Willdale : Q1 2022 Trading Update

TRADING UPDATE

for First Quarter ended 31 December 2021

Trading Environment

The deprecia�ng Zimbabwe dollar, which moved from ZW$87.67 to the United States dollar at the beginning of the quarter to ZW$108.67 at the end, and rising monthly infla�on which reached 6% for December, con�nued to cause uncertainty in the business environment. Business ac�vity in the construc�on sector was affected by a shi� in spending pa�erns as consumers adjusted to the prevailing economic situa�on.

Volume performance

Sales volumes decreased by 20% compared to the same period in the prior year, but are 5% above budget. Decreased offtake from cluster home developments and lower ac�vity from ins�tu�onal buyers impacted on volumes. Stock holding was sa�sfactory going into the annual shutdown period. Produc�on resumed on 1 February as planned a�er the tradi�onal annual maintenance programme..

Financial performance

The subdued volumes resulted in a 7% decline in revenue for the quarter compared to the same period in the prior year in hyperinfla�on terms. Product mix was be�er and, complemented by increased volumes, should drive margins and profitability for the remainder of the year.

Business continuity

It is encouraging to note that the impact on the business of the fourth wave of the Covid19 variant has been minimal. We con�nue to operate under strict guidelines issued by the health authori�es to minimize transmission of the Covid19 virus. Almost all employees have heeded the call to get vaccinated against the virus. The gradual relaxa�on of Covid19 restric�ve measures should further open up the business environment.

Solvency

The business remains solvent. Working capital is available to support the business in the short term. Cash flows con�nue to be generated from sales.

Outlook

We expect sales volumes to rebound towards the end of the second quarter into the third quarter as more construc�on ac�vi�es resume a�er the rainy season. Produc�on should reach targeted levels provided there is sufficient electricity supply. Stability in the macroeconomic factors of the economy is required for an improved opera�ng environment. The supply gap in housing and infrastructure delivery remains huge.

1. Munginga Company Secretary www.willdale.co.zw

07 February 2021

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