Willdale : 2022 Q3 Trading Update

Trading Update for Quarter ended 30 June 2022

Trading Environment

The economic environment remained fluid during the quarter under review, characterized by a deprecia�ng Zimbabwe dollar and rising infla�on. Late rains that fell in April impacted on produc�on. Real increases in costs of produc�on were incurred as the Russia / Ukraine war affected the cost of fuel and other key cost drivers.

Volume performance

Sales volumes for the 9 months' period decreased by 9% compared to the same period in the prior year. The decline in sales is a�ributed to lack of stock which was caused by effects of the late April rains. Produc�on is currently ahead of target and prior year and this should provide stocks to cover the sales gap in quarter 4. Demand remains high, driven by cluster home developments and individual home builders.

Financial performance

Cumula�ve revenue declined by 1% in hyperinfla�on terms compared to the prior year but was 91% above prior year in historical terms. Although average prices have been affected by exchange rate dispari�es, product mix remains favorable and this is expected to bu�ress margins for the full year.

Business con�nuity

Implementa�on of the business strategy con�nues despite the various local and external factors in the opera�ng environment. Business con�nuity and risk management plans are in place and regularly reviewed to minimize nega�ve impacts on the business. We con�nue to operate under strict guidelines issued by the health authori�es to minimize the effects of the Covid19 pandemic, although there has not been any impact from the virus in the quarter under review.

Solvency

The recent �ghtening of lending terms and condi�ons by the central bank presents challenges in raising working capital. However, the business model in place is genera�ng sufficient working capital to support the business in the short term.

Outlook

Increasing demand for bricks to meet the high demand for housing will drive revenues in quarter

4. Plant capacity u�liza�on which is currently averaging above 80% should provide sufficient stocks to meet targeted sales volumes for the ensuing quarter, provided electricity supply remains reasonable. We hope the monetary and fiscal policy interven�ons by government will bring stability to the exchange rate and infla�on and a be�er opera�ng environment.

By Order of the Board

1. Munginga Company Secretary 3 August 2022 www.willdale.co.zw