Willdale’s loss widens as company sells land

HARARE – Listed brick-making firm Willdale’s net loss widened to $380 564 in the six months to March 2017, from $146 575 recorded prior comparable period on the back of heavy rains that damaged the company’s furnaces.

While the first half had been depressed, turnover increased 14 percent to $4 million driven by a 20 percent increase in volumes, with the firm expecting an improvement in sales in the second half.

[GoogleAd]

The company — which recently got shareholder approval to dispose of a piece of land located just outside the capital for a minimum of $4,7 million in a debt extinguishing drive — said it was pinning second half hopes on institutional developments and individual building projects.

“Average selling prices declined by five percent due to a sales mix inclined towards a low margin product,” said Willdale chairperson, Alex Jongwe.

“Margins were further affected by stock write-offs caused by early and incessant rains which damaged some of the kilns that were still firing,” he added.

Jongwe highlighted that although demand for bricks had remained firm in the period under review, saleable stock availability had also been hit by the heavy rains.

“However, significant growth is being registered from institutional developments such as university facilities, schools and shopping centres.

“These and housing delivery initiatives, which are being driven by government and other stakeholders, will spur growth in the second half of the year. Production capacity is available to meet additional demand.

“The specialised brick delivery service introduced in the prior year has provided convenience to customers and a competitive edge in the market,” said Jongwe.

This comes as chief executive, Nyasha Matonda, recently announced the group was set to raise close to $5 million from a land sale, with proceeds earmarked towards reducing the company’s debt, which stands at approximately $6,8 million.

The land up for sale forms part of Swanwick Teneriffle Kinavarra located in Mount Hampden, adjacent to the land presently being utilised by the company for clay mining used in brick manufacturing.

Measuring 190 hectares, the land is currently lying idle.

According to the Willdale boss, there are several bidders for the land, which underwent a property valuation by professional property valuator, Property World, which put a minimum selling price of $2,50 per square metre.

“…The proposal is intended to achieve the twin objectives of unlocking value in the land that was otherwise idle as well as reducing the company’s debt burden.

“The land subject to disposal… with a value of $2,8 million… presents an opportunity to unlock shareholder value and realise the potential upside therein concealed,” the firm said in a recently issued cautionary.

Willdale needs to repay a $2,6 million interest-bearing bank loan and overdraft owed to CBZ Bank, as a top priority for disbursements of proceeds.

The loan has been accruing interest of 10 percent per annum with the company also having incurred penalty interest charges on the capital portion due, yet to be paid.

“Then there is $863 283 accumulated but unpaid preference share dividends. The dividends have been accumulating since 2014 when preference shares were issued and the company did not have capacity to meet the semi-annual preference dividend obligations.

“Priority three is the redemption of $3,2 million of preference shares. The company issued 10 percent redeemable cumulative preference shares in 2014 through a rights issue to shareholders.

“The preference shares are redeemable this year… and subject to agreement with the holders of the preference shares, the company intends to redeem them in a phased manner in order to reduce fixed obligations on the company,” Willdale said.

[Adz]

Leave a comment