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Oliver Kazunga
Senior Business Reporter
LISTED brick manufacturer, Willdale Limited has reclassified its land banks valued at US$2,6 million as current assets following a resolution to develop and resell the land as part of the firm’s capital raising initiative.
In March this year, Willdale announced that it was converting its land banks to residential stands to raise capital for the acquisition of machinery to enhance production at its brick manufacturing plants.
At the time, Willdale indicated it had an estimated 165,6 hectares in Mt Hampden, an area seeing significant demand for residential stands following the completion of the new Parliament Complex while the planned city nearby has also enhanced its appeal.
In a statement accompanying the group’s financial results for the year ended September 30, 2024, the brick manufacturer said: “Land totalling US$2,6 million was reclassified to current assets following the resolution to develop and sell the land.
“Applications for development permits are at different stages of approval.”
It said fund raising for the acquisition of a modern and more efficient rotary kiln plant was ongoing and Willdale believes that the planned plant will improve competitiveness particularly in the common brick segment.
During the year under review, the firm said electricity supply was constant but brick production at its plants was hampered by working capital shortages, which emanated from the changing business model and tight liquidity conditions that prevailed.
Production costs remained relatively higher than competitors who were using better technology.
Revenue for the year at US$11 million was 64 percent above the prior year (2023: US$6,7 million).
“Sales volumes declined by 7 percent due to reduced production. Average prices were 6 percent higher despite competition.
“Exchange rate distortions affected revenue and costs in the first half of the year resulting in significant exchange losses.
“Profitability was also weighed down by real increases in other cost lines such as a 23 percent increase in NEC (National Employment Council) wages and electricity which recorded a 41 percent average tariff increase,” said Willdale.
The brick manufacturer said during the period under review it noted several construction projects being undertaken and thus driving demand for bricks.
It is in this context that cluster home development together with establishment of shopping malls in major cities contributed significantly to Willdale’s revenue.
“Lack of adequate stocks affected volume growth, with volumes declining by 7 percent compared to the prior year.
“Production needs to be enhanced as soon as possible to effectively deal with emerging competition which is threatening both volumes and margins,” said the company.
On its going concern status, the firm remains confident that it will continue to operate as a going concern for the foreseeable future.
“The board’s view is based on the successful implementation of its strategic plans, continued support from its stakeholders and other initiatives that are being undertaken to improve performance and minimise the impact of risks that the company faces,” said Willdale.
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