7%) in the prior year. Distortions in exchange rates continued to impact the revenue figure. Exchange losses amounted to 21% of revenue (2022: 2%) reflecting the extent of exchange rate movements on foreign currency denominated balances. Profitability was also reduced by once off write-offs of VAT refunds totalling about ZWL2 billion following the reclassification of clay bricks from zero rated to VAT exempt with effect from 1 August 2022. Investment property, land and buildings were revalued at the end of the financial year to reflect fair values in line with accounting policy. Despite the operational and economic challenges, positive net cash flows amounting to ZWL3.6 billion (2022:ZWL1.38 billion) were generated from operations.

Production

Throughput and efficiencies were affected by intermittent power outages that prevailed throughout the financial year. Clay crushing capacity was enhanced during the year by investing in a new plant resulting in better product quality. Capacity utilization averaged 75% despite electricity supply deficits. The Board is exploring various options to enhance plant capacity in the short term and intends to leverage on its existing assets to source appropriate funding. A program is under implementation to ensure consistent brick supplies during the rainy season to satisfy growing demand.

Sales and Marketing

Demand for bricks was relatively high throughout the year under review, driven by housing development, construction of educational facilities and shopping centres. Volumes were, however, 5% below the prior year largely due to supply side challenges caused by electricity shortages. The push towards higher margin brick types continued to drive margins up. The brand remained dominant in the market despite increasing competition.

Environment and Social

The Company places critical importance on the impact of its operations on the environment and society, including its staff, and to this end has put in place mechanisms to monitor this impact throughout its value chain. A critical milestone was achieved when the Company completed its journey to ISO certification by being certified to IS09001 (Quality Management Systems), ISO14001 (Environment Management Systems ) and ISO45001 (Occupational Health and Safety) in October 2023. This certification will go a long way in ensuring sustainable operations which provide quality products to meet customer needs.

Governance

There were no changes to the Board composition during the year under review.

Outlook

Key economic fundamentals have remained stable post year end, laying a good foundation for a better operating environment in the ensuing year. However, electricity supply must improve in order to boost capacity utilization and efficiencies and put more bricks onto the market. We will leverage on the prevailing boom in the construction of houses, commercial buildings, educational facilities and other infrastructure to improve revenues and profitability in the ensuing year. Efforts to raise funds from existing assets to upgrade production facilities will be enhanced in the coming year. Relevant cautionary statements have been issued to the market.

Going Concern

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 present 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 performance and minimize the impact of risks that the Company faces.

Dividend

The directors have resolved to pay a dividend of 0.0084 United States cents per share with respect to the financial year ended 30 September 2023. The dividend, totaling US$150,000, is payable to shareholders registered in the books of the Company at the close of business on 12 January 2024 and will be paid in United States dollars on 17 January 2024. The shares of the Company will be traded cum-dividend (with dividend) on the Zimbabwe Stock Exchange up to the market day on 9 January 2024 and ex-dividend as from 10 January 2024. Shareholders are advised to lodge their up-to-date banking details with First Transfer Secretaries, 1 Armagh Road, Eastlea, Harare.

Appreciation

The year under review presented various challenges which I believe we have successfully navigated. On behalf of the Board and Shareholders, I thank our valued customers, suppliers and other stakeholders for their unwavering support. I remain grateful to management and staff for their efforts. The journey towards ISO certification and the general operating environment have not been easy. As we close the current year, I urge all of us to retain the energy to tackle the challenges of the coming year.

C MAKONI
Chairman

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